Hospital consolidation needs new antitrust approach, policymakers say
Beth McCracken claims that a contract dispute between Highmark Health and University of Pittsburgh Medical Center delayed her care and ultimately caused her cancer to metastasize.
McCracken, who was covered by Highmark, started feeling severe pain in the left side of her face in 2013, when she was diagnosed with trigeminal neuralgia. She was referred to UPMC Neurosurgery Associates for multiple brain surgeries, among other procedures, but the pain continued.
The neurosurgeon referred her to UPMC Eye & Ear Institute, but she was barred from any additional UPMC providers, McCracken said, noting that Highmark and UPMC were set to sever most referral services per a consent decree. In early 2018, her dermatologist discovered cancer in her left ear, indicating that she was misdiagnosed.
“I could not help but believe that had I had access to the doctors at Eye & Ear sooner, I might actually still have both (of my ears),” McCracken told policymakers Wednesday at a Senate Competition Policy, Antitrust and Consumer Rights subcommittee hearing. “The lack of access to care because of the insurance card you carry can literally be a matter of life and death.”
The cancer had metastasized to her lungs within the same year of her diagnosis, unlike the typical to five- to 10-year time frame, McCracken said, pointing to the delays in her care as the culprit.
Highmark and UPMC, which did not immediately respond to requests for comment, reached an agreement in 2019 before the consent decree expired to continue reciprocal services.
But these types of disputes are more common as hospital markets increasingly become more concentrated, lawmakers said, noting that about 90% of acute-care markets in metro areas are highly concentrated. Policy experts offered a range of solutions to try to restore the competitive balance and prevent anticompetitive transactions.
They recommended strengthening the Federal Trade Commission and Department of Justice so they can review more transactions. Federal regulators should require reporting of small transactions that fall under the current threshold, revise old policies that incentivize consolidation and market imbalance, and develop a national healthcare database on spending, utilization, prices and ownership models, said Martin Gaynor, professor of economics and health policy at Carnegie Mellon University.
Site-neutral policy should be implemented to level payments across independent practices and hospital-owned outpatient departments, said Michael Cannon, director of health policy studies at the Cato Institute. A panel of appellate judges ruled in July that HHS’ site-neutral payment policy for 2019 could go forward, overturning a lower court decision. The case is headed to the Supreme Court.
States can repeal certificate of need laws, overhaul clinician licensing regulations and remove network adequacy laws that stifle competition and innovation, Cannon said.
Federal regulators should also repeal the antiquated Stark law, which bans physicians self-referrals but also favors corporate-owned enterprises, said Dr. Brian Miller, assistant professor of medicine at Johns Hopkins School of Medicine, who also advocated for physician-owned hospitals.
Miller and Gaynor agreed that the FTC and DOJ can’t keep up with the increasing rate of hospital transactions, of which there were 1,600 over the past 20 years.
“The amount of horizontal merger filings skyrocketed over time and the agencies’ budgets have been flat,” said Gaynor, whose research shows that prices were 12% higher in monopoly markets compared to those with four or more competing hospitals, while quality stagnated or declined. “They need more resources to keep up with the issues they are facing both in the hospital sector and more broadly.”
Hospital care accounts for nearly a third of the U.S.’ $3.8 trillion healthcare bill, which makes up nearly a fifth of the economy. Research has linked hospital mergers and acquisitions, as well as hospital acquisitions of physician groups, with higher prices and lower quality.
“The lack of choice and competition is one of the biggest harms to patients,” Miller said.
The American Hospital Association refutes those claims, pointing to a self-commissioned study that found that mergers reduced operating costs and improved quality. The AHA also said that scale was essential to combat the COVID-19 pandemic.
Sen. Amy Klobuchar (D-Minn.) co-authored a bill that recently passed the Senate Judiciary Committee, which would bolster antitrust enforcement.
It would add $300 million to each of the DOJ and FTC’s budgets, increase merging filling costs for the largest transactions, update the standard for permissible mergers, shift the burden of proof to the merging parties, establish an independent division to conduct market studies and merger retrospectives, and prohibit exclusionary conduct like all-or-nothing contracts, among other provisions.
“When someone is sick, one of the last things they want to hear is that their hospital has been bought and they no longer have access to the doctors they trust,” Klobuchar said. “These are real human costs and we need to talk about how they relate to hospital consolidation and market power.”