Healthcare Business News

AHIP urges court to back FTC in ProMedica case

By Joe Carlson
Posted: December 1, 2012 - 12:01 am ET

The trade group for U.S. health plans has registered its opinion in one of the hardest-fought hospital mergers in a decade, urging the 6th U.S. Circuit Court of Appeals to support the Federal Trade Commission's intent to undo ProMedica's 2010 acquisition of St. Luke's Hospital in Maumee, Ohio.

America's Health Insurance Plans said the court should bear in mind scholarly studies that have found that increased consolidation among healthcare providers leads to higher prices and fewer healthcare options for local businesses and consumers—commentary that comes amid a national wave of consolidations and a corresponding uptick in scrutiny by regulators.

"Doubtless there are a number of reasons explaining why some past hospital consolidations tended to result in higher prices," AHIP's recent friend-of-the-court brief on the case says (PDF). "But consistent, well-established and current scholarship shows that one factor is that hospitals in more concentrated markets are able to negotiate higher rates from health plans."

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The hospitals' trade group, the American Hospital Association, also has opined in the case, defending St. Luke's rationale for seeking membership in a larger health system as a rational and appropriate response to tough market conditions and costly federal mandates.

In its Sept. 24 friend-of-the-court filing, the AHA cited three factors as exacerbating already-difficult circumstances for hospitals: reimbursement reductions, electronic health-record mandates and increasingly skeptical capital markets.

"For many hospitals—particularly stand-alone hospitals—merging with another hospital or system may be the only hope for remaining competitive in the future," the AHA wrote (PDF). "That is important because effective delivery of high-quality care to a community depends on the hospital's ability to succeed in an increasingly competitive environment. Indeed, changes in the field are prompting a 'national explosion of consolidation' in the healthcare industry."

In March 2012, the FTC voted to order Toledo, Ohio-based ProMedica to divest St. Luke's because the deal—called a "joinder" in legal records—would "substantially lessen competition and increase prices" for general acute-care inpatient services and inpatient obstetrical services. The FTC calculated that ProMedica would control 58% of the local market for inpatient hospital care and 81% of the market for obstetrical services.

Oral arguments in ProMedica Health System v. Federal Trade Commission have not yet been scheduled but are expected to take place sometime before summer of 2013.

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