Previous business/academic article Next business/academic article
General Antitrust

A Policy Divided Against Itself? Health Care Reform and FTC Enforcement Policy

Scott P. Perlman, ABA Antitrust Section’s Antitrust Health Care Chronicle, March 2013.

See Scott P. Perlman's resume

Click here to read the full article online

The health care industry today is characterized by an unprecedented wave of provider consolidation, but also by a high degree of uncertainty over how that consolidation is viewed by government policy makers. On the one hand, the Affordable Care Act (ACA), which became law three years ago, encourages providers to improve the quality of care and reduce costs by increasing coordination and integration, including by forming accountable care organizations (ACOs). The ACA also is driving greater merger activity by hospitals based on the prospect of reduced and more at-risk reimbursement, adoption of electronic health records, and policies that encourage providers to take on a more active role in managing population health. On the other hand, the Federal Trade Commission (FTC) has been enforcing the antitrust laws aggressively against provider consolidations. In particular, since the ACA took effect, the FTC has planned to challenge or filed enforcement actions regarding seven health care transactions, including acquisitions of competing physician practices by Renown Health in Reno, Nevada and Provident Health & Services in Spokane, Washington, and hospital mergers including ProMedica Health System’s acquisition of St. Luke’s Hospital in Toledo, Ohio, OSF HealthCare’s acquisition of Rockford Health System in Rockford, Illinois, Reading Health System’s proposed acquisition of a physician-owned surgery center in Reading, Pennsylvania, and Phoebe Putney Health System’s acquisition of Palmyra Park Hospital in Albany, Georgia. Not surprisingly, these enforcement actions have drawn strong criticism from providers, who claim the FTC is out of step with current realities of the health care system and working at cross purposes with health care reform.

These seemingly conflicting policies raise serious questions for providers as to whether they can form ACOs, or engage in other transactions that appear to advance the goals of health care reform, without running afoul of the antitrust laws. This article examines whether the FTC has balanced these arguably conflicting goals effectively, including with respect to the 2011 FTC and U.S. Department of Justice (DOJ) joint policy statement regarding ACOs, as well as recent FTC enforcement actions regarding provider networks, physician consolidations and hospitals mergers. The article also provides suggested principles that can be applied to ensure the goals of health care reform are met while also ensuring providers do not engage in transactions that violate the antitrust laws.

© 2014 - Institute of Competition Law Download our brochure