As Part of Antitrust Efforts, FTC Asks Hospitals To Submit Merger Information

The Federal Trade Commission is "demanding" documents related to several mergers between major medical centers as part of its continuing efforts to step up inquiries into possible antitrust violations in the health care industry, the Wall Street Journal reports (Wysocki, Wall Street Journal, 9/26). Last month, FTC Chair Timothy Muris said the agency would increase its focus on past mergers involving health care providers to ensure that the arrangements benefit patients and do not simply result in higher profits. The increased scrutiny appears to have been prompted largely by a sharp rise in health care costs and a belief that recent mergers have given hospitals more clout in negotiating higher prices with health plans because of a lack of competition. As part of its initiative, the FTC has increased its spending on health care antitrust efforts by 50% (Kaiser Daily Health Policy Report, 8/9). Although Muris would not confirm any specific FTC investigations, the Journal reports the agency has issued a "civil investigative demand" -- similar to a subpoena -- to obtain documents relating to a January 2000 merger between Evanston Northwestern Healthcare and Highland Park Hospital, two not-for-profit providers in the Chicago suburbs. FTC investigators have asked for documents from as early as 1998 that pertain to details of the merger and the operating specifics of the combined entity. The FTC has not filed an official antitrust complaint against the hospitals, according to Evanston Northwestern Senior Vice President David Loveland. Muris confirmed that the agency has yet to file any complaints and said it is "still in the early stages of studying several completed mergers," the Journal reports (Wall Street Journal, 9/26).

Boston Merger
In related news, the New York Times on Sept. 26 looks at how at the merger between two of Boston's largest medical centers, Massachusetts General and Brigham and Women's hospitals, "illustrates the remarkable shift in the dynamics of health care." The merger "promised to help stem the rise in health care costs" by reducing duplicate services and limiting overhead expenses, but employers and state regulators now wonder whether some facilities "abus[e] the market power they have gained through consolidation," the Times reports. According to Helen Darling, president of the Washington Business Group on Health, consolidation among hospitals is "strongly aggravating" health care expenses. With a greater percentage of the market share, Mass General now "appears to be among the most aggressive [in Boston] in seeking higher prices," according to the Times. However, some officials say hospital mergers are "simply making up for years in which the health plans" had an economic advantage, the Times reports. Stuart Altman, a professor at Brandeis University and the co-chair of a state task force on health care costs, said that mergers allow hospitals to "climb out much faster" from their history of low reimbursements. Mass General President Dr. James Mongan, who will become Partners CEO next year, said Partners does not have "special influences in the marketplace," adding, "We weren't able to get a blank check from payors" (Abelson, New York Times, 9/26).