Columbia Hospital Corporation

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IN THE MATTER OF COLUMBIA HOSPITAL CORPORATION, ET AL.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3472. Complaint, Nov. 19, 1993--Decision, Nov. 19, 1993 This consent order requires, among other things, the respondents to divest Kissimmee Memorial Hospital, and this divestiture has been consummated. In addition, it prohibits, among other things, the respondents from acquiring, for 10 years, any acute care hospital in Osceola County, Florida without prior Commission approval. The prior approval requirement also is to be met before respondents permit any acute care hospital they operate in the county to be acquired by any entity that already operates a hospital there. Appearances For the Commission: Mark J. Horoschak and David M. Narrow. For the respondents: Ky Ewing, Vinson & Elkins, Washington, D.C.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the respondents, Columbia Hospital Corporation ("Columbia") and Galen Health Care, Inc. ("Galen"), corporations subject to the jurisdiction of the Commission, have entered into an agreement whereby Columbia will acquire 100 percent of the voting stock of Galen; that the acquisition agreement violates Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, as amended; that the proposed acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45; and it appearing to the COLUMBIA HOSPITAL CORPORATION, ET AL. 1363 1362 Complaint Commission that a proceeding by it in respect thereof would be in the public interest, the Commission hereby issues its complaint, pursuant to Section 11(b) of the Clayton Act, 15 U.S.C. 21(b), and Section 5(b) of the Federal Trade Commission Act, 15 U.S.C. 45(b), stating its charges as follows:

DEFINITIONS PARAGRAPH 1. For purposes of this complaint the following definitions shall apply:

a. Columbia means Columbia Hospital Corporation, a corporation organized, existing, and doing business under the laws of Nevada, with its principal place of business at 777 Main Street, Suite 2100, Fort Worth, Texas.

b. Galen means Galen Health Care, Inc., a corporation organized, existing, and doing business under the laws of Delaware, with its principal place of business at 201 West Main Street, Louisville, Kentucky c. “Acute care hospital" means a health facility, other than a federally owned facility, having a duly organized governing body with overall administrative and professional responsibility, and an organized medical staff, that provides 24-hour inpatient care, as well as outpatient services, and having as a primary function the provision of inpatient services for medical diagnosis, treatment, and care of physically injured or sick persons with short-term or episodic health problems or infirmities.

d. Acute5 1 6 4 1 3 873 2222 85 23 96.142555 cares 1 6 4 1 4 986 2211 176 45 96.312035 inpatient5 1 6 4 1 5 1188 2210 160 45 96.854240 hospitals 1 6 4 1 6 1374 2211 176 34 90.062080 services means 24-hour inpatient health care, and related medical or surgical diagnostic and treatment services, for physically injured or sick persons with short-term or episodic health problems or infirmities. In Florida, acute care inpatient hospital services are provided only by health care institutions licensed as hospitals, in facilities thereof licensed or certified to provide acute care (as opposed to other types of hospital care, such as psychiatric, substance abuse, rehabilitation or subacute skilled nursing care).

Complaint 116 F.T.C.

THE PARTIES PAR. 2. As of December 31, 1992, Columbia owned and operated 24 hospitals in Florida, Texas, Alabama, and: Georgia. In 1992, Columbia had revenues of more than $819 million. Respondent Columbia owns and operates, through a wholly-owned subsidiary, Kissimmee Memorial Hospital ("KMH"), an acute care hospital in Kissimmee, Osceola County, Florida.

