Advisories
FTC Examines Antitrust Immunity for Healthcare Deals
By
Douglas E. Litvack, David Maas, and Douglas C. Ross
07.03.19
We thought you might be interested in a short summary of a workshop the FTC recently held on the impact of certificates of public advantage on healthcare markets.
As a quick refresher, over twenty states have laws that allow the state to approve mergers, acquisitions, or other collaborations between hospitals without antitrust review. COPAs usually require the parties to make commitments on things like rates, community investments, quality programs, and the availability of services as the quid pro quo for escaping antitrust review.
The FTC has historically opposed COPAs, both as a general policy matter and by opposing proposed COPA legislation and applications for COPAs under existing laws. In the Commission’s view, “cooperative agreement laws … are likely to harm communities through higher healthcare prices and lower healthcare quality.”
Against that backdrop, it was not surprising that most of the participants in the FTC’s workshop focused on ways that COPAs have negatively affected competition, quality, and availability of health care in communities where hospital mergers have been ushered in through COPAs. Still, a number of the speakers noted that there has been very little research about the actual effect of COPAs on quality and access.
The American Hospital Association submitted comments (that we helped draft) in advance of the workshop that explained how the use of COPAs is driven, at least in part, by a view among healthcare providers that courts and antitrust enforcers give short shrift to the efficiencies proposed mergers and joint ventures will bring about. Hospitals and health systems find courts and enforcers unwilling to credit efficiencies that stand to benefit patients and communities through cost savings, quality improvements, increased access, and better coordination of care.
Ken Kaufman of Kaufman Hall submitted an interesting comment that focused on declining demand for inpatient care, which he argues means that fewer communities have a legitimate need for multiple hospitals.
It will be interesting to see how states react to the pressure from the FTC not to use COPA laws in place of antitrust review. Some states, like West Virginia, Virginia, and Tennessee, have dismissed the FTC’s concerns about COPAs and have approved mergers using their COPA statutes that the FTC wanted to block. And we’ve heard that Washington legislators are talking about revisiting the state’s COPA statute to encourage its use. So, COPA statutes are likely here to stay, but the FTC will continue its campaign to encourage states to limit their use.
As a quick refresher, over twenty states have laws that allow the state to approve mergers, acquisitions, or other collaborations between hospitals without antitrust review. COPAs usually require the parties to make commitments on things like rates, community investments, quality programs, and the availability of services as the quid pro quo for escaping antitrust review.
The FTC has historically opposed COPAs, both as a general policy matter and by opposing proposed COPA legislation and applications for COPAs under existing laws. In the Commission’s view, “cooperative agreement laws … are likely to harm communities through higher healthcare prices and lower healthcare quality.”
Against that backdrop, it was not surprising that most of the participants in the FTC’s workshop focused on ways that COPAs have negatively affected competition, quality, and availability of health care in communities where hospital mergers have been ushered in through COPAs. Still, a number of the speakers noted that there has been very little research about the actual effect of COPAs on quality and access.
The American Hospital Association submitted comments (that we helped draft) in advance of the workshop that explained how the use of COPAs is driven, at least in part, by a view among healthcare providers that courts and antitrust enforcers give short shrift to the efficiencies proposed mergers and joint ventures will bring about. Hospitals and health systems find courts and enforcers unwilling to credit efficiencies that stand to benefit patients and communities through cost savings, quality improvements, increased access, and better coordination of care.
Ken Kaufman of Kaufman Hall submitted an interesting comment that focused on declining demand for inpatient care, which he argues means that fewer communities have a legitimate need for multiple hospitals.
It will be interesting to see how states react to the pressure from the FTC not to use COPA laws in place of antitrust review. Some states, like West Virginia, Virginia, and Tennessee, have dismissed the FTC’s concerns about COPAs and have approved mergers using their COPA statutes that the FTC wanted to block. And we’ve heard that Washington legislators are talking about revisiting the state’s COPA statute to encourage its use. So, COPA statutes are likely here to stay, but the FTC will continue its campaign to encourage states to limit their use.