FTC official hints at increased policing of healthcare mergers

Writing in Health Affairs, Martin Gaynor, director of the Bureau of Economics of the Federal Trade Commission (FTC), in Washington, D.C., observed that given new findings on the impact of healthcare mergers on prices, it is important for the FTC to work with the Department of Justice (DOJ) and other government agencies to maintain “antitrust enforcement and consumer protection in healthcare markets.”

Gaynor, who is also a professor of economics and public policy at the Heinz College, Carnegie Mellon University, in Pittsburgh, Pennsylvania, wrote from his own viewpoint and included a statement that the views expressed in his article were his alone and “do not necessarily represent the views of the Federal Trade Commission or any of the commissioners.”

However, his opinions are noteworthy given his position at the FTC and that agency’s key role, along with the DOJ, in how antitrust enforcement will work alongside healthcare reform’s efforts to increase more coordinated care — one often-cited factor in the current trend of healthcare provider consolidation.

Gaynor wrote to offer analysis of two studies published concurrently in Health Affairs that came to different conclusions on how to ensure healthcare consolidation does not lead to monopoly pricing for healthcare services.

In the first study, health policy experts Paul B. Ginsburg and Leonard D. Schaeffer of the University of Southern California, in Los Angeles (UCLA), along with medical consultant L. Gregory Pawlson of the law firm Stevens and Lee in Lancaster, Pennsylvania, examined strategies purchasers and payors could use to combat increases in healthcare prices due to greater provider leverage from large healthcare organizations. They found that Federal and state governments could help “by developing antitrust policies that better address current market environments and by fostering the development of physician organizations that can increase competition and contract with payers under shared-savings approaches.”

However, in the second study, William M. Sage, a professor at the University of Texas at Austin law school, noted that greater enforcement of anti-trust laws would backfire unless the enforcement took into account the way past regulation and government subsidies have distorted the healthcare marketplace. According to Sage, antitrust enforcers and regulators should move beyond just looking at consolidation and instead force the healthcare industry to “define and market products that can be assembled and warranted to consumers while keeping emerging sectors such as mHealth free from overregulation, wasteful subsidy, and appropriation by established insurer and provider interests.”

Gaynor’s analysis of both studies is pragmatic. He notes that with all of the current changes going on in the U.S. healthcare system, there is a strong need to make sure the healthcare markets work as well as possible, and that would include stopping certain deals that would limit competition in a way that harms consumers. He also noted that the types of public-private partnerships that Ginsburg, Schaeffer and Pawlson see as a solution may not work if a single healthcare provider becomes the sole or dominant player in any one market.