PAR. 3. Galen owns and operates approximately 70 hospitals in 18 states. In fiscal year 1992, Galen's hospitals had total net revenues of more than $3.8 billion. Respondent Galen owns and operates Osceola Regional Medical Center ("Osceola Regional"), an acute care hospital in Kissimmee, Osceola County, Florida. JURISDICTION PAR. 4. Columbia and Galen, at all times relevant herein, have been and are now engaged in or affecting commerce, as commerce is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12. The businesses of Columbia and Galen, at all times relevant herein, have been and are now in or affecting commerce, as com-4 1 6 1 6 0 631 1836 1321 35 -1 5 1 6 1 6 1 631 1837 137 34 64.364349 merce”5 1 6 1 6 2 790 1836 31 35 96.133652 is5 1 6 1 6 3 840 1836 147 35 96.226433 defined5 1 6 1 6 4 1007 1836 35 34 96.166138 in5 1 6 1 6 5 1063 1836 145 34 96.166138 Sections 1 6 1 6 6 1226 1836 23 33 96.929886 45 1 6 1 6 7 1269 1836 43 34 96.956879 of5 1 6 1 6 8 1327 1836 58 33 96.912025 thes 1 6 1 6 9 1405 1836 146 33 95.774948 Federal5 1 6 1 6 10 1570 1836 114 33 95.774948 Trades 1 6 1 6 11 1703 1836 249 33 96.013535 Commission4 1 6 1 7 0 631 1893 619 42 -1 5 1 6 1 7 1 631 1896 79 39 96.787666 Act,5 1 6 1 7 2 727 1905 37 24 96.383301 as5 1 6 1 7 3 781 1894 188 40 96.003181 amended,5 1 6 1 7 4 991 1894 40 35 95.899834 155 1 6 1 7 5 1047 1893 128 35 94.658829 U.S.C.5 1 6 1 7 6 1192 1893 58 35 94.658829 44.2 1 7 0 0 0 1015 2007 552 34 -1 3 1 7 1 0 0 1015 2007 552 34 -1 4 1 7 1 1 0 1015 2007 552 34 -1 5 1 7 1 1 1 1015 2007 75 28 95.870750 THES 1 7 1 1 2 1100 2007 201 28 95.299469 PROPOSED5 1 7 1 1 3 1312 2007 255 34 96.097450 ACQUISITION2 1 8 0 0 0 629 2113 1323 280 -1 3 1 8 1 0 0 629 2113 1323 280 -1 4 1 8 1 1 0 703 2113 1249 41 -1 5 1 8 1 1 1 703 2115 106 34 96.339203 PAR.5 1 8 1 1 2 835 2115 33 34 92.058464 5.5 1 8 1 1 3 916 2114 57 35 95.456909 On5 1 8 1 1 4 998 2124 40 25 95.296318 or5 1 8 1 1 5 1062 2114 107 35 96.576721 about5 1 8 1 1 6 1192 2114 90 35 96.406250 June5 1 8 1 1 7 1311 2114 53 40 96.816566 10,5 1 8 1 1 8 1395 2113 103 41 96.591141 1993,5 1 8 1 1 9 1524 2113 193 36 96.362076 Columbia5 1 8 1 1 10 1742 2114 68 35 96.362076 ands 1 8 1 1 11 1835 2113 117 36 96.428482 Galen4 1 8 1 2 0 629 2172 1323 45 -1 5 1 8 1 2 1 629 2173 144 35 96.503136 entered5 1 8 1 2 2 799 2172 75 36 95.880226 into5 1 8 1 2 3 900 2183 43 24 96.773117 an5 1 8 1 2 4 970 2178 202 39 96.560081 agreements 1 8 1 2 5 1197 2172 169 45 96.556747 whereby5 1 8 1 2 6 1392 2172 194 35 95.837158 Columbia5 1 8 1 2 7 1611 2172 73 34 95.727417 will5 1 8 1 2 8 1710 2172 144 45 96.615334 acquires 1 8 1 2 9 1885 2172 67 35 96.687027 1004 1 8 1 3 0 629 2230 1322 48 -1 5 1 8 1 3 1 629 2238 145 40 96.877121 percent5 1 8 1 3 2 791 2231 43 35 95.877541 of5 1 8 1 3 3 849 2232 57 34 96.484657 thes 1 8 1 3 4 924 2231 124 44 96.517845 voting5 1 8 1 3 5 1067 2231 101 34 96.517845 