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Expanding health systems’ pricing power tied to surging premiums and insurer withdrawals


Ashish K. Jha, M.D., of the Harvard T.H. Chan School of Public Health and an internist at the Veterans Affairs Boston Healthcare System, argues in a JAMA piece that the insurer withdrawals and big insurance premium increases this year are to no small degree attributable to the market power being wielded by ever larger hospital chains.

He thinks that the future of the Affordable Care Act may rest on the federal government’s ability to monitor and regulate healthcare-industry consolidation among practices, hospitals and hospital systems.

“If the ACA is to thrive under the next president, he or she must ensure that we have a dynamic healthcare marketplace,”  Dr. Jha wrote. “For that reason alone, the ability of the ACA to fulfill its promise of greater access at an affordable price will depend as much on the effectiveness of the FTC  {Federal Trade Commission} as it will on the effectiveness of the CMS.”

His remarks come as a federal appeals court decided to support the FTC’s challenge of  the proposed merger between Advocate Health Care and NorthShore University HealthSystem, both in Illinois.

The 7th Circuit Court  of Appeals called a lower court’s decision to allow the proposed merger between the two health systems “erroneously flawed.”

FTC has argued that the deal could hurt both patients and insurers and result in higher medical costs because of the new behemoth’s pricing power. The health systems have been battling with the FTC over  how their market share should be defined.

To read Dr. Jha’s JAMA piece, please hit this link.

Judge hands FTC defeat in efforts to block big Ill. merger

U.S. District Judge Jorge Alonso’s refusal  this week to block a merger between Advocate Health Care and NorthShore University HealthSystem, both in the Chicago area,  dealt a hard blow to the Federal Trade Commission’s efforts to rein in consolidation of hospitals. The decision could quickly encourage systems to merge, which could lead to considerably higher healthcare costs as the new entities wield more market power and thus are better able to negotiate with insurers.

It was unclear that the FTC would appeal.

In another  similar big case, a federal judge in Pennsylvania refused to stop t a merger between Penn State Hershey (Pa.) Medical Center and PinnacleHealth System in Harrisburg — a decision that the FTC is appealing.

The judge in that case said: “Our determination reflects the healthcare world as it is, and not as the FTC wishes it to be. We find it no small irony that the same federal government under which the FTC operates has created a climate {of cooperation among providers} that virtually compels institutions to seek alliances such as the hospitals intended here.”




FTC will continue to fight big Penn. merger

The Federal Trade Commission will continue fighting to stop a merger between Penn State Milton S. Hershey (Pa.) Medical Center and Harrisburg-based PinnacleHealth System despite a federal judge’s ruling that would, in effect, probably let the merger proceed, say a couple of experts, Modern Healthcare reports.

“This case goes contrary to FTC advocacy and success in other cases, so I’m sure they don’t want this to stick,”  Thomas Greaney, a former assistant chief in charge of healthcare antitrust enforcement at the Justice Department, and now co-director of the Center for Health Law Studies at St. Louis University School of Law, told the publication. “I just think this opinion standing on the books is not a good one for them.”

Jeff Miles, an antitrust expert at law firm Ober Kaler, noted the agency’s concerns with the methodologies  used to define the geographic market of the hospitals that the  judge used in rejecting the FTC’s arguments against the merger.



Judge refuses to block big Pennsylvania merger


The slightly quaint Polyclinic Medical Center, in Harrisburg, Pa., part of Pinnacle Health.

U.S. District Judge John Jones III judge  has refused to temporarily block  the merger  of Penn State Hershey Medical Center and PinnacleHealth System, in a rare defeat for the Federal Trade Commission’s drive against many hospital mergers.

As Modern Healthcare has noted: “Hospitals and insurers across the country have been watching the Pennsylvania case and several others as mergers continue to proliferate. The loss comes as the FTC pursues an injunction in a hospital merger case in the Chicago area between Advocate HealthCare and NorthShore University HealthSystem. ”

“Judge  Jones rejected the FTC’s request for a preliminary injunction to stop the merger between Penn State Hershey, a 508-bed, not-for-profit health system in Dauphin County, and PinnacleHealth System, a not-for-profit, three-campus system with 607 beds, also in Dauphin County. He also slammed the FTC in his opinion for its opposition to such mergers in the current healthcare environment.

