The war on monopolies — courts siding with FTC over hospital mergers: 6 things to know

Throughout the past decade, the Federal Trade Commission has used its antitrust power to stop potential hospital mergers, and it's been winning the war on monopolies, Mondaq reports on an article printed in The Legal Intelligencer.

Here's what you need to know.

1. In the 1990s, hospital mergers were fairly common with federal courts rarely siding with against the merger. Throughout the last decade, the antitrust climate changed and merger-busting gained momentum.

2. The FTC had its first successful challenge in 2007 against Chicago's Northwestern University Healthcare. Then in 2014, the FTC and Idaho's Attorney General challenged a consummated merger between two healthcare organizations, and the courts forced them to divest, although incriminating documents were at the center of the dispute.

3. Mondaq reports the trend began after the ACA was established. As health systems attempt to coordinate services to lower cost, the FTC has been using its antitrust powers and finding success in the courtroom.

4. In the last two months, the FTC has blocked two mergers, one between the Penn State Hershey Medical Center and the Pinnacle Health System in Harrisburg, Penn. and the other between Advocate Health Care Network and the NorthShore University HealthSystem in Chicago. The FTC thought they would've had a "significant impact on the price and availability of healthcare services" in their respective markets if allowed to go through.

5. The decisions are reflective of the difficulties courts have in determining relevant markets.

To make that decision, courts use the hypothetical monopolist test, asking whether a consumer could reasonably overcome increased prices from the effects of a single healthcare organization.

The nature of healthcare means that question has several parts to it. For example, when a hospital raises its prices, patients aren't the only affected party; insurers are too. To answer the question both patients and insurers have to be able to find another healthcare organization to defeat the price hike.

The second factor is the heterogenous nature of providers. Patients can replicate the services general providers offer, but for advanced specialists, patients will struggle to find another specialty provider.

6. Mondaq argues that the FTC will continue pursuing antitrust legislation despite the cost and size of the potential impact.

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