FTC To Intensify Scrutiny of Hospital Mergers, Medical Groups for Antitrust Violations
Federal Trade Commission Chair Timothy Muris said yesterday that the agency plans to increase its focus on past hospital mergers and medical groups to ensure that the arrangements "have actually benefited patients" and not simply resulted in higher profits, the New York Times reports. The agency already has boosted spending on health care antitrust efforts by 50%. The increased scrutiny seems prompted largely by the sharp increase in health care costs, the Times reports. What concerns the agency is that after managed care in the 1990s forced hospitals to lower their prices, recent mergers have given hospitals more clout in negotiating with health plans. Now some hospitals have so little competition that they can "all but name their prices," according to David Dranove, a professor at the Kellogg School of Management at Northwestern University. If it finds evidence that mergers increased prices and did not benefit patients through higher quality of care or increased efficiency, the FTC could move to dissolve mergers through administrative hearings, where it would essentially be arguing and presenting evidence before itself, rather than before a federal district court judge, the Times reports. The FTC's past efforts to block mergers in federal courts have been "largely unsuccessful," with the agency losing in its last seven attempts, the Times reports. Henry Allen, a lawyer at McBride Baker & Coles, said, "Most of us would find striking out seven consecutive times demoralizing, but the FTC appears to have the courage to step back into the batter's box."
The FTC also is intensifying its efforts to examine medical groups, an area in which the agency has a history of reviewing doctors' "financial arrangements" and charging those who fix prices, the Times reports. In its new effort, the agency will consider whether medical groups have actually integrated their clinical practices and not combined "in name only." The move comes as the American Medical Association is backing legislation that would exempt doctors from antitrust laws. Muris said, "I think it's important to establish an antitrust presence." He added, "If doctors are getting together and improving quality, not fixing prices, we're not going to stand in their way" (Abelson, New York Times, 8/9).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.