Hospital Mergers in an Era of Quality Improvement (original) (raw)
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Antitrust, Health Care Quality, and the Courts
Columbia Law Review, 2002
Antitrust law represents the principal legal tool that the United States employs to police private markets, yet it often relegates quality and nonprice considerations to a secondary position. While antitrust law espouses the belief that vigorous competition will enhance quality as well as price, little evidence exists of the practical ability of courts to deliver on that promise. In this Article, Professors Hammer and Sage examine American health care as a vehicle for advancing understanding of the nexus among competition, quality, and antitrust law. The Article reports the results of a comprehensive empirical review of judicial opinions in health care antitrust litigation between 1985 and 1999, with specific attention to courts' handling of quality and other nonprice concerns. Professors Hammer and Sage conclude that, although antitrust law cannot be expected to serve as the sole oversight mechanism for industries as complex and quality dependent as health care, courts have been successful incorporating some nonprice factors into antitrust analysis.
2002
Antitrust law represents the principal legal tool that the United States employs to police private markets, yet it often relegates quality and nonprice considerations to a secondary position. While antitrust law espouses the belief that vigorous competition will enhance quality as well as price, little evidence exists of the practical ability of courts to deliver on that promise. In this Article, Professors Hammer and Sage examine American health care as a vehicle for advancing understanding of the nexus among competition, quality, and antitrust law. The Article reports the results of a comprehensive empirical review of judicial opinions in health care antitrust litigation between 1985 and 1999, with specific attention to courts' handling of quality and other nonprice concerns. Professors Hammer and Sage conclude that, although antitrust law cannot be expected to serve as the sole oversight mechanism for industries as complex and quality dependent as health care, courts have been successful incorporating some nonprice factors into antitrust analysis.
Competing on Quality of Care: The Need to Develop a Competition Policy for Health Care Markets
SSRN Electronic Journal, 2000
As American health care moves from a professionally dominated to a marketdominated model, concerns have been voiced that competition, once unleashed, will focus on price to the detriment of quality. Although quality has been extensively analyzed in health services research, the role of quality in competition policy has not been elucidated. While economists may theorize about non-price competition, courts in antitrust cases often follow simpler models of competition based on price and output, either ignoring quality as a competitive dimension or assuming that it will occur in tandem with price competition. This unsystematic approach is inadequate for the formulation of policy in the health care industry, where quality is a central concern of both consumers and society. Instead, courts need a framework with which to analyze the implications for quality of various market structures and to understand the welfare implications of proposed market changes. A competition policy would seek to evaluate the potential for private markets to protect and improve quality in the health care system. This Article describes the present role of antitrust law in medical markets, explores the issues that would be confronted in developing a competition policy and outlines a research agenda that would begin to accomplish that task.
Questioning Traditional Antitrust Presumptions: Price and Non-Price Competition in Hospital Markets
SSRN Electronic Journal, 2003
Hospital mergers challenge basic assumptions about the effects of market power in the health care industry. Antitrust courts have struggled with claims that hospital mergers may in fact reduce costs and lower prices. This Article assesses the validity of these economic claims in the context of an industry that has undergone radical transformations in recent years. The Article also explores how such arguments should be treated as a matter of antitrust doctrine in an area of the law that relies heavily on market share presumptions and rule-based decision making. The Article contends that courts should employ a total welfare standard of merger review and attempt to directly assess the value of non-price competition. The Article further argues that courts should avoid focusing exclusively on consumer surplus and should reject hospital overtures to entertain a variety of non-economic justifications for merger.
