QUESTION:    Our hospital and a neighboring hospital are planning to form a common parent company. Will we have to file anything with the Federal Trade Commission?

ANSWER:    If you are both nonprofit and the new parent is going to qualify as a 501(c)(3) organization, you should be eligible for an exemption from the Hart-Scott-Rodino pre-merger notification requirements.

FTC regulations, at 16 C.F.R. §802.40, state that: “The formation of an entity is exempt from the requirements of the Act if the entity will be not-for-profit within the meaning of sections 501(c)(1)-(4), (6)-(15), (17)-(20) or (d) of the Internal Revenue Code.” However, it would be a good idea to get confirmation of this from the FTC Pre-Merger Notification Office, which will issue informal interpretations.  See http://www.ftc.gov/enforcement/premerger-notification-program/informal-interpretations.

And don’t forget to talk to the Antitrust Division of your State Attorney General’s Office. They will likely be very interested in reviewing the transaction and are not bound by FTC rules.