Hospital Mergers

In an article in New York Times, the Supreme Court gave power to the Federal Trade Commission or FTC to block hospital mergers so it could limit the authority of public hospital management from immunity to federal antitrust laws. The undivided decision renewed the power of the F.T.C. to task the merging of the only two medical centers in Albany, Ga. Some professionals said the decision could mean that medical centers will have to be more aware of antitrust concerns when they get together with other medical service suppliers to form so-called responsible care companies, as known for in the new medical care law. “I think this is going to restrict one of the collections of protection that the A.C.O.’s will have,” said David Dranove, lecturer of wellness market control at the Kellogg School of Management at Northwestern School.

Various medical centers are consolidating now, often disagreeing that mixing increases the range of services and makes them more effective. But merging can also increase the hospitals’ influence with insurance suppliers, resulting in higher prices. In the Georgia situation, the F.T.C. had tried to prevent the acquisition of HCA Holdings’ Palmyra Medical Center by Phoebe Putney Memorial Hospital, which is owned by the Hospital Authority of Albany-Dougherty County.

States are usually exempted from government antitrust regulations, and that resistance can increase to regional government regulators. Both the Federal District Court in Georgia and the Court of Appeals for the Eleventh Circuit decided that the Albany deal was exempt because it was under the auspices of the county hospital authority. But the Supreme Court said that regional government regulators be eligible for a antitrust resistance only when they are acting pursuant to a clearly articulated state plan to restrict competitors. And that was not the situation in Georgia. “We hold that Atlanta has not clearly articulated and affirmatively indicated a plan to allow hospital regulators to make products that considerably reduce competitors,” Rights Sonia Sotomayor had written for a legal court.

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