FTC warns Tennessee of coming price hikes if it rushes to remove restrictions on hospital chain
The Federal Trade Commission (FTC) is asking a group of Tennessee lawmakers to reconsider a proposed law that would end a regulated monopoly agreement the state has with Ballad Health, ostensibly allowing the for-profit hospital chain to do business without additional oversight.
In a public statement, the FTC warns the state that if the market isn’t immediately open for competition upon Ballad’s Certificate of Public Advantage (COPA) expiring, the “risk of price and quality harms” will increase significantly, including “harm to quality of care and availability of services.”
Ballad Health operates 20 hospitals and dozens of primary and urgent care clinics across northeastern Tennessee and southwestern Virginia. As it expanded and took over its competition, regulators approved the transactions under the terms of a controversial COPA agreement, wherein Ballad is allowed to operate without meaningful competition, so long as the state has oversight into its pricing and business practices to ensure they’re not abusing the public.
As part of the agreement, certain benchmarks were set for quality, including a threshold for mortality rates, goals to meet to limit hospital-acquired infections, and a cap on emergency room wait times. These were put in place to incentivize Ballad to operate ethically and efficiently, under threat of stiff penalties.
The experiment has not been entirely successful, members of the Tennessee legislature argue, citing statistics from the Tennessee Department of Health and reports from Ballad that show it’s consistently failed to meet many of these benchmarks.
Ending the Certificate of Need barrier
The proposed law would allow the COPA to expire in 2028, ideally to bring competition back into the area of the state. However, a second bill would also eliminate a process called a Certificate of Need (CON), wherein healthcare expansion and merger activity in the state must be submitted to regulators for approval to avoid over-consolidation.
The second law would see the CON law expire in 2030, leaving a two-year gap where any hospital attempting to enter Ballad’s territory would be slowed dramatically by the regulatory approval process, something the FTC warns would undermine “the legislature’s goal of increasing competition.”
“Repealing the CON laws as soon as possible—and no later than the expiration of any COPA—would offer the promise of additional competition in Northeast Tennessee,” the agency wrote.
The two bills in question are HB2278, which eliminates the COPA and HB0819, which eliminates the CON.
It’s unclear how likely one or both are to become law.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.