Incentives for Consolidation v Anti-Trust

This is an important Kaiser Health News brief on an Idaho hospital/physician merger that is being scrutinized for potential anti-trust violations. In part it says:

While consolidation in the industry has been underway for decades, the pace has accelerated dramatically since the 2010 passage of the federal health care law. Hospitals and doctors’ groups have joined hands in part out of fear of funding cuts and in part, to position themselves for government bonuses. The bonuses are available to providers who agree to form “accountable care organizations,” which are rewarded for keeping Medicare patients healthy, rather than for the number of tests or procedures they do.

“The Affordable Care Act is pushing consolidation and working together, but the Federal Trade Commission and the Justice Department seem to be saying, ‘Wait a second, there are antitrust laws here,” said Robert Field, a law and health policy professor at Drexel University in Philadelphia. “The federal government has a schizophrenic attitude toward provider consolidation.”

FTC officials, however, deny there is any broad conflict between the Affordable Care Act and antitrust laws.

“The issues are in those small number of cases where collaboration occurs in a way that gives participants excessive marketplace power,” said Deborah Feinstein, director of the bureau of competition for the FTC.

The incentives to aggregate market power have been around for awhile, and North Carolina has seen lots of this in the form of hospitals/health systems purchasing physician practices. The incentives for such behavior are increased not only by the ACA, but by the nascent regionalized Medicaid ACO plan put forth by the N.C. General Assembly. As I said in this post on the emerging North Carolina plan:

This is going to set off another wave of aggregation/consolidation or accelerate it, whichever way you want to view it. The incentives around this sort of plan are to get as big as possible, I think. At some point, there is likely to arise some anti-trust questions around all of this.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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