Despite hundreds of mergers that have taken place between not-for-profit hospitals in the past several years, including the now-final Grand Rapids, Mich., merger, representatives of the sector once again are asking U.S. lawmakers for special antitrust treatment.
Previous efforts have resulted in more lenient and less confusing antitrust enforcement policies for all providers.
While some lawmakers express sympathy for the alleged plight of not-for-profit hospitals, a serious effort to change federal law appears unlikely.
Following a hearing last week on hospital mergers, Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) said, "It certainly does look like" different standards are needed for mergers of not-for-profits than deals involving for-profits.
Hatch said he might support legislation to establish different standards, although healthcare sources said antitrust legislation is unlikely.
The judiciary committee called the hearing in connection with the Senate's passage of a measure barring the continuation of a Federal Trade Commission challenge of the Grand Rapids deal (See story, this page).
That measure is contained in a fiscal 1998 appropriations bill passed by the Senate. The House's appropriations bill, which is pending, doesn't contain the Grand Rapids provision.
Although the committee hearing was intended as a general informational session about antitrust oversight of hospital mergers, not-for-profit hospital advocates used the opportunity to call for different enforcement standards for their constituencies.
Most of the witnesses testifying were connected to not-for-profit hospitals that have had their mergers delayed by antitrust challenges from the FTC (See chart).
No representatives of the for-profit hospital sector testified, and no executives from not-for-profit hospitals that had their mergers pass antitrust muster testified.
Most of the witnesses argued for different standards because they said merging not-for-profit hospitals tend to lower prices after consolidation, while for-profit hospitals tend to raise prices after buying not-for-profits.
Merging not-for-profits are less likely to raise prices, they said, because not-for-profits don't have as strong a motive to maximize profits and because they have community boards comprising local employers who want to keep healthcare costs as low as possible (See related story, p. 9).
Without different standards, they said, the FTC and U.S. Justice Department are more likely to stand in the way of mergers between not-for-profits in the same community. If antitrust clearance is more difficult, not-for-profits may opt to sell out to for-profit chains, they said.
"We're looking for some recognition from the (antitrust enforcement) agencies that nonprofit hospitals may have different economic incentives than for-profit institutions," said William Kopit, the attorney representing the Grand Rapids hospitals.
The Federation of American Health Systems, which represents the for-profit sector, passed on an offer to testify because it didn't want to get involved in a debate between not-for-profit and investor-owned hospitals, said Thomas Scully, the federation's president and chief executive officer.