stocks 1 8 1 3 6 1186 2230 42 35 96.865463 of5 1 8 1 3 7 1242 2230 128 41 96.639359 Galen,5 1 8 1 3 8 1389 2231 69 34 96.857109 ands 1 8 1 3 9 1476 2230 115 35 96.762321 Galen5 1 8 1 3 10 1610 2230 248 35 96.620064 stockholders5 1 8 1 3 11 1877 2230 74 34 95.843369 will4 1 8 1 4 0 630 2288 1322 47 -1 5 1 8 1 4 1 630 2290 139 35 96.652771 receives 1 8 1 4 2 784 2290 36 34 96.909790 in5 1 8 1 4 3 836 2290 186 45 96.709930 exchanges 1 8 1 4 4 1037 2289 193 35 95.707047 Columbia5 1 8 1 4 5 1245 2289 125 45 95.707047 voting5 1 8 1 4 6 1386 2289 112 34 93.245163 stock.5 1 8 1 4 7 1527 2289 174 34 84.402847 The-totals 1 8 1 4 8 1718 2289 105 34 96.886314 values 1 8 1 4 9 1839 2288 43 35 97.012367 of5 1 8 1 4 10 1894 2289 58 34 96.910286 thea 1 8 1 5 0 629 2346 1320 47 -1 5 1 8 1 5 1 629 2349 114 35 96.315102 Galen5 1 8 1 5 2 759 2348 101 35 96.656273 stocks 1 8 1 5 3 874 2354 35 29 96.501244 to5 1 8 1 5 4 924 2348 43 35 96.953934 be5 1 8 1 5 5 982 2347 166 46 96.714180 acquired5 1 8 1 5 6 1161 2347 47 45 96.776634 by5 1 8 1 5 7 1222 2347 193 35 96.093315 Columbia5 1 8 1 5 8 1429 2347 29 35 96.496048 is5 1 8 1 5 9 1474 2347 34 34 95.832245 in5 1 8 1 5 10 1522 2358 125 24 95.832245 excess5 1 8 1 5 11 1663 2346 41 36 96.341904 of5 1 8 1 5 12 1715 2346 83 38 96.923347 $3.25 1 8 1 5 13 1812 2346 137 35 95.937469 billion.2 1 9 0 0 0 945 2460 690 28 -1 3 1 9 1 0 0 945 2460 690 28 -1 4 1 9 1 1 0 945 2460 690 28 -1 5 1 9 1 1 1 945 2461 160 27 96.745834 NATURE5 1 9 1 1 2 1115 2461 48 27 95.447800 OF5 1 9 1 1 3 1172 2461 132 27 95.435577 TRADES 1 9 1 1 4 1315 2461 83 27 96.527817 ANDS 1 9 1 1 5 1410 2460 225 28 96.174416 COMMERCE2 1 10 0 0 0 629 2568 1323 106 -1 3 1 10 1 0 0 629 2568 1323 106 -1 4 1 10 1 1 0 703 2568 1249 45 -1 5 1 10 1 1 1 703 2570 103 35 93.278336 PAR.5 1 10 1 1 2 823 2569 32 36 93.278336 6.5 1 10 1 1 3 894 2570 74 34 95.181259 Thes 1 10 1 1 4 983 2569 153 35 96.331848 relevant5 1 10 1 1 5 1150 2569 71 34 96.940811 lines 1 10 1 1 6 1235 2569 42 34 96.479492 of5 1 10 1 1 7 1288 2579 200 24 96.603539 commerce5 1 10 1 1 8 1503 2569 35 34 96.627022 in5 1 10 1 1 9 1553 2569 116 34 96.722878 which5 1 10 1 1 10 1683 2575 35 28 96.156235 to5 1 10 1 1 11 1734 2569 146 44 96.208405 analyzes 1 10 1 1 12 1894 2568 58 34 96.431908 thea 1 10 1 2 0 629 2626 1322 48 -1 5 1 10 1 2 1 629 2629 180 45 96.398659 proposed5 1 10 1 2 2 839 2628 215 46 96.202896 acquisitions 1 10 1 2 3 1084 2627 29 35 96.478333 is5 1 10 1 2 4 1143 2628 57 34 96.478333 thes 1 10 1 2 5 1229 2627 213 44 96.289085 productions 1 10 1 2 6 1472 2627 69 34 96.309731 ands 1 10 1 2 7 1570 2627 73 34 96.469475 sales 1 10 1 2 8 1672 2626 42 35 96.847832 of5 1 10 1 2 9 1740 2633 101 28 95.996284 acute5 1 10 1 2 10 1871 2637 80 23 95.996284 care COLUMBIA HOSPITAL CORPORATION, ET AL. 1365 1362 Complaint inpatient hospital services and or any narrower group of services contained therein.

