When Kamala Harris was California’s high prosecutor, she was involved that mergers amongst hospitals, doctor teams, and well being insurers might thwart competitors and result in larger costs for sufferers. If she wins the presidency in November, she’ll have a variety of choices to blunt monopolistic conduct nationwide.
The Democratic vice chairman might affect the Federal Trade Commission and instruct the departments of Justice and Health and Human Services to prioritize enforcement of antitrust legal guidelines and channel assets accordingly. Already, the Biden administration has taken an aggressive stance in opposition to mergers and acquisitions. In his first yr in workplace, President Joe Biden issued an executive order supposed to accentuate antitrust enforcement throughout a number of industries, together with well being care.
Under Biden, the FTC and DOJ have fought more mergers than they’ve in a long time, typically concentrating on well being care offers.
“What Harris could do is set the tone that she is going to continue this laser focus on competition and health care prices,” stated Katie Gudiksen, a senior well being coverage researcher at University of California College of the Law, San Francisco.
The Harris marketing campaign didn’t reply to a request for remark.
For a long time, the well being trade has undergone consolidation regardless of authorities efforts to take care of competitors. When well being methods develop, including hospitals and physician practices to their portfolios, they typically achieve a big sufficient share of regional well being care assets to command larger costs from insurers. That ends in higher premiums and different well being care prices for customers and employers, in response to quite a few research.
Health insurers have additionally consolidated in latest a long time, leaving solely a handful controlling most markets.
Health care analysts say it’s attainable for Harris to gradual the momentum of consolidation by blocking future mergers that would result in larger costs and lower-quality care. But lots of them agree the consolidation that has already taken place is an inescapable characteristic of the U.S. well being care panorama.
“It’s hard to unscramble the eggs,” stated Bob Town, an economics professor on the University of Texas.
There had been practically 1,600 hospital mergers within the U.S. from 1998 to 2017 and 428 hospital and well being system mergers from 2018 to 2023, in response to a KFF study. The share of group hospitals that belong to a bigger well being system rose from 53 in 2005 to 68 in 2022. And in one other signal of market focus, as of January, nicely over three-quarters of the nation’s physicians had been employed by hospitals or firms, in response to a report produced by Avalere Health.
Despite former President Donald Trump’s hostility to regulation as a candidate, his administration was lively on antitrust efforts — although it did enable one of many largest well being care mergers in U.S. historical past, between drugstore chain CVS Health and the insurer Aetna. Overall, Trump’s Justice Department was more aggressive on mergers than previous Republican administrations.
Harris, as California’s lawyer basic from 2011 to 2017, jump-started well being care investigations and enforcement.
In this Feb. 3, 2015, picture, Kamala Harris — then California’s lawyer basic — speaks at a information convention.(Irfan Khan/Los Angeles Times by way of Getty Images)
“She pushed back against anticompetitive pricing,” stated Rob Bonta, California’s present lawyer basic, who’s a Democrat.
One of Harris’ most impactful selections was a 2012 investigation into whether or not consolidation amongst hospitals and doctor practices gave well being methods the clout to demand larger costs. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit in opposition to Sutter Health, the large Northern California hospital operator, for anticompetitive conduct. Sutter settled with the state for $575 million.
In 2014, Harris was amongst 16 state attorneys general who joined the FTC in a lawsuit to dismantle a merger between one among Idaho’s largest hospital chains and its largest doctor group. In 2016, Harris joined the U.S. Department of Justice and 11 different states in a successful lawsuit to dam a proposed $48.3 billion merger between two of the nation’s largest well being insurers, Cigna and Anthem.
Attempts to offer the state lawyer basic the facility to nix or impose situations on a variety of well being care mergers have been fiercely, and efficiently, opposed by California’s hospital industry. Most just lately, the hospital trade persuaded state lawmakers to exempt for-profit hospitals from pending legislation that will topic non-public equity-backed well being care transactions to overview by the lawyer basic.
A spokesperson for the California Hospital Association declined to remark.
As lawyer basic of California, Harris’ work was eased by the state’s deep-blue political hue. Were she to be elected president, she might face a much less hospitable political atmosphere, particularly if Republicans management one or each homes of Congress. In addition, she might face opposition from highly effective well being care lobbyists.
Though it typically will get a nasty rap, consolidation in well being care additionally confers advantages. Many docs select to affix massive organizations as a result of it relieves them of the executive complications and monetary burdens of operating their very own practices. And being absorbed into a big well being system generally is a lifeline for financially troubled hospitals.
Still, a serious cause well being methods select to develop via acquisition is to build up market clout to allow them to match consolidation amongst insurers and discount with them for larger funds. It’s an comprehensible response to the monetary pressures hospitals are beneath, stated James Robinson, a professor of well being economics on the University of California-Berkeley.
Robinson famous that hospitals are required to deal with anybody who exhibits up on the emergency room, together with uninsured folks. Many hospitals have numerous sufferers on Medicaid, which pays poorly. And in California, they face a sequence of regulatory necessities, together with seismic retrofitting and nurse staffing minimums, which are costly. “How are they going to pay for that?” Robinson stated.
At the federal degree, any effort to blunt anticompetitive mergers would rely partly on how aggressive the FTC is in pursuing probably the most egregious circumstances. FTC Chair Lina Khan has made the FTC extra proactive on this regard.
Last yr, the FTC and DOJ jointly issued new merger tips, which steered the federal authorities would scrutinize offers extra carefully and take a broader view of which of them violate antitrust legal guidelines. In September, the FTC filed a lawsuit in opposition to an anesthesiology group and its non-public fairness backer, alleging they’d engaged in anticompetitive practices in Texas to drive up costs.
In January, the company sued to cease a $320 million hospital acquisition in North Carolina.
The Federal Trade Commission’s headquarters on Feb. 17, 2023, in Washington. (Ting Shen/Bloomberg by way of Getty Images)
Still, many transactions don’t come to the eye of the FTC as a result of their worth is beneath its $119.5 million reporting threshold. And even when it heard about extra offers, “it is very underresourced and needing to be very selective in which mergers they challenge,” stated Paul Ginsburg, a professor of the follow of well being coverage on the University of Southern California’s Sol Price School of Public Policy.
Khan’s time period ends in September 2024, and Harris, if elected, might attempt to reappoint her, although her potential to take action might depend upon which occasion controls the Senate.
Harris might additionally promote rules that discourage monopolistic behaviors equivalent to all-or-nothing contracting, by which massive well being methods refuse to do enterprise with insurance coverage corporations except they comply with embrace all their services of their networks, whether or not wanted or not. That conduct was one of many core allegations within the Sutter case.
She might additionally search insurance policies on the Department of Health and Human Services, which runs Medicare and Medicaid, that encourage competitors.
Bonta, California’s present lawyer basic, stated that, whereas there are unhealthy mergers, there are additionally good ones. “We approve them all the time,” he stated. “And we approve them with conditions that address cost and that address access and that address quality.”
He expects Harris to deliver related considerations to the presidency if she wins.
This article was produced by KFF Health News, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
Bernard J. Wolfson:
[email protected],
@bjwolfson
Phil Galewitz:
[email protected],
@philgalewitz
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