The Federal Trade Commission and Justice Department investigated few hospital mergers and acquisitions over the past 13 years and challenged even fewer, a new government report said.
The report, released late last month by the General Accounting Office, Congress' investigative arm, supports the contention that the hospital industry's fears about antitrust enforcement may have little basis in fact.
Led by the American Hospital Association, the industry has complained that outdated federal antitrust laws and misguided enforcement policies have blocked beneficial collaborative ventures among hospitals and have "chilled" others.
In the past several years, the AHA has lobbied for antitrust relief from Congress, the administration and the two enforcement agencies, relying primarily on anecdotal reports from hospital executives (Jan. 10, p. 22).
The effort paid off with six antitrust "safety zones" issued by the agencies last fall. The safety zones immunize certain provider business arrangements, including mergers that involve small hospitals (Sept. 20, 1993, p. 3). The agencies also are expected to release antitrust guidance for provider networks (Aug. 29, p. 8).
But the GAO report suggests that the cries for help may be unfounded.
Hospitals filed 397 pre-merger notifications with the agencies from the government's 1981 fiscal year to fiscal 1993, which ended Sept. 30, 1993, the report said. Hospitals and other companies with assets above a certain threshold are required to tell the government about their merger or acquisition plans.
The FTC and Justice Department conducted preliminary antitrust investigations of 68, or 17%, of the transactions. They made detailed investigations of just 28, or 7%, of the deals, the GAO said.
Detailed investigations typically are noted by the agencies' "second request" for more documentation from hospitals.
Of the 28 second requests issued over the 13-year period examined by the GAO, the agencies cleared 13 transactions.
Seven of the remaining 15 investigations resulted in formal antitrust challenges by the agencies. Five hospitals scrapped their plans in the face of a possible challenge. The remaining three settled out of court, agreeing not to consolidate or to do so with restrictions.
In total, only 15 of the 397 transactions didn't go through because of intervention by the agencies, the GAO found.
The GAO report did not conclude whether the enforcement activity was appropriate or reflected hospitals' concerns.
The report also documented the extent to which hospitals are taking advantage of state hospital cooperation acts. Such laws or regulations give hospitals antitrust exemptions for collaborative ventures that have demonstrable community benefits. Their passage is part of the AHA's antitrust relief lobbying effort.
As of May, 18 states have placed hospital antitrust exemption laws on the books, the GAO said. However, hospitals have taken advantage of them in only three instances.