When Kamala Harris was California’s high prosecutor, she was involved that mergers amongst hospitals, doctor teams, and well being insurers might thwart competitors and result in increased costs for sufferers. If she wins the presidency in November, she’ll have a variety of choices to blunt monopolistic habits nationwide.
The Democratic vp might affect the Federal Commerce Fee and instruct the departments of Justice and Well being and Human Companies to prioritize enforcement of antitrust legal guidelines and channel sources accordingly. Already, the Biden administration has taken an aggressive stance towards mergers and acquisitions. In his first yr in workplace, President Joe Biden issued an government order supposed to accentuate antitrust enforcement throughout a number of industries, together with well being care.
Underneath Biden, the FTC and DOJ have fought extra mergers than they’ve in a long time, usually concentrating on well being care offers.
“What Harris might do is ready the tone that she goes to proceed this laser concentrate on competitors and well being care costs,” mentioned Katie Gudiksen, a senior well being coverage researcher at College of California Faculty 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 methods broaden, including hospitals and physician practices to their portfolios, they usually acquire a big sufficient share of regional well being care sources to command increased costs from insurers. That ends in increased premiums and different well being care prices for shoppers and employers, in keeping with quite a few research.
Well being insurers have additionally consolidated in current a long time, leaving solely a handful controlling most markets.
Well being care analysts say it’s potential for Harris to sluggish the momentum of consolidation by blocking future mergers that would result in increased costs and lower-quality care. However lots of them agree the consolidation that has already taken place is an inescapable characteristic of the U.S. well being care panorama.
“It’s arduous to unscramble the eggs,” mentioned Bob City, an economics professor on the College of Texas.
There have been practically 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 keeping with a KFF examine. The share of group 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, properly over three-quarters of the nation’s physicians had been employed by hospitals or firms, in keeping with a report produced by Avalere Well being.
Regardless of former President Donald Trump’s hostility to regulation as a candidate, his administration was lively 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. Total, Trump’s Justice Division was extra aggressive on mergers than previous Republican administrations.
Harris, as California’s legal professional normal from 2011 to 2017, jump-started well being care investigations and enforcement.
“She pushed again towards anticompetitive pricing,” mentioned Rob Bonta, California’s present legal professional normal, who’s a Democrat.
One in every of Harris’ most impactful choices was a 2012 investigation into whether or not consolidation amongst hospitals and doctor practices gave well being methods the clout to demand increased costs. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit towards Sutter Well being, the large Northern California hospital operator, for anticompetitive habits. Sutter settled with the state for $575 million.
In 2014, Harris was amongst 16 state attorneys normal who joined the FTC in a lawsuit to dismantle a merger between considered one of Idaho’s largest hospital chains and its largest 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 legal professional normal the ability to nix or impose situations on a variety of well being care mergers have been fiercely, and efficiently, opposed by California’s hospital trade. Most lately, the hospital trade persuaded state lawmakers to exempt for-profit hospitals from pending laws that will topic non-public equity-backed well being care transactions to assessment by the legal professional normal.
A spokesperson for the California Hospital Affiliation declined to remark.
As legal professional normal of California, Harris’ work was eased by the state’s deep-blue political hue. Have been she to be elected president, she might face a much less hospitable political surroundings, particularly if Republicans management one or each homes of Congress. As well as, she might 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 hitch massive organizations as a result of it relieves them of the executive complications and monetary burdens of operating their very own practices. And being absorbed into a big well being system is usually a lifeline for financially troubled hospitals.
Nonetheless, a serious purpose well being methods select to broaden via acquisition is to build up market clout to allow them to match consolidation amongst insurers and discount with them for increased 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 individuals. Many hospitals have numerous 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 degree, any effort to blunt anticompetitive mergers would rely partly on how aggressive the FTC is in pursuing essentially the most egregious instances. FTC Chair Lina Khan has made the FTC extra proactive on this regard.
Final yr, the FTC and DOJ collectively issued new merger tips, which advised the federal authorities would scrutinize offers extra intently and take a broader view of which of them violate antitrust legal guidelines. In September, the FTC filed a lawsuit towards an anesthesiology group and its non-public fairness backer, alleging that they had 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 rather underresourced and needing to be very selective wherein mergers they problem,” 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, might attempt to reappoint her, although her capability to take action might rely on which celebration controls the Senate.
Harris might additionally promote laws that discourage monopolistic behaviors akin to all-or-nothing contracting, wherein massive well being methods refuse to do enterprise with insurance coverage firms except they comply with embody all their amenities of their networks, whether or not wanted or not. That habits was one of many core allegations within the Sutter case.
She might additionally search insurance policies on the Division of Well being and Human Companies, which runs Medicare and Medicaid, that encourage competitors.
Bonta, California’s present legal professional normal, mentioned that, whereas there are dangerous mergers, there are additionally good ones. “We approve them on a regular basis,” he mentioned. “And we approve them with situations that tackle value and that tackle entry and that tackle high quality.”
He expects Harris to carry related issues to the presidency if she wins.
This text was produced by KFF Well being Information, which publishes California Healthline, an editorially impartial service of the California Well being Care Basis.
bwolfson@kff.org,
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pgalewitz@kff.org,
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