Aya Healthcare has abandoned its proposed acquisition of Cross Country Healthcare following intense scrutiny from federal antitrust regulators who warned the deal would harm competition in the critical healthcare staffing market.
The Federal Trade Commission's Bureau of Competition Director Daniel Guarnera announced the termination Tuesday, stating that FTC staff had identified significant competitive concerns with the proposed merger between two of the largest companies providing software and services that hospitals use to manage temporary healthcare workers.
"The deal would have eliminated head-to-head competition between two of the largest firms providing the software and services that hospitals use to find, hire, and manage their pools of traveling nurses and other temporary healthcare workers," Guarnera said in a statement.
The healthcare staffing industry has become increasingly consolidated in recent years, with major players acquiring smaller competitors to expand their market reach. Aya Healthcare and Cross Country Healthcare represent two of the most significant firms in this space, offering comprehensive platforms that help hospitals recruit, hire, and manage traveling nurses and other temporary medical staff.
The FTC's intervention reflects growing federal concern about consolidation in healthcare-related markets, particularly those that affect labor competition. The agency has increasingly focused on mergers that could reduce competition for workers' services, not just consumer goods and services.
According to the FTC's analysis, the proposed merger would have created a dominant player in the healthcare staffing technology and services market. Both companies provide sophisticated software platforms that hospitals rely on to manage their temporary workforce needs, including tools for recruiting traveling nurses, managing contracts, and coordinating staffing schedules.
The commission's concerns centered on the potential impact on multiple stakeholders in the healthcare ecosystem. For healthcare workers, particularly traveling nurses, fewer competing platforms could mean reduced options for finding assignments and potentially lower compensation. The traveling nurse market has grown significantly, especially following the COVID-19 pandemic, as hospitals increasingly rely on temporary staff to address chronic nursing shortages.
For hospitals, the merger could have resulted in higher costs for staffing services and reduced leverage in negotiations with staffing firms. Many hospitals depend heavily on these platforms to quickly fill critical nursing positions, making them vulnerable to price increases from a dominant provider.
The FTC also highlighted broader patient care implications, noting that increased hospital expenses from reduced competition in staffing services ultimately translate to higher healthcare costs for American patients.
"Further consolidation in this important market risked reducing the options available for many thousands of healthcare workers, increasing hospitals' expenses, and ultimately raising healthcare costs for American patients," Guarnera explained.
The statement suggests this investigation was part of the FTC's broader strategy to scrutinize consolidation in healthcare markets. Under the Biden administration, federal antitrust enforcement has intensified, with agencies taking a more aggressive stance against mergers they believe could harm competition.
Guarnera emphasized that the Bureau of Competition will continue investigating similar transactions and filing enforcement actions when necessary to protect competition in healthcare and labor markets. He specifically noted concern about deals that form part of broader consolidation strategies, suggesting the FTC is watching for patterns of anti-competitive behavior across the industry.
The healthcare staffing market has experienced significant growth and consolidation pressures in recent years. The COVID-19 pandemic accelerated demand for traveling nurses and temporary healthcare workers as hospitals faced severe staffing shortages. This increased demand made healthcare staffing firms attractive acquisition targets for larger players seeking to expand their market presence.
Industry observers note that the FTC's successful pressure to terminate this deal signals increased regulatory scrutiny for future healthcare staffing mergers. Companies considering similar transactions will likely face more intensive review processes and may need to demonstrate clearer consumer and worker benefits to gain approval.
The termination also reflects the FTC's evolving approach to labor market competition. Traditional antitrust analysis focused primarily on consumer welfare, but recent enforcement actions have increasingly considered impacts on workers and labor market dynamics.
For Aya Healthcare and Cross Country Healthcare, the terminated merger means both companies must pursue growth strategies independently. This could involve organic expansion, smaller acquisitions that raise fewer competitive concerns, or investments in technology and service improvements to compete more effectively in the existing market structure.
The FTC's intervention preserves competition in a market that serves as critical infrastructure for the American healthcare system, ensuring hospitals continue to have multiple options for managing their temporary staffing needs while protecting opportunities for healthcare workers seeking employment flexibility.