FTC Warns Tennessee Lawmakers of Potential Health Care Cost Surge Over Ballad Legislation

At the center of the debate is Ballad Health, a 20-hospital system operating in northeastern Tennessee and southwestern Virginia. Lawmakers are considering a plan to end Ballad’s Certificate of Public Advantage agreement in 2028, which would remove state-imposed restrictions on the system. A separate proposal would eliminate Tennessee’s Certificate of Need law in 2030, which currently allows hospitals to block new competitors from entering their markets.

FTC officials have raised concerns that the two-year gap between ending the COPA agreement and repealing the CON law could create unintended consequences. Per a statement from three agency officials, this timing potentially “undermines” the state’s goal of increasing competition by giving Ballad Health an opportunity to limit new entrants during that interim period.

In a letter addressed to state Rep. David Hawk and published on the FTC’s website, agency officials warned that Ballad Health would have “every incentive” to challenge competitors seeking approval under the CON process, thereby reducing the likelihood of new providers entering the market.

Ballad Health was formed in 2018 after Tennessee and Virginia lawmakers granted a waiver from federal antitrust laws, allowing two regional hospital systems to merge. The agreement created what is considered the largest state-sanctioned hospital monopoly in the United States, with the understanding that the system would meet specific quality-of-care benchmarks.

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However, findings from KFF Health News suggest the system has struggled to meet several of those targets. According a statement based on annual reports from the Tennessee Department of Health and Ballad itself, the system has fallen short in areas such as infection rates, mortality outcomes, emergency room wait times, and patient satisfaction.

The FTC has consistently opposed COPA agreements nationwide, as well as Tennessee’s CON law, arguing both policies can restrict competition. Under the CON framework, hospitals must obtain state approval to build new facilities, and competing providers can challenge those applications by demonstrating potential financial harm.

Supporters of the CON system, particularly nonprofit hospital networks, argue that limiting competition helps preserve essential services. They contend that revenue from profitable procedures like heart surgeries and joint replacements helps subsidize emergency care for uninsured patients.

In Ballad’s case, the COPA agreement has so far prevented the system from opposing competitors through the CON process. But once the COPA expires in 2028, that restriction would be lifted, allowing Ballad to challenge new entrants until the CON law is potentially repealed in 2030.

FTC officials described this overlap as problematic. Per a statement in their letter, the scenario could represent the “worst possible outcome for patients,” as it allows the hospital system to avoid federal antitrust scrutiny during the COPA period and then bypass state oversight once the agreement expires.

Ballad Health spokesperson Hillary Edwards said the organization is deferring to lawmakers on how policy evolves moving forward.

Source: FTC