Study: Federal antitrust action minimal relative to number of hospital mergers

Editor's Note

Federal regulation of hospital mergers is inadequate, according to an April antitrust enforcement study scheduled to be published by the American Economic Association.

According to a June 14 report in Modern Healthcare, researchers at universities including Harvard and Yale analyzed insurance claims data from Aetna, Humana, and UnitedHealthcare, covering 28% of U.S. individuals with employer-sponsored insurance. The article cites 5 key takeaways:  

• Low antitrust enforcement. From 2002 to 2020, the FTC took action against only 1% (13 out of 1,164) of hospital mergers. Recently, however, there has been increased enforcement, as seen in cases such as John Muir Health abandoning its acquisition of San Ramon Regional Medical Center due to state and FTC opposition.
• Increased costs. Hospital mergers have led to a 1.6% average price increase within two years post-merger. The consolidation gives providers more power to demand higher rates.
• Rising outpatient prices. Between 2010 and 2015, inpatient prices rose by 1.1%, while outpatient prices increased by 1.8%. Outpatient price hikes are more pronounced in rural areas with less competition.
• Anticompetitive mergers. Over 200 completed mergers (20%) from 2002 to 2020 were deemed anticompetitive based on market concentration metrics. However, the FTC challenged only 13 deals. Many mergers escaped scrutiny due to their size being below reporting thresholds.
• Insufficient FTC funding. The FTC's limited budget has hindered its ability to enforce antitrust actions. From 2010 to 2015, the average annual antitrust enforcement budget was $136 million. Increased resources are necessary to effectively regulate mergers.

Researchers emphasize the need for better funding and resources for the FTC to address the impact of hospital mergers on local communities and healthcare costs.