FTC Provides Guidance for Financially Distressed Firms Seeking Merger Partners in Ohio Hospital Deal

On September 2, 2026, the Federal Trade Commission (FTC) provided guidance to merging parties on how it will interpret a key prong of the failing firm defense, specifically whether a financially distressed seller adequately searched for alternative purchasers. This guidance was provided in the context of the sale of a small hospital system in southeastern Ohio, Fairfield Medical Center (FMC), to Adena Health, which does not operate nearby hospitals, after the FTC staff and Ohio Attorney General raised concerns about selling FMC to OhioHealth Corporation, one of Ohio’s largest health systems. The FTC’s guidance on the “shop” process is particularly relevant to rural health care systems who may be struggling and looking to sell to the most well-resourced system, which may also be the closest competitor.  And the FTC’s insights are helpful since it successfully challenged the Novant/Lake Norman transaction in North Carolina at the Fourth Circuit Court of Appeals, which overturned the lower court’s reliance on the failing firm defense.

Background: A Second Front of Antitrust Scrutiny for OhioHealth

Since 2024, OhioHealth sought to acquire the financially struggling FMC and formally announced an acquisition plan in November 2025. According to the FTC, OhioHealth acquiring FMC raised serious concerns of increased costs and reduced quality of care because OhioHealth owned neighboring facilities. The FTC also questioned the thoroughness of FMC’s process for identifying other potential buyers. FTC staff coordinated closely with the Ohio Attorney General’s Office throughout and encouraged FMC to seek alternative buyers through a robust sales process.

A “Comprehensive Sales Process” Yields an Alternative Buyer

According to the FTC, the comprehensive sales process that followed “attracted interest from multiple potential buyers” and ultimately resulted in the abandonment of the OhioHealth/FMC transaction, leading to FMC’s partnership with Adena Health, which was not a close competitor. FMC and Adena Health closed their transaction on September 1, 2026, creating Adena Fairfield Medical Center.

FMC’s financial condition was a central feature of the deal: the hospital had accumulated years of losses, including an operating loss of more than $37 million in 2025. The FTC characterized the outcome as one that will allow FMC to “continue serving patients in Ohio over the long term, without the competitive risks posed by the previously proposed OhioHealth deal.”

FTC Signals Heightened Scrutiny of “Failing Firm” Claims

In connection with the closing, Chairman Andrew N. Ferguson, joined by Commissioner Mark R. Meador, issued a statement addressing best practices for firms “shopping” for a buyer, noting that “financial distress is not a blank check for mergers that would substantially reduce competition between hospitals and risk leaving patients with higher costs and lower quality care.” Notably, firms must demonstrate “good-faith efforts to obtain reasonable alternative offers that pose less of a risk to competition than the proposed merger.” To assess “good faith,” FTC staff will look for evidence that a “full set of potential buyers” was contacted with “sufficient time to evaluate a potential transaction,” “sufficient and equal access to information” to assess the deal, and whether “buyers that did not present competitive concerns” made offers that were considered.

Key Takeaways for Health Care Providers

The Adena/FMC outcome highlights several themes for health care providers contemplating transactions in the current enforcement environment:

• The failing-firm defense remains a demanding standard. The FTC expects a broad, well-documented canvass of alternative buyers before it will credit a distressed-seller rationale. A thinly supported or truncated sales process invites scrutiny and a search for a “better buyer.”
• Rural and community hospital deals remain a priority. The Commission reiterated its focus to preserve competition in local markets, particularly where the affected hospitals serve rural communities.
• Federal-state coordination continues. The FTC will coordinate closely with the State Attorney General—reinforcing that providers should anticipate joint federal and state review of significant transactions.

Press Release, Fed. Trade Comm’n, Statement Regarding Fairfield Medical Center’s Sale to Adena Health (Sept. 2, 2026), .

Press Release, Fed. Trade Comm’n, Statement Regarding the Termination of Novant Health’s Acquisition of Hospitals from Community Health Systems (July 1, 2024), .

Fed. Trade Comm’n, Statement of Chairman Andrew N. Ferguson Joined by Commissioner Mark R. Meader Regarding Fairfield Medical Center’s Sale to Adena Health (Sept. 2, 2026), .

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