Recent suggestions by federal officials about their agency’s intention to challenge every hospital merger ... in the pipeline and antipathy toward Certificates of Public Advantage (COPAs) — state laws intended to preempt federal antitrust interference — are troubling on a number of levels. First, one of the things the federal antitrust agencies used to pride themselves on was the fairness of those laws and how they were implemented. Unlike Department of Health and Human Services regulations that are typically highly prescriptive, the antitrust laws require an inquiry into all the facts and circumstances of any transaction the touchstone of which is consumer welfare and economic efficiency. So, the theory goes, it doesn’t matter what sector of the economy is at issue, every sector can expect the same type of searching but fair assessment for their transaction.
Not so, it seems, for hospitals at the Federal Trade Commission these days.
This is additionally troubling because that agency has the power — which it has used readily in the recent past — to subject a transaction to its own brand of administrative justice before the parties to a transaction can even get to a federal court, where they can expect to get an impartial hearing. It’s a good way to kill a deal and the FTC knows it. Is it little wonder that long ago the FTC was prohibited from scrutinizing not-for-profits beyond mergers?
Also, the FTC appears oddly oblivious to the reasons for COPAs and why they are likely to proliferate. State and local officials resort to COPAs when they believe that the FTC is not acting in the best interest of their residents by blocking a transaction they believe is important to the health and welfare of their communities. You would think that those responsible for taking care of the people actually affected by a transaction are due some a bit more deference from that federal agency.
The FTC would do well to recall the federal district court judge in Idaho who reluctantly acceded to the agency’s will, noting the deal was intended to “improve patient outcomes” and “would have that effect if left intact.” It is those goals that are at the heart of the hospital and health system mergers of today as the recent analysis by economists at Charles River Associates’ studies attest. The latest findings both reinforce and strengthen the previous report’s conclusions that hospital mergers result in benefits that accrue to patients in the form of better care and reduced costs. The analysis also found that that mergers can lead to enhanced quality through the expansion of clinical best practices, as evidenced by statistically significant declines in the rates of readmission and mortality rates following mergers.
Any federal agency would do well to maintain an open mind and a good degree of humility about its role in health care because it is the health and well-being of entire communities that can hang on its decisions.
Melinda Hatton is AHA’s General Counsel.