Federal Trade Commission Launches Investigation Into Hospital Competition
The Federal Trade Commission on Friday held a hearing in Washington, D.C., as part of an investigation into competition among the nation's hospitals, physicians, HMOs and pharmaceutical companies, the Boston Globe reports. The investigation, which the FTC will conduct over the next eight months with the Department of Justice, will examine whether the large number of hospital and health plan mergers in the 1990s has affected competition and increased health care costs. At the FTC hearing, officials from Boston-based Tufts Health Plan accused health system Partners HealthCare of anticompetitive practices. Tufts CEO Dr. Harris Berman said that Partners -- which has a network of five main hospitals that includes Massachusetts General Hospital and Brigham and Women's Hospital -- has a "near monopoly" in Boston's western and northern suburbs and controls the market for pediatrics, pediatric psychiatry, medical oncology, obstetrics and gynecological care, which has left Tufts with "little negotiating clout," the Globe reports. Berman also said that the alleged Partners monopoly has led to increased health insurance premiums. "Partners has used this position to demand price increases above what we would expect that normal, healthy competition would otherwise produce," Berman said, adding, "The outcome of Partners' negotiating power and market dominance has been higher prices to the consumer."
Partners CEO Dr. James Mongan, who also testified at the FTC hearing, said that the health system required higher reimbursements from Tufts and other health insurers over the past several years to account for years of annual 1.5% increases, "far below" the rate of medical inflation, the Globe reports. Jennifer Watson, a spokesperson for Partners, said, "We work very carefully to make sure we're within the bounds of the law and make sure we don't engage in anticompetitive behavior." Partners has become "increasingly successful financially" in the past few years and has attracted a large number of patients in the Boston area, a trend that has led to concerns about "whether the network is too big and could force smaller competitors out of business," the Globe reports. Last year, Massachusetts Attorney General Thomas Reilly (D) began an investigation into alleged anticompetitive practices in the Boston area and sent civil investigative demands to several hospitals, but the demands did not target a specific heath system (Kowalczyk, Boston Globe, 3/1). The FTC hearing on Friday was part of the first week of a series of public discussions on the impact of competition on health care costs, quality and access, as well as incentives for reform (Heldt Powell, Boston Herald, 2/28).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.