Federal regulators' decision to remove longstanding antitrust guidance could deter some provider-led joint ventures.
The Federal Trade Commission voted 3-2 Wednesday to withdraw guidelines issued in 2000 that helped hospitals and other providers gauge whether regulators would investigate affiliations between competitors.
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The guidelines were outdated and missing key information on recent court rulings, updated regulatory guidance, how technology like artificial intelligence could impact competition and current consolidation strategies such as vertical integration, the FTC and Justice Department said in a joint statement. In addition, the guidelines included safe harbors that have “no basis in federal antitrust statutes,” the statement said.
Regulators did not indicate whether they plan on replacing the guidelines. However, a new administration under President-elect Donald Trump may choose to reinstate or rework the guidance, which pertains to all economic sectors.
Some healthcare lawyers agreed the decades-old guidance does not consider how the competitive landscape has shifted with data aggregation, algorithmic pricing and other features of a modern economy. But the more skeptical view is that the FTC eliminated the guidelines to have a chilling effect on mergers and acquisitions.
Competing health systems may be less willing to form joint ventures in an uncertain regulatory environment, healthcare attorneys said. Costs tied to planning and executing those types of agreements are poised to increase as organizations will rely more heavily on healthcare lawyers to measure antitrust risk, advisers said.
“Business leaders crave certainty and clear, bright-line rules,” said Robert Miller, a healthcare attorney at law firm Hooper Lundy & Bookman. “The tension here is the FTC and DOJ said they don’t favor clear, bright-line rules because they think the rules that have been developed are too permissive and do not account for the rapidly changing nature of the economy.”
One of the biggest impacts stems from the end of a safe harbor that said the FTC and DOJ would not challenge an affiliation that stays below a combined 20% market share in each relevant market, attorneys said.
“Parties are going to have to think a lot harder about whether their collaboration or joint venture raises antitrust enforcement risk, even when their combined market share is 20% or less,” said Alexis Gilman, a healthcare lawyer at law firm Crowell & Moring. “I don’t know if there will be a massive chilling effect, but there could be some at the margins where maybe a collaboration resulting in 18% combined market share doesn’t happen.”
Withdrawing the guidelines may also threaten existing affiliations. Healthcare advisers may tell providers to reevaluate existing joint ventures and affiliations that would not have triggered antitrust scrutiny under the now-eliminated guidelines, said Ken Field, a healthcare lawyer at law firm Hogan Lovells.
“This creates uncertainty about long-accepted practices,” he said.
Dissenting FTC commissioners questioned the timing of the policy change. The FTC should not remove guidance less than a month before a new administration takes over, said commissioners Melissa Holyoak and Andrew Ferguson. Trump recently selected Ferguson to take over as FTC chair in 2025.
Some healthcare lawyers said it may have made more sense to withdraw these guidelines last year, when federal agencies removed guidance that included safe harbors for healthcare information sharing. Regulators described those safe harbors as overly permissive, as well.
“The current agency leadership wanted to get this done before the changeover in January,” Gilman said. “The FTC seems to be clearing the deck in enforcement actions.”