Dive Brief:
- A new report published in the Antitrust Health Care Chronicle contends that competition is better for the consumer.
- A study of consumers in California that accompanied the report revealed that patients who live in areas with many competing hospitals had substantially lower premiums than those who lived in highly-consolidated healthcare markets.
- Report author T. Scott Thompson of Bates White Economic Consulting suggested there should be more policies in place to "protect and invigorate hospital competition through, at a minimum, appropriate antitrust enforcement and possibly through other means"
Dive Insight:
Reports like these call into question who healthcare mega-mergers truly benefit, especially since one of the arguments hospitals use when seeking mergers is that they pass on lower costs to the consumer. But with the cost of healthcare rising for consumers, who are bearing unprecedented financial responsibility for their care, it's important to protect their interests first—even if that means hospitals have to do more legwork and research to support their "lower costs" claims.
Thomson suggests that claims that a proposed merger or alliance will generate cost efficiencies or improvements in care should be evaluated carefully "to determine whether they are likely to be achieved or could be achieved through alternative means that are less destructive to competition," he stated.
Frankly, hospitals won't have much of a choice going forward: 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. The agency 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.
