The Federal Trade Commission has finally started cracking down on hospital mergers, and not a moment too soon. The WSJ reports that a panel of three judges in a Cincinnati appeals court sided against an Ohio hospital yesterday. Toledo hospital system ProMedica tried to merge with a local community hospital in 2010, but the FTC quickly stepped in:
The Federal Trade Commission moved to block the merger under an antitrust statute, claiming the deal would allow ProMedica to jack up prices for in-patient services. The health system countered that it was doing the Toledo metropolitan area a service by rescuing a struggling hospital from insolvency.“[T]he Commission had every reason to conclude that, as ProMedica’s dominance in the relevant markets increases … so too does ProMedica’s leverage in demanding higher rates,” said the Sixth Circuit ruling.
ProMedica has vowed to continue the fight in higher courts, but this ruling still marks an important victory for the FTC and for health care consumers. Consolidation invariably increases the market power of hospital chains and puts insurance companies at a disadvantage when negotiating prices for their customers. The FTC has been reluctant to apply antitrust legislation to hospitals in the past, partly because the public holds hospitals in high esteem. As a result, hospitals grew and grew and their patients paid more and more. If the FTC has grown more diligent in protecting consumer interests in the health care marketplace, that is good news indeed.