Health Affairs, 2021
States can challenge proposed hospital mergers by using antitrust laws to prevent anticompetitive harms. This observational study examined additional state laws-principally charitable trust, nonprofit corporation, health and safety, and certificate-of-need laws-that can serve as complements and substitutes for antitrust laws by empowering states to be notified of, review, and challenge proposed hospital mergers through administrative processes. During the period 2010-19, 862 hospital mergers were proposed, but only forty-two (4.9 percent) were challenged by states, including thirty-five by states without federal involvement, of which twenty-five (71.4 percent) originated in the eight states with the most robust merger review authority. The twenty-five challenges resulted in two mergers being blocked; three being abandoned; and twenty being approved with conditions, including seven with competitive-impact conditions. Hospital market concentration and prices increased at similar rates in these eight states versus other states, potentially because most challenges allowed mergers to proceed with conditions that did not adequately address competitive concerns. Although these findings do not reveal an optimal state framework, elements of advanced state merger review authority may have the potential to improve poorly functioning hospital markets. H ealth care provider markets in the United States have consolidated into large hospital and health systems. 1 During 1998-2017, 1,577 hospital mergers occurred, 2 which contributed to 95 percent of hospital markets-defined as Metropolitan Statistical Areas (MSAs)-being highly concentrated in 2018. 3 Although horizontal hospital mergers and acquisitions could theoretically generate cost savings that are passed on to purchasers and improve quality, studies have found mixed or the opposite results: Consolidation is inconsistently associated with cost reductions 4 but is strongly associated with higher prices and similar or reduced quality. 5-9 Evidence is emerging that cross-market hospital mergers can also lead to higher prices. 10 Higher hospital market concentration has also been associated with higher Affordable Care Act Marketplace premiums 11,12 and reductions in wage growth. 13 Although concentration in health care markets has increased dramatically since the early 1990s, 2,3,5,14 much of it has occurred with little to no antitrust scrutiny. 2,15,16 At the federal level, the Department of Justice (DOJ) and Federal Trade Commission (FTC) monitor market conduct, review proposed mergers, and engage in enforcement activities to foster competition. 17 However, limited time and resources prevent federal anti
Journal of Health Politics, Policy and Law, 2006
In this article, I use the Federal Trade Commission and the Department of Justice 2004 report Improving Health Care: A Dose of Competition as an occasion to comment on two specific issues that have arisen in health care antitrust: the recent string of losses by the enforcement agencies in hospital merger cases and an antitrust exemption for physicians to bargain collectively with health insurers. One of the more salient facts about health care antitrust enforcement is the notable recent lack of success of the enforcement agencies in hospital merger cases. This may be due to judges and juries holding views of hospital markets as being different from markets for other goods and services. My conclusion is that hospitals are an industry with unique attributes, but nothing about the specifics of the health care industry suggests that the unregulated use of market power in this industry is socially beneficial. As a consequence, the antitrust laws should be enforced here as in any other industry. Countervailing power is an issue that has come to the fore in health care antitrust. Physicians have explicitly asked for legislative exemption from the antitrust laws in order to bargain collectively with insurance companies, as a means of counteracting insurers' monopsony power. It is not clear that health insurers possess significant monopsony power. Even if they do, bestowing monopoly power on physicians will not necessarily improve matters. Active antitrust enforcement in insurance markets is the correct response, not blanket exemptions for providers.
International journal of health care finance and economics, 2004
The literature on hospital competition and quality is young; most empirical studies have focused on few conditions and outcomes. Measures of in-hospital mortality and complications are susceptible to bias from unmeasured severity and transfer/discharge practices. Only one research team has evaluated related process and outcome measures, and none has exploited chart-review or patient survey-based data. Prior studies have generated inconsistent findings, suggesting the need for additional research. We describe the strengths and limitations of various approaches to quality measurement, summarize how quality has been operationalized in studies of hospital competition, outline three mechanisms by which competition may affect hospital quality, and propose measures appropriate for testing each mechanism.
Impact of hospital mergers: a systematic review focusing on healthcare quality measures
European Journal of Public Health, 2022
Background Despite mergers have increasingly affected hospitals in the recent decades, literature on the impact of hospitals mergers on healthcare quality measures (HQM) is still lacking. Our research aimed to systematically review evidence regarding the impact of hospital mergers on HQM focusing especially on process indicators and clinical outcomes. Methods The search was carried out until January 2020 using the Population, Intervention, Comparison and Outcome model, querying electronic databases (MEDLINE, Scopus, Web Of Science) and refining the search with hand search. Studies that assessed HQM of hospitals that have undergone a merger were included. HQMs were analyzed through a narrative synthesis and a strength of the evidence analysis based on the quality of the studies and the consistency of the findings. Results The 16 articles, included in the narrative synthesis, reported inconsistent findings and few statistically significant results. All indicators analyzed showed an in...