Virginia (Map, News) - The federal government moved Friday to block a merger between Prince William Health System and Northern Virginia's largest hospital family, Inova Health System Foundation, citing monopoly fears.

While the Manassas-area hospital leaders say the proposed bond would improve its ability to provide services, including with a $200 million renovation, a joint federal and state court filing said the alliance would "reduce vital competition and result in higher prices."

After the merger, Inova would control 73 percent of hospital beds in the region, "dwarfing its only four remaining independent competitors," the complaint said.

The Federal Trade Commission and the Virginia attorney general announced plans to attempt to block the merger in Alexandria federal district court, as the two-year-old proposal neared completion.

"There is no question that Northern Virginia residents have benefited from the robust competition between Inova and Prince William Hospital through better services and lower prices," said Jeremy Schmidt, director of the Federal Trade Commission's bureau of competition.

"If Inova acquires Prince William Health Systen this vital competition will be lost, health care prices will increase and many residents will be forced to accept reduced health care coverage or no coverage at all."

Hospital leaders declared the action, "extremely disappointing," and vowed to contest it in court.

"The FTC's challenge is not the final word on the proposed merger," Inova Health System said in a statement.

The hospital sought a partnership with Inova in 2006, because the organization of five area hospitals committed to helping launch major renovations to the facility.

"The merger enjoys broad support from the community because residents, businesses and community leaders understand that it is critical toward addressing current and emerging health care needs in one of the nation's fastest growing counties," Prince William Health System president Michael Schwartz said.

But the joint federal and state complaint says competition has suffered as Inova expanded from three hospitals to five by merging with Alexandria Hospital in 1997 and Loudoun Hospital in 2005. The addition of Prince William Health System would result in less competition for patients and insurers, the complaint says.

dgenz@dcexaminer.com