The Federal Trade Commission has ordered Sevita Health to divest more than 100 healthcare facilities to resolve antitrust concerns surrounding its proposed $835 million acquisition of BrightSpring Health Services' community living business, the agency announced today.
Under the FTC's proposed consent order, Sevita will be required to divest 128 intermediate care facilities that provide services to individuals with intellectual and developmental disabilities, known as IDD services. The facilities, located in Indiana, Louisiana, and Texas, will be acquired by Dungarvin Group, Inc., which the FTC describes as an experienced operator of intermediate care facilities.
Sevita, a subsidiary of Centerbridge Seaport Acquisition Fund, L.P., seeks to acquire BrightSpring's community living business, ResCare Community Living. The transaction would combine the two largest national providers of residential services for individuals with intellectual and developmental disabilities.
The FTC's complaint alleges that the acquisition would eliminate competition between Sevita and BrightSpring in specific geographic markets, threatening to limit healthcare facility options and degrade the quality of care for vulnerable populations. According to the agency, this competition has been critical to ensuring both providers compete on quality and choice.
"The FTC's action today ensures that individuals with intellectual and developmental disabilities and their families continue to benefit from competition between community living providers," said Daniel Guarnera, Director of the FTC's Bureau of Competition. "In the relevant geographic markets, this acquisition threatened to limit healthcare facility options and degrade the quality of care for those with intellectual and developmental disabilities."
The consent order addresses concerns that reduced competition could result in diminished incentives to maintain, invest in, or improve critical aspects of care including facilities, staffing levels and training, care standards, safety protocols, and individualized services. These factors are particularly important for vulnerable populations who rely on specialized residential care.
Intermediate care facilities provide residential services and support for individuals with intellectual and developmental disabilities who require assistance with daily living activities. The facilities offer specialized care designed to help residents achieve greater independence while ensuring their health and safety needs are met.
The divestiture includes not only the 128 intermediate care facilities but also other assets such as day-training programs that complement residential services. Day-training programs typically provide educational, vocational, and social activities designed to help individuals with disabilities develop skills and engage with their communities.
Dungarvin Group, the approved buyer for the divested facilities, operates intermediate care facilities and is considered by the FTC to be well-positioned to maintain competitive operations in the affected markets. The company's experience in providing IDD services was a key factor in the agency's approval of the divestiture arrangement.
The geographic scope of the required divestitures reflects markets where the FTC determined that the merger would create harmful concentration. Indiana, Louisiana, and Texas represent areas where Sevita and ResCare's combined operations would have reduced competition below acceptable levels according to antitrust analysis.
The FTC's intervention demonstrates the agency's continued focus on healthcare market consolidation, particularly in sectors serving vulnerable populations. Healthcare mergers have faced increased scrutiny from federal regulators concerned about the potential for reduced competition to harm consumers through higher prices or lower quality care.
"The FTC will continue to actively review acquisitions in healthcare markets to ensure that competition is driving higher quality care for all Americans—including some of our nation's most vulnerable citizens," Guarnera said.
The proposed consent order settles charges that would have been filed against the transaction. Consent orders allow companies to resolve antitrust concerns without admitting wrongdoing while still addressing competitive issues identified by regulators.
The intellectual and developmental disabilities services sector has seen consolidation in recent years as providers seek to achieve economies of scale and expand their geographic reach. However, the FTC's action indicates that regulators will carefully scrutinize mergers that could reduce competition in local markets where consumers have limited alternatives.
For families and individuals who rely on IDD services, the preservation of competition is intended to maintain choice and quality in care options. The specialized nature of these services and the vulnerability of the populations served make competition particularly important for ensuring providers maintain high standards.
The consent order is subject to public comment before final approval. Once finalized, Sevita will be required to complete the divestitures before proceeding with its acquisition of ResCare Community Living from BrightSpring Health Services.