PAR. 7. The relevant section of the country is Osceola County, Florida.

MARKET STRUCTURE PAR. 8. The relevant market is highly concentrated, whether measured by the Herfindahl-Hirschmann Index ("HHI") or by four-firm concentration ratios.

ENTRY CONDITIONS PAR. 9. Entry into the relevant market is difficult due to certificate-of-need regulation of entry by the State of Florida, substantial lead times required to establish a new hospital, and other factors.

COMPETITION PAR. 10. KMH and Osceola Regional are actual and potential competitors in the relevant market.

EFFECTS PAR. 11. The effects of the aforesaid acquisition, if consummated, may be substantially to lessen competition in the relevant market in the following ways, among others: (a) It would eliminate actual and potential competition between KMH and Osceola Regional, and between Osceola Regional and others;

(b) It would significantly increase the already high levels of concentration;

(c) It may create a firm whose market share is so high as to lead to unilateral anticompetitive effects;

Decision and Order 116 F.T.C.

(d) It would eliminate Osceola Regional as a substantial independent competitive force;

(e) It may enhance the possibility of collusion or interdependent coordination by the remaining firms in the relevant market; and (f) It may deny patients, physicians, third-party payers, and other consumers of hospital services the benefits of free and open competition based on price, quality, and service. VIOLATIONS CHARGED PAR. 12. The acquisition agreement described in paragraph five above violates Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45.

PAR. 13. The acquisition described in paragraph five, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45. DECISION AND ORDER The Federal Trade Commission having initiated an investigation into the proposed acquisition of Galen Health Care, Inc. by Columbia Hospital Corporation, including as a proposed respondent Columbia Healthcare Corporation (a corporation into which Columbia Hospital Corporation is proposed to be merged immediately preceding its acquisition of Galen Health Care, Inc.), and the respondents, having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission would charge respondents with violation of Section 7 of the Clayton Act, as amended, and Section 5 of the Federal Trade Commission Act, as amended; and The respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the COLUMBIA HOSPITAL CORPORATION, ET AL. 1367 1362 Decision and Order signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order: 1. Respondent Columbia Hospital Corporation is a corporation organized, existing and doing business under the laws of the State of Nevada, with its principal place of business at 777 Main Street, Suite 2100, Fort Worth, Texas. Respondent Columbia Healthcare Corporation is a corporation organized, existing and doing business under the laws of the State of Delaware, with the same principal place of business as Columbia Hospital Corporation. 2. Respondent Galen Health Care, Inc. is a corporation organized, existing and doing business under the laws of the State of Delaware, with its principal place of business at 201 West Main Street, Louisville, Kentucky.

3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

For the purposes of this order:

A. Columbia means Columbia Hospital Corporation, a corporation organized, existing and doing business under the laws of Nevada, with its principal place of business at 777 Main Street, Decision and Order 116 F.T.C.

Suite 2100, Fort Worth, Texas, as well as its officers, employees, agents, parents, divisions, subsidiaries, affiliates, successors and assigns (including specifically, but not limited to, Columbia Healthcare Corporation, the corporation into which Columbia Hospital Corporation is proposed to be merged), and the officers, employees, or agents of Columbia's divisions, subsidiaries, affiliates, successors and assigns.

B. Galen means Galen Health Care, Inc., a corporation organized, existing and doing business under the laws of the State of Delaware, with its principal place of business at 201 West Main Street, Louisville, Kentucky, as well as its officers, employees, agents, parents, divisions, subsidiaries, affiliates, successors assigns, and the officers, employees, or agents of Galen's divisions, subsidiaries, affiliates, successors and assigns C. Respondents means Columbia and Galen, collectively and individually.

D. Acute5 1 3 4 1 3 894 1582 86 24 96.490868 cares 1 3 4 1 4 995 1571 177 44 92.416656 hospital means a health facility, other than a federally owned facility, having a duly organized governing body with overall administrative and professional responsibility, and an organized medical staff, that provides 24-hour inpatient care, as well as outpatient services, and having as a primary function the provision of inpatient services for medical diagnosis, treatment, and care of physically injured or sick persons with short-term or episodic health problems or infirmities. E. To acquires 1 3 5 1 4 1004 2046 48 22 96.674492 an5 1 3 5 1 5 1071 2041 104 27 96.425262 acute5 1 3 5 1 6 1195 2045 85 23 96.347557 cares 1 3 5 1 7 1299 2033 176 44 91.117157 hospital means to directly or indirectly acquire the whole or any part of the assets of an acute care hospital; to acquire the whole or any part of the stock or share capital of, the right to designate directly or indirectly directors or trustees of, or any equity or other interest in, any person which Operates an acute care hospital; or to enter into any other arrangement to obtain direct or indirect ownership, management or control of an acute care hospital or any part thereof, including but not limited to a lease of or management contract for an acute care hospital.

