Will Biden's crusade for competition hinder ASC-hospital joint ventures?

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The Biden administration has begun making its mark on the U.S. healthcare system with strong support for competition.

President Joe Biden signed an executive order July 9 asking the Federal Trade Commission and U.S. Justice Department to further scrutinize hospital mergers and revise guidelines to make sure any transactions won't lead to price increases and rural hospital closures. Will the federal government intensify scrutiny on hospitals purchasing ASCs and mergers between physician groups as well?

ASC administrators are keeping a close eye on this trend toward more government scrutiny.

"I think 2022 will present some new policy issues, particularly related to hospital and health system consolidation, and to what extent this impacts hospital-physician joint ventures," said Tina Piotrowski, CEO of Copper Ridge Surgery Center in Traverse City, Mich., during an upcoming interview with the Becker's Ambulatory Surgery Centers Podcast.

The FTC was already on high alert for anticompetitive transactions between hospitals before President Biden's executive order. In April, a deal between Brentwood, Tenn.-based LifePoint Health and Greenville, S.C.-based Prisma Health to sell three hospitals and an emergency room fell through after the FTC delayed the deal and "made it prohibitive to move forward," according to the health systems.

The FTC also asked a federal judge to stop Edison, N.J.-based Hackensack Meridian Health from acquiring Englewood (N.J.) Health in May.

President Biden's executive order cited a 2020 Kaiser Family Foundation report showing hospitals in consolidated markets have higher prices than hospitals with multiple competitors. The foundation's report also stated that physician fees in concentrated markets were 14 percent to 30 percent higher than in less concentrated markets.

A 2018 study published in the Journal of Health Economics and published in the report showed physician-hospital integration led to 14 percent higher prices for services. For years, one of the benefits of ASCs joint venturing or selling to a hospital has been the rate lift from insurance companies after the transaction is complete. A hospital partner's negotiating power historically has helped ASCs achieve better contracts than single centers can on their own.

Healthcare service rate hikes could fall under the federal government's microscope as this administration promotes policies for higher quality, lower cost care.

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