Universal Health Services agrees to sell hospitals after antitrust probe

By Steve Kanigher

Published Monday, Nov. 15, 2010 | 2:08 p.m.

Updated Monday, Nov. 15, 2010 | 4:51 p.m.

Clearing the way for a merger, Universal Health Services Inc. today said it agreed to sell two Las Vegas psychiatric hospitals it's acquiring as part of its acquisition of Psychiatric Solutions Inc. (PSI).

PSI, based in Franklin, Tenn., has been running Montevista Hospital with 160 beds and Red Rock Behavioral Health Hospital with 41 beds.

They will be sold within six months as part of an agreement settling an antitrust investigation by the Federal Trade Commission and affected states.

King of Prussia, Pa.-based Universal Health is best known in Las Vegas as the owner of the Valley Health System, which includes Valley, Desert Springs, Summerlin, Spring Valley and Centennial Hills hospitals.

Its psychiatric operations in Las Vegas include Spring Mountain Sahara with 60 beds and Spring Mountain Treatment Center with 164 beds.

“There is a shortage of hospital beds in the Las Vegas area for those who are dangers to themselves or others, and hence need acute inpatient psychiatric care,” Nevada Attorney General Catherine Cortez Masto said in a statement. “When this merger was announced, it was important to examine its competitive effects, including whether the transaction may decrease the availability of this life-saving service even more. The divestiture of PSI’s psychiatric hospitals in Las Vegas resolves competitive concerns as it maintains the status quo.”

She said the deal would have reduced the number of meaningful competitors in Las Vegas from four to three and the combined firm would have controlled about 70 percent of the Las Vegas market. Local public mental health facilities are excluded from the analysis given their focus on serving indigent patients, as opposed to the insured patients that Universal Health and PSI treat.

The FTC said the two hospitals are among 15 psychiatric facilities Universal Health must sell to complete the $3.1 billion acquisition of Psychiatric Solutions.

The other facilities are in Delaware and Puerto Rico.