- Using the power of the 100-year-old Clayton Antitrust Act of 1914, the Federal Trade Commission has begun to challenge some of the many hospital mergers and physician practice acquisitions taking place.
- The FTC has been increasingly successful in its efforts to block deals which it sees as anticompetitive. For example, it won three cases regarding hospital mergers in the last two years, in Albany, GA, Toledo, OH and Rockford, IL, and just prevailed in its first ever case challenging a health system buyout of a medical practice in Idaho.
- While hospitals have argued that consolidation is necessary to improve and coordinate care for patients, the FTC asserts that it's possible to meet those goals without a full merger.
As hospitals see it, mergers are necessary to coordinate care, in alignment with the goals of the ACA. They say mergers benefit the community by bringing cash to struggling institutions, allowing those previously cash-strapped organizations to buy new medical equipment and adopt EMRs. In other situations, hospitals say they are working to improve care quality, lower care cost and eliminate duplication of services, for example, by consolidating the cardiac care centers at one site.
But the FTC argues that the effects of such mergers are mostly negative, as they tend to reduce competition and thereby raise prices. The agency has found that price hikes after mergers could be as high as 40% to 50%. The FTC, which notes that it only challenges 1% of such mergers and acquisitions, says that it expects hospitals to document the benefits they claim will proceed from a merger with detailed studies rather than vague assertions. It seems likely that the FTC will remain aggressive for the near future, so hospitals with merger plans had best be prepared to prove their claims of benefit.
Want to read more? You may enjoy this story on two NC hospitals that recently created an alliance; or this story on the groundbreaking Anthem Blue Cross HMO-ACO hybrid.