The Federal Trade Commission has taken special interest in mergers and acquisitions in the healthcare space and the role increasingly bigger companies play when it comes to healthcare costs and quality of services.
Specifically, the FTC issued orders to five health insurance companies and two health systems to turn over information for the agency to study the regulatory regimes known as certificates of public advantage (COPAs), which are meant to displace competition among healthcare providers and are adopted by state governments.
Aetna, Anthem, BlueCross BlueShield of Tennessee, Cigna and United Healthcare, as well as Ballad Health and Cabell Huntington Hospital have been asked to supply aggregated patient billing and discharge data, hospital employee wage data and other information.
The agency wants to know the effects of COPAs on prices, quality, access, innovation of healthcare services and the impact of hospital consolidation on employee wages.
How hospital and health system mergers impact healthcare prices and quality of services has been a question for some time. Last year lawmakers from the Congressional Energy & Commerce Committee urged the Medicare Payment Advisory Commission (MedPAC), an independent commission that evaluates Medicare payments and financial incentives, to research the effects of consolidation with respect to higher costs to the Medicare program and beneficiaries.
The focus on analyzing consolidation comes at a time when M&A deals in the field have skyrocketed over the past several years. Vertically consolidated hospitals increased 21% from 2007 to 2012, according to figures from the Government Accountability Office (GAO) cited by the Congressional committee. A 2018 report from Kaufman Hall found 2017 was a record year for hospital and health system transactions with 115 deals.
And information about the impact has been conflicting; industry-backed studies show hospital mergers reduce costs and boost quality, while others studies reveal rising hospital prices are the main contributor to higher healthcare costs overall.
The past few years have seen a number of significant mergers across the healthcare landscape:
Centene’s acquisition of WellCare
CVS Health’s $69 billion takeover of health insurer Aetna
Cigna’s $67 billion purchase of Express Scripts
Advocate Health Care’s merger with Aurora Health Care
Community Health System’s $6.7 billion merger with hospital chain Health Management Associates
The FTC staff has been engaged in an ongoing policy project to assess the effects of COPAs, and the agency held a public workshop to present its research on price effects of three COPAs in June 2019. The workshop also enabled the agency to listen to stakeholder experience with COPAs, which will be incorporated into the current study design. The agency will collect information for several years and publicly report its findings.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."