In a panel discussion Monday afternoon at the American Health Lawyers Association annual meeting in Boston, Reilly noted the FTC's decisions this year to challenge merger plans in two separate cases: one involving ProMedica of Toledo, Ohio, and the other involving Phoebe Putney Health System of Albany, Ga. But he was quick to add that more confidence would not necessarily equal more victories.
"Hospital mergers are very difficult," Reilly said during the session titled "Powerful Hospital and Powerful Payor: What is the Antitrust Diagnosis?" "If you show any efficiencies or improvements in quality of care, we're probably going to lose. We probably should lose."
(Just hours after Reilly's comments, FTC officials learned that they had lost a key court battle on the Phoebe Putney case, but government officials have already vowed to appeal the ruling.)
Reilly said the recent high tide of merger activity among hospitals had not gone unnoticed by federal regulators. "The number of hospital mergers we're hearing about today is incredible," he said. "We have a couple mergers we are taking a look at. We haven't made up our mind, but we're taking a close look at them."
On the same panel, U.S. Justice Department Antitrust Section Assistant Litigation Chief Peter Mucchetti said regulators have been paying close attention to healthcare pricing in regions where providers or payers hold concentrated market power.
For example, United Regional Health Care System in Wichita Falls, Texas, has agreed to settle allegations that it was using its 90% share of the inpatient and outpatient surgery market to force payers into exclusive arrangements using deep price discounts.
While deep discounts are common and can be positive, Mucchetti said the United Regional case raised "red flags" because the discounts for services were below the cost of providing them, making them anticompetitive.
"Discounts are fine, so long as they're above cost," Mucchetti said.
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