When Kamala Harris was California’s prime prosecutor, she was involved that mergers amongst hospitals, doctor teams, and well being insurers may thwart competitors and result in greater costs for sufferers. If she wins the presidency in November, she’ll have a variety of choices to blunt monopolistic conduct nationwide.
The Democratic vp may affect the Federal Commerce Fee and instruct the departments of Justice and Well being and Human Providers to prioritize enforcement of antitrust legal guidelines and channel assets accordingly. Already, the Biden administration has taken an aggressive stance in opposition to mergers and acquisitions. In his first 12 months in workplace, President Joe Biden issued an govt order supposed to accentuate antitrust enforcement throughout a number of industries, together with well being care.
Beneath Biden, the FTC and DOJ have fought extra mergers than they’ve in many years, usually focusing on well being care offers.
“What Harris could do is set the tone that she is going to continue this laser focus on competition and health care prices,” mentioned Katie Gudiksen, a senior well being coverage researcher at College of California School of the Regulation, San Francisco.
The Harris marketing campaign didn’t reply to a request for remark.
For many years, the well being trade has undergone consolidation regardless of authorities efforts to take care of competitors. When well being techniques increase, including hospitals and physician practices to their portfolios, they usually achieve a big sufficient share of regional well being care assets to command greater costs from insurers. That leads to greater premiums and different well being care prices for customers and employers, in response to quite a few research.
Well being insurers have additionally consolidated in latest many years, leaving solely a handful controlling most markets.
Well being care analysts say it’s potential for Harris to gradual the momentum of consolidation by blocking future mergers that might result in greater costs and lower-quality care. However lots of them agree the consolidation that has already taken place is an inescapable function of the U.S. well being care panorama.
“It’s hard to unscramble the eggs,” mentioned Bob City, an economics professor on the College of Texas.
There have been almost 1,600 hospital mergers within the U.S. from 1998 to 2017 and 428 hospital and well being system mergers from 2018 to 2023, in response to a KFF research. The proportion of neighborhood hospitals that belong to a bigger well being system rose from 53 in 2005 to 68 in 2022. And in one other signal of market focus, as of January, nicely over three-quarters of the nation’s physicians have been employed by hospitals or companies, in response to a report produced by Avalere Well being.
Regardless of former President Donald Trump’s hostility to regulation as a candidate, his administration was energetic on antitrust efforts — although it did permit one of many largest well being care mergers in U.S. historical past, between drugstore chain CVS Well being and the insurer Aetna. General, Trump’s Justice Division was extra aggressive on mergers than previous Republican administrations.
Harris, as California’s lawyer common from 2011 to 2017, jump-started well being care investigations and enforcement.
“She pushed back against anticompetitive pricing,” mentioned Rob Bonta, California’s present lawyer common, who’s a Democrat.
One among Harris’ most impactful choices was a 2012 investigation into whether or not consolidation amongst hospitals and doctor practices gave well being techniques the clout to demand greater costs. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit in opposition to Sutter Well being, the large Northern California hospital operator, for anticompetitive conduct. Sutter settled with the state for $575 million.
In 2014, Harris was amongst 16 state attorneys common who joined the FTC in a lawsuit to dismantle a merger between one in all Idaho’s largest hospital chains and its greatest doctor group. In 2016, Harris joined the U.S. Division of Justice and 11 different states in a profitable lawsuit to dam a proposed $48.3 billion merger between two of the nation’s largest well being insurers, Cigna and Anthem.
Makes an attempt to present the state lawyer common the ability to nix or impose circumstances on a variety of well being care mergers have been fiercely, and efficiently, opposed by California’s hospital trade. Most just lately, the hospital trade persuaded state lawmakers to exempt for-profit hospitals from pending laws that will topic personal equity-backed well being care transactions to assessment by the lawyer common.
A spokesperson for the California Hospital Affiliation declined to remark.
As lawyer common of California, Harris’ work was eased by the state’s deep blue political hue. Have been she to be elected president, she may face a much less hospitable political atmosphere, particularly if Republicans management one or each homes of Congress. As well as, she may face opposition from highly effective well being care lobbyists.
Although it usually will get a nasty rap, consolidation in well being care additionally confers advantages. Many medical doctors select to affix massive organizations as a result of it relieves them of the executive complications and monetary burdens of working their very own practices. And being absorbed into a big well being system could be a lifeline for financially troubled hospitals.
Nonetheless, a serious motive well being techniques select to increase by way of acquisition is to build up market clout to allow them to match consolidation amongst insurers and cut price with them for greater funds. It’s an comprehensible response to the monetary pressures hospitals are underneath, mentioned James Robinson, a professor of well being economics on the College of California-Berkeley.
Robinson famous that hospitals are required to deal with anybody who exhibits up on the emergency room, together with uninsured folks. Many hospitals have a lot of sufferers on Medicaid, which pays poorly. And in California, they face a collection of regulatory necessities, together with seismic retrofitting and nurse staffing minimums, which might be costly. “How are they going to pay for that?” Robinson mentioned.
On the federal stage, any effort to blunt anticompetitive mergers would rely partly on how aggressive the FTC is in pursuing probably the most egregious instances. FTC Chair Lina Khan has made the FTC extra proactive on this regard.
Final 12 months, the FTC and DOJ collectively issued new merger tips, which urged the federal authorities would scrutinize offers extra carefully and take a broader view of which of them violate antitrust legal guidelines. In September, the FTC filed a lawsuit in opposition to an anesthesiology group and its personal fairness backer, alleging they’d engaged in anticompetitive practices in Texas to drive up costs.
In January, the company sued to cease a $320 million hospital acquisition in North Carolina.
Nonetheless, many transactions don’t come to the eye of the FTC as a result of their worth is under its $119.5 million reporting threshold. And even when it heard about extra offers, “it is very underresourced and needing to be very selective in which mergers they challenge,” mentioned Paul Ginsburg, a professor of the follow of well being coverage on the College of Southern California’s Sol Worth Faculty of Public Coverage.
Khan’s time period ends in September 2024, and Harris, if elected, may attempt to reappoint her, although her capacity to take action could depend upon which occasion controls the Senate.
Harris may additionally promote laws that discourage monopolistic behaviors equivalent to all-or-nothing contracting, through which massive well being techniques refuse to do enterprise with insurance coverage corporations except they comply with embrace all their services of their networks, whether or not wanted or not. That conduct was one of many core allegations within the Sutter case.
She may additionally search insurance policies on the Division of Well being and Human Providers, which runs Medicare and Medicaid, that encourage competitors.
Bonta, California’s present lawyer common, mentioned that, whereas there are unhealthy mergers, there are additionally good ones. “We approve them all the time,” he mentioned. “And we approve them with conditions that address cost and that address access and that address quality.”
He expects Harris to deliver comparable issues to the presidency if she wins.
This text was produced by KFF Well being Information, which publishes California Healthline, an editorially unbiased service of the California Well being Care Basis.
