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By Matthew Loughran
Dec. 15 — There is no conflict between the coordination of care provisions of the Affordable Care Act and the antitrust laws that would excuse health-care providers engaging in anticompetitive mergers, Deborah Feinstein, director of the Federal Trade Commission's Bureau of Competition, told reporters at a briefing at the National Press Club Dec. 15.
“If you look at the ACA it specifically says it's not meant to supplant competition and we think it is quite clear that the goals of the ACA and antitrust are in harmony, not in conflict,” she said.
Feinstein said that accountable care organizations (ACOs) and other methods of coordination, such as sharing population health data, don't run afoul of the federal antitrust laws and easily could be used to increase collaboration short of a full merger that might reduce competition in the relevant market.
The briefing, sponsored by Alliance for Health Reform and the Jayne Koskinas Ted Giovanis Foundation for Health and Policy also featured Andrea Murino, a partner at Goodwin Procter LLP in Washington and George Slover, senior policy counsel at Consumers Union in Washington.
Of the “hundreds of ACOs” that exist, Feinstein said that none had ever been challenged by the antitrust authorities. “That suggests that there are in fact ways for folks to collaborate” and “not run afoul of the antitrust laws,” Feinstein said.
She also made a “distinction between collaboration, even among competitors, and something that leads to increased consolidation” by referencing the “Incredible Edible Egg” advertising campaign launched by the American Egg Board in the late 1970s.
“This was a group of competitors, the egg manufacturers, that all got together and said ‘let's spend some money to promote the health benefits of eggs and that eggs are OK to eat,'” she said.
Feinstein added that such a collaboration was illustrative of what could be done in areas such as population health management studies.
“There's nothing in the antitrust laws that prevents all the hospitals from an area from saying ‘you know what, it would be great if we all got on the same IT system so that we can share information with the physicians in the area,” she said.
Murino didn't disagree with Feinstein's perspective, but she added a word of warning, saying that for some entities, “their business reality is that they can't do these high touch areas of collaboration and get the efficiencies they need to bring costs down without having that complete unity of interest” that comes from a merger.
Murino said that many of her clients' “greatest fear” was “those yearly or every-other year negotiations they have with the big payers, because those payers say to them, well your reimbursement rates are going down 10 percent no matter what.”
She added that the providers then would “have to make adjustments to be able to do the things that they want to do and to keep the quality of care up and to keep their entities functioning in the way that they want while they're being paid less. It's a real challenge.”
Slover pointed to Murino's concern as a reason that scrutiny of mergers in both the provider and insurer industries is required. “In those negotiations, we want the providers to have to negotiate with the insurers, but we also want the insurers to have to negotiate with the providers and we want each of them to have effective alternatives so that no one can really lay down a ‘take it or leave it,’” he said.
He described his concern that excessive consolidation on one side or the other would create a “spiral where the providers are saying the insurers are too powerful, we need to get powerful too, and the insurers are saying the providers are getting more powerful, we need to get more powerful too.”
According to Slover, this arms race ends “with what has been long-referred to in antitrust circles as a ‘sumo wrestler' situation” in which two gigantic organizations bulk up to face off but then actually end up accommodating each other to the detriment of anyone outside of the circle, in this case, the consumers.
The panelists agreed that potential merger partners should consider the possible remedies for anticompetitive effects that could flow from the proposed merger.
Feinstein said that the most common remedy requested by the FTC when it discovers that a merger has an anticompetitive effect is that the merged entity divest some aspect of the business in order to reset the competitive balance.
“Often in hospital mergers we get promises that are proffered to us from the hospitals that they will simply agree to price caps, agree not to change their behavior, agree to increase prices only at the rate of inflation,” she said.
Feinstein added that “those are not remedies that the FTC finds acceptable” because of the inability to “guess” what a proper price cap would look like and the near certainty that a price cap will lead to diminished quality of care.
Murino agreed. “The thing I absolutely tell all of my clients is if you're going to be interested in doing any kind of consolidation the remedy must be structural.” Conduct remedies that focus merely on promises not to raise prices or act in an anticompetitive way “are just not effective,” she added.
Feinstein said that many of the hospital mergers that are litigated reach that point because the type of structural divestiture that could be requested would undo the deal entirely.
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