When Kamala Harris was California’s prime prosecutor, she was involved that mergers amongst hospitals, doctor teams, and well being insurers might thwart competitors and result in increased costs for sufferers. If she wins the presidency in November, she’ll have a variety of choices to blunt monopolistic habits nationwide.
The Democratic vice chairman might affect the Federal Commerce Fee and instruct the departments of Justice and Well being and Human Providers to prioritize enforcement of antitrust legal guidelines and channel sources 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 govt order meant to accentuate antitrust enforcement throughout a number of industries, together with well being care.
Underneath Biden, the FTC and DOJ have fought extra mergers than they’ve in a long time, usually focusing on well being care offers.
“What Harris might do is about the tone that she goes to proceed this laser concentrate on competitors and well being care costs,” mentioned Katie Gudiksen, a senior well being coverage researcher at College of California Faculty of the Legislation, San Francisco.
The Harris marketing campaign did not reply to a request for remark.
For many years, the well being trade has undergone consolidation regardless of authorities efforts to keep up competitors. When well being programs broaden, including hospitals and physician practices to their portfolios, they usually achieve a big sufficient share of regional well being care sources to command increased costs from insurers. That ends in increased premiums and different well being care prices for customers and employers, in keeping with quite a few research.
Well being insurers have additionally consolidated in current a long time, leaving solely a handful controlling most markets.
Well being care analysts say it is potential for Harris to sluggish the momentum of consolidation by blocking future mergers that would result in increased costs and lower-quality care. However lots of them agree the consolidation that has already taken place is an inescapable function of the U.S. well being care panorama.
“It is laborious to unscramble the eggs,” mentioned Bob City, an economics professor on the College of Texas.
There have 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 keeping with a KFF research. The share of neighborhood 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 have been employed by hospitals or firms, in keeping with a report produced by Avalere Well being.
Regardless of former President Donald Trump’s hostility to regulation as a candidate, his administration was energetic on antitrust efforts — although it did permit one of many largest well being care mergers in U.S. historical past, between drugstore chain CVS Well being and the insurer Aetna. General, Trump’s Justice Division was extra aggressive on mergers than previous Republican administrations.
Harris, as California’s lawyer common from 2011 to 2017, jump-started well being care investigations and enforcement.
“She pushed again in opposition to anticompetitive pricing,” mentioned Rob Bonta, California’s present lawyer common, who’s a Democrat.
Certainly one of Harris’ most impactful selections was a 2012 investigation into whether or not consolidation amongst hospitals and doctor practices gave well being programs the clout to demand increased costs. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit in opposition to Sutter Well being, the enormous Northern California hospital operator, for anticompetitive habits. Sutter settled with the state for $575 million.
In 2014, Harris was amongst 16 state attorneys common who joined the FTC in a lawsuit to dismantle a merger between considered one of Idaho’s largest hospital chains and its largest doctor group. In 2016, Harris joined the U.S. Division of Justice and 11 different states in a profitable lawsuit to dam a proposed $48.3 billion merger between two of the nation’s largest well being insurers, Cigna and Anthem.
Makes an attempt to offer the state lawyer common the ability to nix or impose circumstances on a variety of well being care mergers have been fiercely, and efficiently, opposed by California’s hospital trade. Most lately, the hospital trade persuaded state lawmakers to exempt for-profit hospitals from pending laws that will topic personal equity-backed well being care transactions to evaluate by the lawyer common.
A spokesperson for the California Hospital Affiliation declined to remark.
As lawyer common of California, Harris’ work was eased by the state’s deep blue political hue. Have been she to be elected president, she might face a much less hospitable political atmosphere, particularly if Republicans management one or each homes of Congress. As well as, she might face opposition from highly effective well being care lobbyists.
Although it usually will get a foul rap, consolidation in well being care additionally confers advantages. Many medical doctors select to affix massive organizations as a result of it relieves them of the executive complications and monetary burdens of working their very own practices. And being absorbed into a big well being system is usually a lifeline for financially troubled hospitals.
Nonetheless, a significant motive well being programs select to broaden by acquisition is to build up market clout to allow them to match consolidation amongst insurers and cut price with them for increased funds. It is an comprehensible response to the monetary pressures hospitals are below, mentioned James Robinson, a professor of well being economics on the College of California-Berkeley.
Robinson famous that hospitals are required to deal with anybody who reveals up on the emergency room, together with uninsured individuals. Many hospitals have a lot of 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 might be costly. “How are they going to pay for that?” Robinson mentioned.
On the federal degree, any effort to blunt anticompetitive mergers would rely partially 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.
Final yr, the FTC and DOJ collectively issued new merger tips, which recommended the federal authorities would scrutinize offers extra intently 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 personal fairness backer, alleging that they had 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.
Nonetheless, many transactions do not come to the eye of the FTC as a result of their worth is under its $119.5 million reporting threshold. And even when it heard about extra offers, “it is vitally underresourced and needing to be very selective by which mergers they problem,” mentioned Paul Ginsburg, a professor of the follow of well being coverage on the College of Southern California’s Sol Value Faculty of Public Coverage.
Khan’s time period ends in September 2024, and Harris, if elected, might attempt to reappoint her, although her means to take action might rely upon which occasion controls the Senate.
Harris might additionally promote laws that discourage monopolistic behaviors similar to all-or-nothing contracting, by which massive well being programs refuse to do enterprise with insurance coverage firms except they comply with embrace all their services of their networks, whether or not wanted or not. That habits was one of many core allegations within the Sutter case.
She might additionally search insurance policies on the Division of Well being and Human Providers, which runs Medicare and Medicaid, that encourage competitors.
Bonta, California’s present lawyer common, mentioned that, whereas there are unhealthy mergers, there are additionally good ones. “We approve them on a regular basis,” he mentioned. “And we approve them with circumstances that handle price and that handle entry and that handle high quality.”
He expects Harris to deliver comparable issues to the presidency if she wins.
This text was produced by KFF Well being Information, which publishes California Healthline, an editorially impartial service of the California Well being Care Basis.
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