Alan Weil, Editor-Chief of Health Affairs www.healthaffairs.org opened the conversation on healthcare consolidation at the Alliance for Health Reform www.allhealth.org briefing held at the National Press Club http://press.org December 15, 2015. He said “The consistent theme in healthcare right now is consolidation but there is tremendous variability in how that is playing out in different parts of the healthcare sector.”
He pointed out that consolidation is taking place both horizontally and vertically. We have hospitals and physician practices merging and consolidating, plus consolidation is going on between home health agencies and in the pharmaceutical and insurance industries.
Debbie Feinstein, Director of the Bureau of Competition at the Federal Trade Commission (FTC) www.ftc.gov/about-ftc/bureaus-offices/bureau-competition discussed the FTC’s recent actions that have focused on hospital mergers. As she explained, the focus has primarily been on horizontal combination hospitals that are competing with each other, and competing both to negotiate with insurance companies and competing to actually get patients that live in the same geographic area.
She mentioned how the FTC in November challenged a hospital merger between two West Virginia Hospitals located in Huntington West Virginia. The FTC concluded that the proposed action to allow Cabell Huntington Hospital’s http://cabellhuntington.org acquisition of St Mary’s Medical Center www.st-marys.org located within three miles of each other in West Virginia, would create a near monopoly over general acute care inpatient hospital and outpatient surgical services in the adjacent counties.
In an FTC action on December 8, 2015, the FTC authorized blocking the Penn State Hershey Medical Center http://pennstatehersey.org, a 551 bed not-for-profit health system against the proposed merger with the Pinnacle Health System www.pinnaclehealth.org, a not-for-profit three hospital system.
The FTC alleges that the combination of these two healthcare providers would substantially reduce competition in the area surrounding Harrisburg, Pennsylvania and lead to reduced quality and higher healthcare costs.
In an action taken on December 18, 2015, the FTC authorized the blocking of the proposed merger of Advocate Health Care Network www.advocatehealth.com and North Shore University Health System www.northshore.org which are two leading providers of general acute care inpatient hospital services in the North Shore area of Chicago.
The FTC issued an administrative complaint alleging that the proposed merger would create the largest hospital system in the North Shore area. The combined entity would operate a majority of the hospitals in the area and control more than 50 percent of the general acute care inpatient hospital services and as a result, could cause significant harm to consumers.
The FTC takes other issues seriously. For instance, if there are hospitals that are about to go bankrupt and are ready to close their doors, then acquisition by a nearby competitor is better than if the hospital simply closed the door. In addition the FTC may also look at the quality implications and if it is noted that a transaction would increase quality for the consumer that would be taken under consideration.
Feinstein discussed how the FTC frequently hears that there is a conflict between the Affordable Care Act (ACA) and antitrust enforcement but the agency feels strongly that there is not a conflict as the ACA is specifically not meant to supplant competition.
So the thinking at the FTC is that the goals of the ACA and antitrust are in harmony and not in conflict. The FTC often finds that there are other practical ways of achieving coordinated care and alternative payment models beyond merging with a close competitor.
Other speakers on the panel included Andrea Murino, Partner and Co-Chair of Goodwin Procter’s Antitrust Practice, and George Slover, Senior Policy Counsel at Consumer Union. Alan Weil and Marilyn Serafini of the Alliance moderated.
To view the video, go to www.allhealth.org. Supporters of the briefing included the Jayne Koskinas Ted Giovanis Foundation http://jktgfoundation.org and Health Affairs www.healthaffairs.org.