Antitrust Law Daily Wrap Up, ANTITRUST NEWS: West Virginia health care bill would harm competition, FTC staffs claim, (Mar 10, 2016)

By Greg Hammond, J.D.

Staffs of the FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics have concerns that West Virginia Senate Bill 597 (S. 597) will harm health care competition and consumers in West Virginia, according to a letter sent to state representative Mike Pushkin (D-Kanawha).

The staffs identified two sets of provisions that were troublesome—those concerning: (1) “cooperative agreements” between health care providers; and (2) “exemptions” to federal antitrust laws for health care providers.

Cooperative agreements.S. 597 contemplates exempting “cooperative agreements” from federal antitrust law, such as mergers and acquisitions among health care providers, so long as one of the providers is “a teaching hospital which is a member of an academic medical center.” The other parties to the cooperative agreement, however, need only be “one or more other hospitals, or other health care providers.”

The FTC staffs first note that the antitrust laws already allow efficient health care collaborations. Consequently, the “cooperative agreements” provisions may effectually create an undue additional regulatory barrier to procompetitive agreements. In addition, the combined effect of the cooperative agreement provisions and the exemption provisions seem unnecessary and likely harmful, the staffs claim.

“FTC staff are deeply concerned that the Bill would mainly serve to encourage mergers and conduct that likely would not pass muster under the antitrust laws because they would reduce competition, raise prices, diminish incentives to improve quality, and provide relatively small or no benefits to consumers,” the letter states. Although the cooperative agreements are supposed to include a teaching hospital, the competitive harm would originate from the loss of competition between two or more other hospitals or health care providers that are permitted to join the cooperative agreement, the staffs claim, and the anticompetitive effects might spread well beyond a teaching hospital.

Antitrust exemptions. In addition, the staffs argue that the antitrust exemption provisions that would immunize otherwise anticompetitive conduct pose a substantial risk of consumer harm and are disfavored. In particular, the staffs note once again that the antitrust laws already allow efficient and pro-consumer collaborations and mergers among competing health care providers. Consequently, the staffs conclude that, “The Bill’s apparent attempt to confer antitrust immunity is, therefore, unnecessary for legitimate collaborations and, if effective, would encourage groups of private health care providers to engage in blatantly anticompetitive conduct.”

News: Antitrust FederalTradeCommissionNews