FTC Ramps Up Efforts Against Hospital Consolidation in Wake of Rising Costs

In June 2024, a class-action lawsuit against Hartford HealthCare (HHC) in Connecticut exposed the reality of hospital consolidation: dramatically inflated medical costs. The lawsuit claims that Hartford HealthCare, a dominant force in Connecticut's healthcare landscape, leverages its market power to overcharge for medical services, such as colonoscopies which cost $3,800 at HHC’s St. Vincent’s Medical Center compared to just $1,400 at nearby Bridgeport Hospital, owned by Yale New Haven Health. This drastic difference in pricing underscores a broader, concerning trend impacting the U.S. healthcare system, and the Federal Trade Commission (FTC) is taking notice.

Hospital consolidation has been reshaping the healthcare system, characterized by a surge in mergers and acquisitions—from horizontal and vertical mergers to cross-market consolidations. The American Hospital Association notes a significant uptick in such activities, with over 2,000 mergers since 1998. This trend has led to an increase in the number of community and nonprofit hospitals integrated into larger systems, rising from 53% in 2005 to 68% in 2022, according to Kaiser Family Foundation research. Such market dominance has serious implications, limiting competition and choice, escalating costs, and potentially degrading the quality of care provided to patients.

The Detrimental Impacts of Hospital Consolidation

Higher Prices

Hospital consolidation typically results in higher healthcare costs, affecting patients, employers, and taxpayers through reduced competition. Mergers provide hospitals greater leverage over insurance negotiations, often leading to increased prices. Research has shown that hospitals in concentrated markets secure higher reimbursement rates, which drives up premiums and overall costs. A New England Journal of Medicine study confirms that acquisitions lead to higher prices for commercially insured patients, while a Harvard Business School report indicates cross-market mergers also contribute to rising costs. In areas with high hospital concentration, Marketplace insurance premiums are 5% higher than in less concentrated markets. Hospitals without nearby competitors can charge prices 12% higher than those in competitive markets, imposing a significant financial burden on patients. Given that hospitals constitute 42% of Americans' premium dollars, a 12% price increase translates into more than $1,000 annually for families and about $370 for single people on employer-sponsored plans. These price increases significantly burden consumers, especially under the strain of high-deductible health plans (HDHPs), exacerbating the healthcare affordability crisis. Making matters worse, even with regulations requiring hospitals to be transparent about their pricing, comparison shopping for healthcare services remains difficult. Inconsistencies in how hospitals present pricing information and a lack of standardization make it challenging for patients to accurately compare costs across different providers, further limiting their ability to make informed choices.

Reduced Access and Quality of Care

Despite potential efficiencies, evidence suggests consolidation may compromise care quality, affecting patient experience, mortality rates, and service accessibility. A New England Journal of Medicine study noted a decline in patient satisfaction following mergers, without improvements in readmission or mortality rates. Experts from a Penn LDI seminar highlight that consolidation often leads to higher prices without quality gains, particularly impacting access in consolidated markets. Rural and underserved areas suffer most, experiencing reductions in essential services such as obstetrics, and even specialized services like pediatric care are curtailed, increasing wait times and pressure on remaining providers. This consolidation-driven reduction in services can translate into restricted access to care for patients. Longer wait times for appointments, the need to travel greater distances to find available specialists, and the closure of facilities in underserved communities all create significant barriers to receiving timely and appropriate care.

Negative Impacts on Healthcare Workers

Consolidation also detrimentally impacts healthcare workers by typically leading to lower wages, heavier workloads, and reduced job mobility. Hospitals gain market power that suppresses wages, especially for skilled professionals such as nurses. Increased workloads and staffing shortages result in burnout and higher turnover. Notably, a complaint by labor unions against UPMC highlighted anti-competitive practices that worsen working conditions for healthcare staff.

Ethical Concerns

The ethical implications of consolidation are profound, often prioritizing profit over patient care, exacerbating health disparities and limiting access for marginalized communities. The closure of services in economically disadvantaged areas or restrictions imposed by new owners can severely impact vulnerable populations. As noted by Penn LDI, such practices especially affect low-income women and rural residents, challenging the foundational ethics of healthcare.

These issues underscore the need for a high level of scrutiny around mergers and policies that prioritize patient care quality, affordability, and fair labor practices in the face of ongoing hospital consolidation.

The FTC’s Fight Against Anti-Competitive Mergers

Amid growing concerns about the negative effects of hospital consolidation, the Federal Trade Commission stands as a key defender of patient interests and market competition in healthcare. Under the Biden Administration, the FTC has intensified its stance against anti-competitive mergers, demonstrating a strong commitment to safeguarding consumers from the adverse outcomes of unchecked consolidation.