“He wrote that the FTC too narrowly defined the systems’ geographic market because the agency didn’t account for the distances many of their patients travel to reach the hospitals. He also wrote that the FTC did not include enough hospitals in its definition of the market.

He found it “compelling” that the hospitals have already worked with central Pennsylvania’s two largest insurers, CBC and Highmark, to ensure that their rates wouldn’t increase following a merger. Of course, who knows what would actually happen with those rates.

FTC puts W.Va. hospital-merger challenge on hold


Cabell Huntington Hospital.

The Federal Trade Commission will put its challenge of a West Virginia hospital merger on hold while it studies a new state law meant to protect the deal from federal antitrust scrutiny.

The FTC’s order  delays for 30 days administrative law proceedings over Cabell Huntington Hospital’s proposed acquisition of St. Mary’s Medical Center, also  in Huntington.

Modern Healthcare reported: “The order follows the recent signing of a new West Virginia law  designed to shield hospital mergers from state and federal antitrust review, assuming they get certain other state approvals. Some speculated the new law would cause the FTC to drop its challenge to the West Virginia merger all together, and that the new law could inspire more states to pass similar legislation. ”

“Withdrawing this matter from adjudication for a short period of time…will give us an opportunity to evaluate the impact, if any, of the state legislation without any adverse effects on competition or consumer interests,”  the agency said.

The publication reported that the FTC had said previously that the takeover would create a near-monopoly over acute-care inpatient hospital services and outpatient surgical services that would likely lead to higher prices and lower quality. Modern Healthcare said that the “two hospitals’ leaders have said they believe the FTC challenge ‘misreads the highly competitive landscape’ across their three-state market of Kentucky, Ohio and West Virginia” and that the merger would help the community.

FTC opposes big Pennsylvania system merger


The Federal Trade Commission  seeks  to block Penn State Hershey Medical Center’s proposed merger with PinnacleHealth System, asserting that the new central Pennsylvania  entity would raise prices and lower healthcare quality in the area.

“The proposed merger would eliminate the significant competition between these hospitals {hospital systems} resulting in higher prices and diminished quality,” said Debbie Feinstein, director of the FTC’s Bureau of Competition.

PinnacleHealth and Penn State Hershey responded by saying:

“We are extremely disappointed that the FTC does not share the enthusiasm of the many employers, community leaders, private physicians, commercial insurance providers and others who have recognized the benefits of our integration and demonstrated their broad support for it.”

The systems have asserted that the proposed merger would create “the depth of services and scale” needed to manage population health at the lowest possible cost.

But  hospital mergers have tended to be associated with higher prices in their regions as a result of less competition.

The FTC’s decision displays its continuing skepticism and frequent opposition to  hospital mergers, especially since 2007.

Deals that would give systems more than 40 percent of the market share  in their regions tend to ignite the agency’s opposition.

Johns Hopkins group warns of hospital-merger ill effects



A group of Johns Hopkins University physicians and professors has called on the Federal Trade Commission to act with more caution when considering hospital mergers.

The group, writing in the Aug. 13 JAMA, warn that hospital c0nsolidation into large chains  reduces competition that can improve care and control prices, gives patients fewer choices and could result in higher overall and individual medical expenses.

The authors want the FTC to pay particular attention to mergers that could result in creating one dominant hospital system in a region. There were 193 mergers in 2013 and 2014 and about about a fifth of U.S. hospitals are expected to seek a merger in the next five years, the authors found.

A 2013 analysis, also published in JAMA, found that none of the 306 geographic healthcare markets in the United States are considered highly competitive. Single systems dominate nearly  half of these markets.
The authors  said that “limited integration” has benefits, such as when large medical centers collaborate with smaller community hospitals to improve patient care.

Robert Wood Johnson Foundation research found  that patients living in competitive healthcare  markets have better medical outcomes and lower death rates than people in less competitive ones.


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