UPDATE 1-Community Health gets US OK to buy rival hospital operator

Wed Jan 22, 2014 6:19pm EST

WASHINGTON Jan 22 (Reuters) - Hospital operator Community Health Systems Inc has won approval to buy Health Management Associates Inc on the condition that it sell hospitals in Alabama and South Carolina, the U.S. Federal Trade Commission said on Wednesday.

The deal was valued at $3.9 billion when it was announced by the companies in July. The FTC, which includes debt in its calculations, put the value at $7.6 billion.

Community Health Systems, the second-largest for-profit U.S. hospital operator, said in July that it would buy Florida-based Health Management, a smaller rival, to strengthen its base of operations as the U.S. healthcare system is overhauled under President Barack Obama's Affordable Care Act.

Both chains operate hospitals primarily in smaller cities and rural areas. Health Management has a strong focus in the U.S. southeast, including Florida.

Despite the expansion, Tennessee-based Community Health will remain the second largest hospital network behind industry leader HCA Holdings Inc, which concentrates mostly on larger markets.

The combined company will operate 206 hospitals across 29 states.

Under a deal with the FTC, which assesses proposed mergers to ensure they comply with antitrust law, Community Health will sell the Riverview Regional Medical Center near Gadsden, Alabama and the Carolina Pines Regional Medical Center near Hartsville, South Carolina.

No buyer was immediately named for the hospitals.

U.S. hospitals are seeing a wave of consolidation. Most recently, No. 3 hospital chain Tenet Healthcare Corp purchased Vanguard Health Systems Inc, wrapping up the $1.73 billion deal in October.