Hospital mergers and acquisitions continue to garner intense scrutiny from lawmakers, with pressure likely to hold steady following the recent announcement of new antitrust guidelines and state and federal investigations into potential healthcare monopolies .
In December, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) released updated guidelines outlining the factors they consider when determining if a merger illegally monopolizes a local healthcare market or jeopardizes access to critical healthcare services.
Last week, the DOJ also announced a UnitedHealth Group antitrust probe , just months after the healthcare conglomerate’s workforce numbers indicated it is now affiliated with or employs 10% of the US physician workforce .
While the impact of the latest guidelines is yet to be seen, concerns over healthcare market consolidation are not new. Over the past two decades, mergers have attracted attention for contributing to a decline in independent hospitals, said Rachel M. Werner, MD, PhD, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, Philadelphia, Pennsylvania.
“At this point, most hospitals are operating in a pretty concentrated market,” she said.
Here are five things to know about the current state of hospital mergers.
1. Record-Breaking Merger Enforcements
The DOJ and FTC reported the highest level of enforcement activity in over 20 years in fiscal year 2022 — the latest available data. Together, the agencies filed 50 merger enforcement actions and brought a record-breaking number of merger enforcement challenges, resulting in 11 approved actions, the restructuring or abandonment of seven mergers, and six business deals entering litigation.
Included in those statistics was a proposed merger between the two largest health systems in Rhode Island, Lifespan and Care New England Health System, which was abandoned after the FTC and the state Attorney General took steps to block it. the HCA branch in Utah Healthcare abandoned plans for to acquire five Salt Lake City area hospitals from competitor Steward Health Care System, as did RWJBarnabas Health after exploring a merger with Saint Peter's Healthcare System in New Jersey.
2. New Antitrust Guidelines Consider Labor Market
The new guidelines notably focus on labor competition, said Jody Boudreault, JD, attorney and chair of the Antitrust Life Sciences and Healthcare Group at Baker Botts law firm in Washington, DC. Health professionals typically have more employment opportunities in an urban area, unless hindered by restrictive noncompete agreements , and fewer options in rural settings.
In the Lifespan merger that fell through, Ms. Boudreault said that the newly created hospital system would have employed two thirds of Rhode Island's full-time nurses, limiting opportunities for local employment elsewhere.
“Going forward, I would expect federal authorities to review not only the competitive impact of the hospitals merging but also the competitive impact of the physician, and especially nursing, workforce,” she said.
FTC Chair Lina M. Khan noted similar labor market concerns.
In a statement to Congress , she said that hospital consolidation reduces options for employees, who fear “being blacklisted from further hiring in a system that controls many of the hospitals in the area” and “makes workers afraid to file complaints, organize their workplace, or leave before the end of a contract.”