Anti-competitive Business Practices Talking Points

The Issue:

• A wide body of research has shown that provider consolidation leads to higher health care prices for private insurance. An analysis of data from employer-sponsored coverage found that hospitals that do not have any competitors within a 15-mile radius have prices that are 12% higher than hospitals in markets with four or more competitors.
• Large health care systems use their size to leverage higher payments in contract negotiations with insurers. In many cases, they use their leverage to engage in anti-competitive contracting. For example, hospital systems may require that insurers include all hospitals in their system in a provider network if the insurer wants any hospitals included. This can lead to higher cost hospitals being in a provider network even when there are lower cost hospitals nearby.
• At the federal level, the Federal Trade Commission (FTC) is charged with reviewing hospital mergers. In the past, the FTC has blocked some hospital and physician mergers, but the overall health care market has continued to become increasingly consolidated.

Why It’s Important:

• Our health care system is rife with economic distortions, including inadequate competition, opaque pricing, uninformed consumers and a lack of actionable measures of quality. Where markets have failed entirely or where there is no market, federal policymakers have a responsibility to directly manage prices, with an emphasis on strengthening competition.
• Employers must work together for stronger health care anti-trust enforcement, including prohibitions on anti-competitive practices, to address the problems of industry consolidation, market power and high prices.
• Consolidation among provider organizations is likely to gain momentum as larger hospitals and health systems continue to acquire smaller entities weakened by the pandemic.
• While provider consolidation holds the promise of greater efficiencies and better care coordination, evidence of the benefits of improved quality after a merger are mixed at best, and some studies suggest that market consolidation can actually led to lower quality care.

What We Want:

• We are urging the FTC to  carefully scrutinize any proposed health care provider mergers – both vertical and horizontal integration – to ensure that the merger actually is in the best interests of the communities in which these providers operate.
• We are urging Congress to ban anti-competitive contracting terms in contract negotiations between hospital systems and health plans. Section 302 of the Lower Health Care Costs Act of 2019 provides a strong model.