The FTC has notably succeeded in obstructing several hospital mergers recently. For example, in June 2024, Novant Health in North Carolina canceled its acquisition plans for two hospitals after the FTC argued that the deal would create near-monopoly conditions, leading to higher prices and diminished care quality. Other successful FTC actions include blocking RWJBarnabas Health's merger with St. Peter’s Healthcare System in New Jersey in June 2022, and a similar intervention in March 2022 against a merger between Hackensack Meridian Health and Englewood Healthcare Foundation.

These victories highlight a shift towards more assertive regulatory actions, reflecting the FTC’s renewed vigor under the Biden Administration’s directives. In July 2021, President Biden issued an executive order encouraging greater antitrust enforcement to foster a competitive healthcare marketplace. This order critiqued the rampant hospital mergers and directed the FTC to enhance its antitrust enforcement, even allowing for the retrospective challenge of mergers that might have anti-competitive effects.

As per Kaiser Health News reports, this directive has rejuvenated FTC efforts, increasing the agency’s readiness to tackle hospital mergers that might have previously been overlooked. ProPublica’s analysis indicates a significant uptick in enforcement, with the FTC blocking four mergers in the first two years of Biden’s presidency, compared to fewer than one per year during the previous administration.

Evolving Enforcement Strategies

The FTC is also broadening its enforcement strategies, exploring new legal theories and focusing more on diverse aspects of market competition, including labor markets. FTC Chair Lina Khan emphasized in December 2021 the importance of examining how mergers affect not just prices but also employment conditions, highlighting the potential of increased antitrust actions to improve pay and working conditions for healthcare workers.

Moreover, the FTC is scrutinizing vertical mergers more closely, such as those involving hospitals acquiring physician practices, which had traditionally been perceived as beneficial for efficiency. Recent studies, however, suggest these mergers might increase prices and reduce competition, as hospitals gain more control over referrals and insurer negotiations.

This proactive approach by the FTC, fueled by the Biden Administration’s push for more competition, marks a potential turning point in the battle against the detrimental impacts of hospital consolidation. This shift underscores a comprehensive strategy to protect competition and patient welfare in the healthcare sector.

Limitations of Current Enforcement Mechanisms

Despite the FTC's strong stance against anti-competitive hospital mergers, the agency confronts significant barriers that hinder its effectiveness in tackling consolidation. These challenges stem from outdated guidelines, limited resources, and the complexities of proving competition harm in complex healthcare markets.

The FTC's enforcement focus has been predominantly on single-market mergers, as per guidelines last updated in 2010. This approach overlooks the rising trend of cross-market mergers, where healthcare entities expand across different regions, enhancing their market power and leverage over insurers. The effects of these mergers can significantly diminish competition even without direct geographic overlap.

Moreover, stagnant funding levels have strained the FTC's capacity to adequately investigate and legally contest the growing volume of hospital mergers. According to ProPublica, the agency's budget constraints limit its ability to hire necessary expert staff and sustain prolonged legal battles against well-funded healthcare giants. Consequently, many potentially harmful mergers proceed without challenge, consolidating markets further and reducing competition.

Challenging cross-market mergers in court presents its own set of hurdles. These cases tend to lack solid legal precedents, complicating the FTC's task of demonstrating their anti-competitive nature. The nuanced market dynamics involved, such as insurer behavior and potential spillover effects, add to the complexity, making it difficult for the FTC to establish clear legal grounds for opposition.

To truly curb anti-competitive hospital mergers, the FTC needs updated guidelines that reflect the realities of cross-market mergers, increased funding for enforcement activities, and innovative legal strategies to tackle these complex consolidations effectively.

The Medical Credit Card Blind Spot

As policymakers and regulators grapple with the complex issue of hospital consolidation, a related problem is emerging that demands attention: the proliferation of medical credit cards and their disproportionate impact on vulnerable patients. These financial products, often promoted by healthcare providers themselves, are creating a new avenue for medical debt, trapping patients in a cycle of high-interest payments and jeopardizing their financial security.

The Consumer Financial Protection Bureau (CFPB) reports a staggering growth in medical credit card use, with the number of cardholders nearly tripling in the last decade. From 2018 through 2020, Americans charged almost $23 billion in healthcare expenses to these cards, accumulating over $1 billion in deferred interest payments alone. This trend is particularly concerning for older Americans, whose unpaid medical debt has surged in recent years, reaching $53.8 billion in 2020.

The promotion of these cards by healthcare providers, who often receive financial incentives from credit card companies, raises serious ethical concerns. Patients, facing the stress of a medical diagnosis or treatment, are particularly vulnerable to persuasive sales tactics and may not fully understand the complex terms of these credit products. This practice is especially egregious when providers push these cards onto patients who might be eligible for financial assistance programs (FAPs), designed to help low-income patients cover medical expenses.

