Members of Congress to Closely Examine Hospital System Consolidation

An influential House lawmaker intends to start crafting legislation allowing the Federal Trade Commission to more easily punish anticompetitive behavior in the healthcare industry, according to a news report in Bloomberg Law online. The March 11 article, by Bloomberg Law reporter Shira Stein, reports that “Rep. David Cicilline (D-R.I.), the chairman of the House Judiciary antitrust subcommittee, said in an interview that he is going to start working on legislation based on recommendations from economics professors and researchers at a recent hearing.”

That hearing, which carried the subject line, “Diagnosing the Problem: Exploring the Effects of Consolidation and Anticompetitive Conduct in Health Care Markets,” was held on Thursday, March 7, in the Rayburn House Office Building. It was a House Judiciary Committee meeting. Its featured witnesses included Dr. Fiona Scott Morton, a professor of economics in the Yale School of Management; Dr. martin Gaynor, a professor of economics and health policy at Carnegie Mellon University; Michael Kades, director of markets and competition policy at the Washington Center for Equitable Health; and Dr. Craig Garthwaite, a research professor in the Kellogg School of Management at Northwestern University.

At the hearing, according to Stein, Professor Morton said that courts typically push back on what the Federal Trade Commission (FTC) considers anticompetitive practices because the law is unclear; but, that, with more guidance, the FTC could more easily go after those violations. Meanwhile, Cicilline told Bloomberg Law that his top priority is allowing the FTC to recoup through a process known as disgorgement the money that companies have obtained through their anticompetitive behavior, “to really be sure the penalties are felt by the bad actors.”

The FTC is unable to pursue the anticompetitive conduct of nonprofit hospitals under current laws—it can only examine mergers—but the pace of hospital mergers has quickened in recent years, with over 1,600 hospital mergers taking place from 1998 to 2017, according to the American Hospital Association.

Cicilline is not alone in looking at healthcare consolidation as a concern. Senate Finance Committee Chairman Charles Grassley (R-Iowa) is also looking into how nonprofit hospitals are earning their tax-exempt status and how the Internal Revenue Service is enforcing those standards. The Bloomberg Law report quotes Cicilline as stating that he was planning to discuss working together on the issue with Grassley.