Some amount of cognitive dissonance on the part of healthcare executives is to be expected, as pro-competition laws push back against the market power that may be gained through efforts to improve the efficiency of healthcare.
Even though healthcare executives “believe in their hearts of hearts that they will do the opposite, the antitrust laws expect that parties will exercise their economically rational power at some point,” says Mark Botti, a partner with Akin Gump Strauss Hauer and Feld in Washington and a former chief of litigation for the U.S. Justice Department's Antitrust Division, which regulates healthcare companies.
“If markets are well-defined and you know that you are going to have substantial market share after the transaction, and that market concentration is going to increase after the transaction, you can readily predict that you are going to draw some level of antitrust scrutiny,” Botti says.
No less an authority than the U.S. Supreme Court is expected to rule this year on whether a public hospital in Albany, Ga., was granted legal immunity from antitrust scrutiny, enabling it to consolidate the city's only two hospitals under a single operator called Phoebe Putney Health System.
The hospitals say the $200 million transaction was legal, while the Federal Trade Commission accuses Phoebe officials of using public ownership to illegally shield a hospital monopoly from review. The high court heard oral arguments in November, but any decision is likely to deal with somewhat narrow questions that could affect publicly run hospitals and a legal principle known as “state-action immunity” from antitrust laws.