To protect patients from predatory medical credit practices, policymakers must implement regulations. This includes prohibiting deferred interest promotions, capping interest rates on medical credit cards, requiring clear and conspicuous disclosures of terms and conditions, and strengthening enforcement of FAP requirements to ensure eligible patients are aware of and receive the financial assistance they deserve. We must address this blind spot to prevent unnecessary medical debt and safeguard the financial well-being of vulnerable Americans.

A Multi-Pronged Policy Strategy

Addressing the pervasive effects of hospital consolidation requires a comprehensive strategy aimed at fostering a competitive, patient-centered healthcare system. This strategy must include bolstering antitrust enforcement, revising payment models, regulating medical credit practices, and empowering patients as informed consumers.

Strengthening Antitrust Enforcement:

The FTC's current efforts, while commendable, fall short in tackling the full breadth of consolidation issues. As discussed, guidelines need updating to address cross-market mergers explicitly. This includes assessing the broader implications of mergers that impact common customers across different markets. Congress should also enhance FTC funding, enabling more investigations and legal actions against complex healthcare mergers.

Reforming Payment Models:

The prevailing fee-for-service model, which rewards quantity over quality, exacerbates consolidation as providers seek greater market dominance. Transitioning to shared-risk and population-based payment models, as suggested by the Health Care Payment Learning and Action Network, would incentivize providers to prioritize care quality and efficiency. Supporting smaller providers in this transition is necessary, including offering infrastructure investments and adapting risk arrangements to ensure their viable participation in value-based care.

Empowering Patients as Consumers:

We have to empower patients to become knowledgeable consumers. This involves improving price transparency and access to comprehensive quality and performance data, enabling patients to make informed healthcare choices. Policies should also promote patient involvement in decision-making processes, ensuring treatments align with patient preferences and values.

Addressing Integrated Finance and Delivery Systems Concerns:

While systems integrating insurance and healthcare provision can enhance coordination and efficiency, they also pose risks of further consolidating markets and reducing competition. Regulatory oversight is essential to curb anti-competitive practices and ensure these systems do not disadvantage certain patient groups or perpetuate health disparities.

Conclusion

The Hartford HealthCare lawsuit exemplifies the repercussions of unchecked hospital consolidation. This trend, left unaddressed, threatens to compromise the accessibility and affordability of healthcare, deepening disparities and imposing undue financial strain on Americans.

The urgency for comprehensive healthcare reform has never been more apparent. It is time that all stakeholders — policymakers, healthcare providers, patient advocates, and the public — collaborate to redefine the priorities of our healthcare system. We must advocate for a system that values patient well-being above profit, promotes fair competition, and ensures that care quality is rewarded.

By taking decisive action and implementing targeted reforms, we can address the pervasive issues brought on by hospital consolidation. This collective effort is essential to fostering a healthcare environment that upholds the highest standards of equity and excellence, ensuring that all Americans have access to the care they need at prices they can afford.

Biden’s State of the Union: Bold Promises on Public Health

On March 1st, President Biden delivered his first State of the Union Address to both chambers of Congress and the American people at large. Amid a slew of foreign and domestic policy proclamations, particular attention should be afforded to the statements and commitments made about addressing the COVID-19 pandemic and public health, more broadly. Championing the landmark legislation that was the American Rescue Plan, the President laid out how the legislation’s programming reduced food pantry lines, increased employment, and how expansion of the Affordable Care Act’s subsidies resulted in lower insurance premiums for many Americans. In addressing the COVID-19 pandemic, Biden also recognized a sobering outcome that will shake the nation: within the next few weeks, the United States’ official COVID death toll will surpass one million people. Though the President misstated the moment in that those empty seats at dinner tables will be more than a million; on average each COVID death has impacted 9 other people, including orphaning children across the country. Biden then shifted the address, citing the Centers for Disease Control and Prevention’s recent announcement of adjust masking guidelines and metrics of risk, trying to signal a much-needed political win in the fight against COVID. However, immediately following these statements, the President also focused on providing the country with another round of free at-home COVID-19 tests and implementing a tactic already well-known in the HIV space: test-to-treat, with added bonus of the program following the COVID vaccine model and having no out-of-pocket expense for patients.

