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Senate Subcommittee Holds Hearing on Hospital Consolidation

May 28, 2021

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Allyson Perleoni, Manager, Government Relations

The Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing on May 19 titled “Antitrust Applied: Hospital Consolidation Concerns and Solutions.” The hearing focused on the impact of hospital consolidation on fair competition and consumers.

Subcommittee Chair Amy Klobuchar (D-Minn.) opened the hearing by highlighting the increasing number of physician practice acquisitions by hospitals. She noted that the economy has become more concentrated and that “we have had about 1,600 hospital mergers in this country in the last 20 years. Ninety percent of all metropolitan areas have highly concentrated hospital markets. We've also seen hospitals buying physician practices at a fast pace, and now about one-third of all doctors work for a hospital.” She also highlighted antitrust law reform, stating that “when mergers are anti-competitive, they must be stopped. That's why I have proposed legislation to reform merger law and make it easier to stop anti-competitive merger[s] before their effects hurt consumers in the form of higher cost or lower quality care.” Klobuchar also called for an increase in funding for the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division to provide them with more resources to review possible antitrust activity by hospitals.

Subcommittee Ranking Member Mike Lee (R-Utah) concurred with Klobuchar and further emphasized hospital market consolidation as a problem, stating that “concentration doesn't always lead to higher prices and lower quality, but it can and it — and it frequently has in hospital markets.” He also emphasized the government’s role in increasing consolidation, noting that “the largest drivers of hospital consolidations often come from government interventions and health care.” Additionally, Lee explained that something must be done because “antitrust enforcement is only a remedial tool.”

Testifying on behalf of the American Hospital Association, Board Chair Rod Hochman, MD, highlighted the evolving health care system, stating that hospital integration is critical “to strengthening health care in this country and ensuring every community, whether rural, urban or suburban, has access to affordable evidence-based care.” He also noted that consolidation is necessary because some hospitals face mounting financial challenges and that insurer consolidation is also a cause of hospital consolidation. “There is vigorous oversight by every level of government,” Hochman stated in response to the assertion that antitrust enforcement has been lacking.

Other witnesses disputed these claims, presenting arguments that hospital consolidation has had a negative effect on consumers. Professor Martin Gaynor, former director of the FTC Bureau of Economics, stated that “extensive research evidence shows that consolidation between close competitors results in higher prices, and patient quality of care suffers from lack of competition, including a substantially increased risk of death.” He agreed with Klobuchar that the FTC and the DOJ need more resources “so they can not only do more enforcement in existing areas, but can proactively invest to address new and developing issues.”

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