The AHA analysis looked at 316 transactions involving 551 hospitals between 2007 and 2012. The proportion of mergers with an overlap in at least one metropolitan statistical area (MSA) decreased to 32% last year from 60% in 2007, according to the report.
When the two parties were operating in the same market, almost 90% were in MSAs with at least five competitors, the report concluded. And when there were five or fewer competitors—the situation with 20 deals—most of the transactions involved a small hospital in a small community.
Those hospitals were likely to be in serious financial straits and “there were clearly tangible benefits that accrued to the community,” said Richard Pollack, AHA executive vice president. The acquired hospitals—without scale or access to capital—were at risk for closure, he said.
Nearly all hospital mergers and acquisitions undergo antitrust review, and the vast majority are approved, the AHA pointed out in the report. But the government is looking closely at these deals and has challenged four since 2011.
Kenneth Field, a former FTC lawyer who now focuses on antitrust at Jones Day, noted that even when there are multiple players in the market, regulators will focus on the extent of direct competition between the two merging parties. The FTC, he said, is especially interested in how much leverage the merging parties will have with payers.