COLUMBIA HOSPITAL CORPORATION, ET AL. 1369 1362 Decision and Order F. To operates 1 3 1 1 4 1007 662 47 23 96.434486 an5 1 3 1 1 5 1070 658 105 28 96.293472 acute5 1 3 1 1 6 1192 662 86 23 96.293472 cares 1 3 1 1 7 1295 649 177 46 92.983398 hospital means to own, lease, manage, or otherwise control or direct the operations of an acute care hospital, directly or indirectly.

G. Affiliate means any entity whose management and policies are controlled in any way, directly or indirectly, by the person with which it is affiliated.

H. Person means any natural person, partnership, corporation, company, association, trust, joint venture or other business or legal entity, including any governmental agency. I. Kissimmee5 1 3 4 1 3 999 1175 196 37 96.215782 Memorials 1 3 4 1 4 1210 1175 190 46 94.140915 Hospital means the general acute care hospital currently owned and operated by Columbia in Osceola County, Florida at 200 Hilda Street, Kissimmee, Florida, and all of its assets, title, properties, interests, rights and privileges, of whatever nature, tangible and intangible, including without limitation all buildings, machinery, equipment, and other property of whatever description, except for accounts receivable and cash. J. Commission means the Federal Trade Commission. II.

It is ordered, That:

A. Within six (6) months after the date this order becomes final, respondents shall divest, absolutely and in good faith, Kissimmee Memorial Hospital. Kissimmee Memorial Hospital shall be divested only (1) to Adventist Health System/Sunbelt Health Care Corporation and/or its affiliates, pursuant to the acquisition agreement attached hereto as Exhibit A, or otherwise (2) to an acquirer or acquirers, and only in such manner, that receives the prior approval of the Commission. The purpose of the divestiture required by this order is to ensure the continuation of Kissimmee Memorial Hospital as an ongoing, viable acute care hospital and to remedy the lessening of competition alleged in the Commission's complaint.

B. Respondents shall comply with all terms of the Agreement to Hold Separate, attached hereto and made a part hereof as Decision and Order 116 F.T.C.

Appendix I. Said Agreement shall continue in effect until such time as respondents have divested Kissimmee Memorial Hospital or until such other time provided in the Agreement to Hold Separate.

C. Pending divestiture, respondents shall take such action as is necessary to maintain the viability and marketability of Kissimmee Memorial Hospital and shall not cause or permit the destruction, removal or impairment of any assets or businesses of Kissimmee Memorial Hospital, except in the ordinary course of business and except for ordinary wear and tear.

III.

It is further ordered, That:

A. If respondents have not divested Kissimmee Memorial Hospital as required by paragraph II of this order within six (6) months after the date this order becomes final, respondents shall consent to the appointment of a trustee by the Commission to divest Kissimmee Memorial Hospital. In the event the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, 15 U.S.C. 45(1), or any other statute enforced by the Commission, respondents shall similarly consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to Section 5(1) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the respondents to comply with this order.

B. If a trustee is appointed by the Commission or a court pursuant to paragraph III.A. of this order, respondents shall consent to the following terms and conditions regarding the trustee's powers, authorities, duties and responsibilities: COLUMBIA HOSPITAL CORPORATION, ET AL. 1371 1362 Decision and Order 1. The Commission shall select the trustee, subject to the consent of respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures of acute care hospitals. 2. The trustee shall have the exclusive power and authority, subject to the prior approval of the Commission, to divest Kissimmee Memorial Hospital 3. The trustee shall have eighteen (18) months from the date of appointment to accomplish the divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the eighteen-month period the trustee has submitted a plan of divestiture or believes that divestiture can be accomplished within a reasonable time, the divestiture period may be extended by the Commission, or by the Court for a court-appointed trustee; provided, however, that the Commission or Court may only extend the divestiture period two (2) times.

