Antitrust Scrutiny in Healthcare Mergers: What the FTC Is Watching
The Federal Trade Commission continues to increase its scrutiny of healthcare mergers and acquisitions. Consolidation in the hospital and medical industry continues to up its pace. Regulators are taking a much more scrutinizing look at these transactions to avoid reduced competition and impacts to patient care. However, you can still move forward if you have skilled legal counsel to help you avoid common pitfalls in these mergers.
The healthcare mergers and acquisitions attorneys at Daniels, Porco & Lusardi, LLP can help you handle the FTC and work towards your goals.
What You Need to Know About the FTC’s Increased Look at Healthcare Mergers
The FTC has made it clear that healthcare consolidation is subject to antitrust enforcement. Mergers that lead to dominant market share, fewer choices for providers, or increased prices for consumers may break the Clayton Act or the Sherman Act.
Key concerns you should look out for include:
- Reduced competition in local markets, especially in rural or underserved areas.
- Increased bargaining power over payers, leading to higher reimbursement rates.
- Limited patient choice due to fewer independent providers.
- Barriers to entry for new or smaller healthcare entities.
The FTC’s focus is not just on hospital systems. It also includes physician practices, ambulatory surgery centers, behavioral health providers, and telehealth platforms.
Know What the FTC Is Looking for in Healthcare Deals
Before approving a healthcare merger, the FTC evaluates several factors:
1. Market Concentration
The FTC uses the Herfindahl-Hirschman Index (HHI) to evaluate market concentration. If a proposed merger greatly raises HHI in a specific geographic area or service market, it might lead to a second request or enforcement action.
2. Vertical Integration
Vertical deals are also under scrutiny. These includes deals like hospitals buying physician groups or a payer that decides to buy a provider.
- Concerns: These deals may foreclose competitors, restrict referrals, or create incentives for self-dealing.
- FTC focus: Whether the integration limits access to essential services or creates unfair advantages.
3. Price Effects and Reimbursement Impact
The FTC will look into whether your merger could lead to higher prices. These prices could impact insurers, government payers, and patients. The FTC will look at:
- Evidence: Historical pricing data, payer negotiations, and internal projections.
- Red flags: Mergers that increase leverage over insurers or eliminate low-cost competitors.
4. Harm to Quality and Innovation
FTC regulators will also look into whether your merger will hurt innovation in the field or harm clinical quality. They will consider care coordination and patient outcomes in making this assessment. They will also determine what risks consolidation has to care.
5. Physician and Staff Impact
The FTC also looks at how the acquisition might affect the terms of employment, labor markets, or the autonomy of physicians in the practice.
They will consider issues with non-compete clauses or reduced bargaining power should the merger be approved. They will also watch for potential monopolies over healthcare labor
Best Practices You Can Follow to Navigate FTC Review
To minimize antitrust risk, healthcare entities should:
- Conduct a pre-merger antitrust analysis with legal counsel.
- Prepare detailed market definitions and competitive impact assessments.
- Engage third-party economists to model price and quality effects.
- Maintain transparency in communications and documentation.
- Consider divestitures or behavioral remedies to address FTC concerns.
Early engagement with regulators and proactive compliance planning can significantly improve deal viability.
Recent Enforcement Trends You Should Care About
The FTC has challenged several high-profile healthcare mergers in recent years, including:
- Hospital system consolidations in California, Illinois, and New Jersey.
- Physician group acquisitions that reduced competition in specialty care.
- Digital health platform mergers with potential data monopolization risks.
Seek Assistance with Anti-Trust Scrutiny from the FTC
A healthcare merger can be an important part of your growth. However, you need to understand the risks of antitrust scrutiny before you move forward with your merger. The FTC watches closely to determine if your merger will affect patients or the medical market.
Consult with the dedicated healthcare transaction attorneys at Daniels, Porco & Lusardi, LLP for help with your case. Contact us today for a consultation.