Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Connecticut AG urges passage of bill requiring notice of acquisitions, mergers of hospitals and group medical practices, (Apr 18, 2014)

By John W. Arden, J.D., LL.M.

In an April 16 report on hospital and physician practice acquisitions and hospital-based facilities fees, Connecticut Attorney General George Jepsen urged the state legislature to pass pending legislation that would require parties to acquisitions, mergers, or changes in corporate structures of hospitals and group medical practices to provide notice of such transactions. Under the proposal (SB 35), the attorney general would be required to maintain and use the information as part of antitrust investigations and enforcement capabilities.

The report examined the merger and acquisition trend that may “allow hospitals and health systems to secure market power—monopolies—that give them enhanced bargaining power over their reimbursement, which will likely lead to higher health care prices.” Acquired physican practices give hospitals a larger referral base, which in turn enhances the hospitals’ negotiating leverage with payers.

According to the report, the purpose of SB 35 is to provide the attorney general with notice of acquisitions, mergers, and joint ventures and thereby enable the office to better monitor these transactions in order to fulfill the legislative mandate of ensuring that health care markets are maintained in Connecticut. The measure also would require hospitals and hospital systems to file annual reports with the Office of the Attorney General and the Commissioner of Public Health regarding the group practices which they own or are affiliated with.

The legislation is intended to provide the Office of the Attorney General with greater insight into “the makeup of the evolving health care market in Connecticut and, where appropriate, assist the initiation of legal action to preserve competition when it is threatened.”

SB 35 is entitled “An Act Concerning Notice of Acquisitions, Joint Ventures and Affiliation of Group Medical Praices.” It was approved in a near-unanimous vote in the Public Health Committee, according to the Office of the Attorney General.

The report further examined the assessment of “facility fees” by hospitals and hospital-acquired physician practices, purportedly to cover the overhead expenses of the hospital. These fees are often expensive, surprising, and confusing to patients who had been treated by physicians prior to the acquisition of a practice group by a hospital. The attorney general supports House Bill 5337, which requires hospitals and medical practices to provide a clear and easily understood notice when they will be charged a facility fee and a separate professional fee.

News: Antitrust ConnecticutNews