4. The trustee shall have full and complete access to the personnel, books, records and facilities relating to Kissimmee Memorial Hospital, or any other relevant information, as the trustee may reasonably request. Respondents shall develop such financial or other information as such trustee may reasonably request and shall cooperate with any reasonable request of the trustee. Respondents shall take no action to interfere with or impede the trustee's accomplishment of the divestiture. Any delays in divestiture caused by respondents shall extend the time for divestiture under this paragraph III in an amount equal to the delay, as determined by the Commission or the Court for a court-appointed trustee. 5. Subject to respondents’ absolute and unconditional obligation to divest at no minimum price and the purpose of the divestiture as stated in paragraph II of this order, the trustee shall use his. or her best efforts to negotiate the most favorable price and terms available with each acquiring entity for the divestiture of Kissimmee Memorial Hospital. The divestiture shall be made in the manner set out in paragraph II of this order; provided, however, that if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve Decision and Order 116 F.T.C.

more than one such acquiring entity, the trustee shall divest to the acquiring entity or entities selected by respondents from among those approved by the Commission.

6. The trustee shall serve, without bond or other security, at the cost and expense of respondents, on such reasonable and customary terms and conditions as the Commission or a Court may set. The trustee shall have authority to employ, at the cost and expense of respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, or other representatives and assistants as are reasonably necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the sale and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the Court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of respondents and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting Kissimmee Memorial Hospital.

7. Respondents shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, or liabilities arising in any manner out of, or in connection with, the trustee's duties under this order.

8. Within sixty (60) days after appointment of the trustee, and subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the Court, respondent shall execute a trust agreement that transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this order.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in paragraph III.A. of this order.

10. The Commission or, in the case of a court-appointed trustee, the Court may on its own initiative or at the request of the trustee issue such additional orders or directions as may be nec- COLUMBIA HOSPITAL CORPORATION, ET AL. 1373 1362 Decision and Order essary or appropriate to accomplish the divestiture required by this order.

11. The trustee shall have no obligation or authority to operate or maintain Kissimmee Memorial Hospital. 12. The trustee shall report in writing to respondents and to the Commission every sixty (60) days concerning the trustee's efforts to accomplish the divestiture.

IV.

It is further ordered, That for a period of ten (10) years from the date this order becomes final, no respondent shall, without the prior approval of the Federal Trade Commission: A. Acquire any acute care hospital in Osceola County, Florida; or B. Permit any acute care hospital it operates in Osceola County, Florida to be acquired by any person that operates, or will operate immediately following such acquisition, any other acute care hospital in Osceola County, Florida. Provided, however, that no acquisition shall be subject to this paragraph IV of this order if the fair market value of (or, in case of a purchase acquisition, the consideration to be paid for) the acute care hospital or part thereof to be acquired does not exceed one million dollars ($1,000,000).

V.

It is further ordered, That, for a period of ten (10) years from the date this order becomes final, respondents shall not permit all or any substantial part of any acute care hospital they operate in Osceola County, Florida to be acquired by any other person (except pursuant to the divestiture required by paragraph II of this order) unless the acquiring person files with the Commission, prior to the closing of such acquisition, a written agreement to be bound by the Decision and Order 116 F.T.C.

provisions of this order, which agreement respondents shall require as a condition precedent to the acquisition. VI.

It is further ordered, That, for the purposes of determining or securing compliance with this order, and subject to any legally recognized privilege, upon written request and on reasonable notice to respondents made at their principal offices, respondents shall permit any duly authorized representatives of the Commission: A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda and all other records and documents in respondents’ possession or control relating to any matter contained in this order; and B. Upon five days’ notice to respondents and without restraint or interference from respondents, to interview their officers or employees, who may have counsel present, regarding such matters. VI.

It is further ordered, That:

A. Within sixty (60) days after the date this order becomes final and every sixty (60) days thereafter until respondents have fully satisfied the divestiture obligations of this order, respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with the order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of all contacts or negotiations with prospective acquirers for the divestitures required by this order, including the identity of all parties contacted. Respondents also shall include in their compliance reports copies of all written communications to and from such parties, and all COLUMBIA HOSPITAL CORPORATION, ET AL. 1375 1362 Decision and Order internal memoranda, reports, and recommendations concerning the required divestitures.

B. Annually beginning on the first anniversary of the date this order becomes final and continuing for nine (9) years thereafter, respondents shall submit a verified report demonstrating the manner in which they have complied and are complying with this order.

Vill.

It is further ordered, That respondents shall notify the Commission at least thirty (30) days prior to any proposed change, such as dissolution, assignment, sale resulting in the emergence of a successor corporation or association, or the creation or dissolution of subsidiaries or affiliates, which may affect compliance obligations arising out of this order.

