- Anti-competitive experts discussed the surge in consolidations and acquisitions in the healthcare industry, which have prompted widespread concern about increased costs and reduced quality of care, at an event held Wednesday at financial consulting firm KPMG's headquarters.
The Federal Trade Commission's director at its Bureau of Competition, Deborah Feinstein, explained why the agency challenges certain hospital transactions and how.
- Providers don't need to integrate businesses for population health management efforts, not even those in smaller practices, according to Feinstein. Other speakers disagreed.
Hospitals and health systems have been partnering left and right all throughout the nation, with such M&A activity increasing 6.1% over the first half of 2016. Provisions of the ACA encouraged consolidation of hospital and physicians, and the activity has continued for other reasons such as bargaining leverage with payers and suppliers. However, antitrust officials have kept an eye out for integration and consolidation plans that would harm competition in the healthcare provider market.
While the FTC is not a regulatory agency, its goal is to protect consumers from deals that could potentially lead to issues like higher prices and lower quality by occasionally goes to court to challenge proposed transactions.
"Hospital prices in monopoly markets are more than 15% higher," Feinstein said. She gave several examples of proposed deals that have been challenged by the FTC, such as Advocate-Northshore and CHS-HMA.
The concerns the FTC has with such deals include geographic market issues and physician consolidation. From lowering costs to adding additional hospital rooms, the agency has heard a range of defenses. Using financial difficulties as a defense often works because the FTC understands that sometimes a hospital must be acquired in order to keep its doors open.
With regards to quality improvement via a transaction, the FTC gives credit to plans that can result in a "demonstrable difference." But skepticism on this reasoning should be expected if the question of why the hospital can't improve quality on its own is left unanswered.