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FTC Commissioner Warns Hospital Mergers Will Be Closely Scrutinized In 2020

By Mark Prvulovic - Jan 17, 2020 at 3:00PM

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This could be a major setback for top hospital operators.

Federal Trade Commissioner Christine Wilson said on Thursday at a conference that the regulatory body will be monitoring potential hospital mergers more closely as part of a larger strategy of trying to improve competitiveness in the industry.

Speaking at an event hosted by the Council for Affordable Health Coverage, Wilson mentioned that the agency will be retrospectively evaluating past mergers and whether they truly managed to reduce costs as originally claimed. She also said the agency aims to give mid-level medical practitioners more flexibility in terms of [anti-competitive] practice laws and that the FTC will push to keep biosimilars available on the market. 

Picture of a hospital against a clear blue sky.

Image source: Getty Images.

Many healthcare groups, including the Council for Affordable Health Coverage, have warned that hospital consolidations haven't led to a decrease in costs, as initially expected. Instead, they argue that hospital prices have risen without seeing a corresponding increase in the quality of service.

What this means for hospital operators

This isn't the first time that someone from the FTC has argued for tougher hospital merger reviews. In May 2019, FTC Commissioner Rebecca Kelly Slaughter made a similar argument, stating that the agency can't enforce antitrust laws against non-profits and that the FTC should be "as aggressive as possible" in regulating healthcare competition.

For major hospital facility operators, this means that it'll likely be harder to gain FTC approval for acquisitions in the future. Healthcare investors shouldn't expect to see big deals coming soon from companies such as HCA Healthcare (HCA -1.53%), which made a $1.5 billion acquisition last year. While there's a difference between for-profit hospital operators such as HCA and non-profit healthcare providers, both will likely be adversely affected by a more acquisition-adverse FTC.

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