APPENDIX I AGREEMENT TO HOLD SEPARATE This Agreement to Hold Separate (the Agreement) is by among Columbia Hospital Corporation, a corporation organized, existing and doing business under the laws of the State of Nevada, and Columbia Health Care Corporation, a corporation, organized, existed and doing business under the laws of thé State of Delaware, both with their principal place of business at 777 Main Street, Suite 2100, Forth Worth, Texas (collectively referred to as Columbia); and the Federal Trade Commission (the Commis-4 1 8 1 9 0 625 2305 1300 48 -1 5 1 8 1 9 1 625 2310 127 42 96.581207 sion), an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, 15 U.S.C. 41, et seg. (collectively, the Parties). Whereas, on or about June 10, 1993, Columbia entered into an agreement to acquire all of the voting stock of Galen Health Care, Inc. (hereinafter the Acquisition); and Decision and Order 116 F.T.C.

Whereas, the Commission is now investigating the Acquisition to determine if it would violate any of the statutes enforced by the Commission; and Whereas, if the Commission accepts the attached Agreement Containing Consent Order ("Consent Order"), which would require divestiture of Columbia's Kissimmee Memorial Hospital in Osceola County, Florida ("KMH"), the Commission must place it on the public record for a period of at least sixty (60) days and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission's Rules; and Whereas, the Commission is concerned that if an understanding is not reached, preserving the status quo ante of KMH's assets and businesses during the period prior to the final acceptance of the Consent Order by the Commission (after the 60-day public notice period), divestiture resulting from any proceeding challenging the legality of the Acquisition might not be possible, or might be less than an effective remedy; and Whereas, the Commission is concerned that if the Acquisition is consummated, it will be necessary to preserve the Commission's ability to require the divestiture of KMH as described in paragraph II of the Consent Order, and the Commission's right to seek to restore KMH as a viable competitor; and Whereas, the purpose of this Agreement and the Consent Order is to:

(1) Preserve KMH as a viable independent acute care hospital pending its divestiture, and (ii) Remedy any anticompetitive effects of the Acquisition; and Whereas, Columbia's entering into this Agreement shall in no way be construed as an admission by Columbia that the Acquisition is illegal; and Whereas, Columbia understands that no act or transaction contemplated by this Agreement shall be deemed immune or exempt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement.

COLUMBIA HOSPITAL CORPORATION, ET AL. 1377 1362 Decision and Order Now, therefore, the parties agree, upon understanding that the Commission has not yet determined whether the Acquisition will be challenged, and in consideration of the Commission's agreement that, unless the Commission determines to reject the Consent Order, it will not seek further relief from Columbia with respect to the Acquisition, except that the Commission may exercise any and all rights to enforce this Agreement and the Consent Order to which it is annexed and made a part thereof, and in the event the required divestiture is not accomplished, to seek divestiture of KMH as held separate pursuant to this Agreement, as follows: 1. Columbia agrees to execute and be bound by the attached Consent Order.

2. Columbia agrees that from the date this Agreement is accepted until the earliest of the dates listed in subparagraphs 2.a - 2.c, it will comply with the provisions of paragraph 3 of this Agreement:

a. Three business days after the Commission withdraws its acceptance of the Consent Order pursuant to the provisions of Section 2.34 of the Commission's Rules;

b. 120 days after publication in the Federal Register of the Consent Order, unless by that date the Commission has finally accepted such Order; or c. The day after the divestitures required by the Consent Order have been completed.

3. Columbia will hold KMH's assets and businesses as they are presently constituted separate and apart on the following terms and conditions:

a. KMH, as it is presently constituted, shall be held separate and apart and shall be operated independently of Columbia (meaning here and hereinafter, Columbia excluding KMH) except to the extent that Columbia must exercise direction and control over KMH to assure compliance with this Agreement. Decision and Order 16 F.T.C.

b. Columbia shall not exercise direction or control over, or influence directly or indirectly, KMH or any of its operations or businesses; provided, however, that Columbia may exercise only such direction and control over KMH as is necessary to assure compliance with this Agreement.

c. Columbia shall maintain the viability and marketability KMH and shall not sell, transfer, encumber (other than in the normal course of business), or otherwise impair its marketability or viability.

d. Except for the single Columbia director, officer, employee, or agent serving on the News 1 3 3 2 7 1188 1217 135 35 86.744270 Board or Management5 1 3 3 2 10 1679 1217 233 35 94.474388 Committee (as defined in subparagraph 3.h), Columbia shall not permit any director, officer, employee, or agent of Columbia to also be a director, officer or employee of KMH.

e. Except as required by law, and except to the extent that necessary information is exchanged in the course of evaluating the Acquisition, defending investigations litigation, or negotiating agreements to dispose of assets, Columbia shall not receive or have access to, or use or continue to use, any of KMH's material4 1 3 4 6 0 608 1740 1303 45 -1 5 1 3 4 6 1 608 1741 233 35 96.411034 confidential5 1 3 4 6 2 866 1740 250 36 93.142982 information not in the public domain. Any such information that is obtained pursuant to this subparagraph shall only be used for the purpose set out in this subparagraph. ("Material confidential information," as used herein, means competitively sensitive or proprietary information not independently known to Columbia from sources other than KMH, and includes but is not limited to customer lists, price lists, marketing methods, patents, technologies, processes, or other trade secrets). f. Columbia shall not change the composition of the management of KMH except that the KMH directors or agreement to hold members serving on the New Board or Management Committee (as defined in subparagraph 3.h) shall have the power to remove employees for cause.

g. All material transactions, out of the ordinary course of business and not precluded by subparagraphs 3.a - 3.f hereof, shall be subject to a majority vote of the New Board or Management Committee (as defined in subparagraph 3.h). COLUMBIA HOSPITAL CORPORATION, ET AL. 1379 1362 Decision and Order h. Columbia shall either separately incorporate KMH and adopt new Articles of Incorporation and By-laws that are not inconsistent with other provisions of this Agreement or shall establish a separate business venture with articles of agreement covering the conduct of KMH in accordance with this Agreement. Columbia shall also elect a new three person board of directors of KMH ("New Board") or Management Committee of KMH ("Management Committee"). Columbia may elect the directors to the New Board or select the members of the Management Committee; provided, however, that such New Board or Management Committee shall include no more than one Columbia director, officer, employee, or agent. Except as permitted by this Agreement, the director of the New Board or member of the Management Committee who is also a Columbia director, officer, employee or agent, shall not receive in his or her capacity as a New Board director or Management Committee member material confidential information and shall not disclose any such information received under this Agreement to Columbia or use it to obtain any advantage for Columbia. Said director of the New Board or member of the Management Committee who is also a Columbia director, officer, employee or agent, shall enter a confidentiality agreement prohibiting disclosure of material confidential information (as that term is defined in subparagraph 3.e.). Such New Board director or Management Committee member shall participate in matters which come before the New Board or Management Committee only for the limited purpose of considering a capital investment or other transactions exceeding $1,000,000 and carrying out Columbia's responsibility to assure that KMH is maintained in such manner as will permit its divestiture as an ongoing, viable acute care hospital. Except as permitted by this Agreement, such New Board director or Management Committee member shall not participate in any matter, or attempt to influence the votes of the other directors or Management Committee members with respect to matters that would involve a conflict of interest if Columbia and KMH were separate and independent entities. Meetings of the New Board or Management Committee during the term of this Agreement shall be Decision and Order 116 F.T.C.

stenographically transcribed and the transcripts retained for two (2) years after the termination of this Agreement. i. All earnings and profits of KMH shall be retained separately in KMH. If necessary, Columbia shall provide KMH with sufficient working capital to operate at its current rate of operation, and to carry out any capital improvement plans for KMH which have already been approved by Columbia.

j. Should the Federal Trade Commission seek in any proceeding to compel Columbia (meaning here and hereinafter Columbia including KMH) to divest itself of KMH, or to seek any other injunctive or equitable relief, Columbia shall not raise any objection based upon the expiration of the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact that the Commission has permitted the Acquisition. Columbia also waives all rights to contest the validity of this Agreement. 4. For the purpose of determining or securing compliance with this Agreement, subject to any legally recognized privilege, and upon written request with reasonable notice to Columbia made to its principal office, Columbia shall permit any duly authorized representative or representatives of the Commission: a. Access during the office hours of Columbia and in the presence of counsel to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of Columbia relating to compliance with this Agreement;

b. Upon five (5) days notice to Columbia, and without restraint or interference from it, to interview officers or employees of Columbia, who may have counsel present, regarding any such matters.

5. This agreement shall not be binding until approved by the Commission.

IMPERIAL CHEMICAL INDUSTRIES PLC, ET AL. 1381 1381 Complaint