The program ideals outlined in the days that followed found some confusion, need for clarity, and even some professional association bickering. Public health professionals who have long advocated for more robust responses to the pandemic took to news outlets to vent their frustrations and the American Medical Association drew derision on social media for their statement discouraging pharmacists prescription and provision of COVID antivirals. Pharmacists have long been a target for HIV advocates, especially in terms of increasing pre-exposure prophylaxis (PrEP) access and decreasing test to treat initiation delays. Wouldn’t it be nice if this COVID program provided a model outside of vaccination in which pharmacists could also serve a more robust role in facilitating seamless treatment and prevention? The meaningful hiccups the administration and advocates should keep a close eye on in this regard is the labor shortage of pharmacists, closing of more rural locations for chain pharmacies, and any developments around anti-competitive practices of pharmacy benefit managers (PBMs) associated with pharmacies. Consequences of these will extend beyond immediate COVID programming and ideal HIV programming.

The President also made statements referring to medication costs and price controls and needing to make sure more Americans could afford their care. However, details were lacking and if any recent effort is indicative, singularly focusing on manufacturer list prices won’t address patient costs or get much anywhere. Buyer beware, some proposals in the apparently sunk Build Back better legislation would also cut provider compensation in public payer programs, a dire consequence as the nation struggles with health care staffing shortages. Those shortages should be noted in detail because the American Rescue Plan provided funding meant to supplement the financial demands of staffing a pandemic and there’s good reason to suspect administrators, rather than providers, enjoyed the fruits of that labor. Further, most Americans experience their out-of-pocket costs of care due to the benefit design of their insurer (and PBM), not the manufacturer list price. Indeed, the Biden Administration appears to eb as insurer friendly as the Obama admin. To impact the costs facing patients more meaningfully at the pharmacy counter and other burdens in accessing medication, the Biden administration should focus more on developing patient protections via the regulatory process, limiting the aggressive utilization management (or deny-first coverage) policies, increasing formulary restrictions, and discriminatory plan design. Some of the tools for doing so already exist, but the federal government has yet to curb the tactics of payers in avoiding their responsibilities under the ACA’s medical-loss-ratio rules or ensure payers are not inappropriately applying cost-sharing for qualifying preventative medications and services.

The President also became the first to mention “harm reduction” in a State of the Union Address. Urging Congress to pass the Mainstreaming Addiction Treatment Act (MAT Act), President Biden is seeking to fulfill his commitments to address the opioid epidemic and move toward modernizing domestic drug policy. In a sign of acknowledgment of the scope and size of substance use epidemic in the country, Biden endorsed recovery programs and recognized the more than 23 million people struggling with addiction in the country. Immediately following the MAT Act mention, the President moved on to address of a lesser defined but equally important need in encouraging commitment to a robust set of policy ideals aimed at meeting the mental health needs of the country.

All these good things can easily be outweighed by what wasn’t mentioned. President Biden did not mention any interest in extending another round of stimulus payments, despite the program resulting in one of the largest reductions in poverty in US history. And while there was focus on rebuilding the nation’s health care staffing, no mention was afforded to rebuilding the nation’s public health infrastructure. Meanwhile, we’ve known for quite some time poverty as a notable association with HIV and decreasing poverty also decreases HIV risks and prevalence, data remains in the decline with regard to HIV and STI screenings, Hepatitis C rates are still on the rise, and inconsistencies in PrEP usage during the height of initial COVID waves likely foretells a more diverse at-risk community. Even the government’s own HIV.gov webpage dedicated to the State of the Union fails to mention any HIV or HCV specific programming efforts associated with the address.

While there’s much to celebrate about the President’s COVID goals, advocates should be cautious about projecting those goals onto other public health efforts. Afterall, COVID proved we could provide more up to date reporting than the 2 year delays we typically see in HIV and HCV surveillance, but we haven’t. COVID-related telemedicine expansion was welcomed by patients across the nation but Congress is poised to claw back those gains. For many of us, while the state of the union is improving coming out of the Omicron wave of the COVID-19 pandemic, much work remains. Including reminding this administration that it is empowered to protect patients, access to and affordability of care, an obligation to invest in public health programs beyond COVID and has committed to advancing efforts to End the HIV Epidemic.

Beyond Medication: Tech Advances in Care Delivery

Broad telehealth acceptance is just the tip of the iceberg when it comes to technology advancements and innovations in the general health care space. From mobile Apps designed to encourage patient-provider communication and medication reminders to drone being the next home delivery pharmacy tool, much hope and concern rests on the horizon of health-in-your-hand-and-on-demand.

In this, as with many developments in care delivery and equitable access, the space of chronic care, specifically HIV, has long helped lead the way for the rest of the industry. A 2018 post on HIV.gov and 2020 post on webMD cite several mobile Apps with focuses on prevention services, linkage to care, care support, and social support. Some study has been done about effective strategies of user engagement with mobile Apps, with a particular focus on younger demographics. One such study, from University of North Carolina at Chapel Hill and Duke University, with participants ranging from 16-24 years of age, found extraordinary efficacy with a “gamifying” approach, including “badges” and “tokens” among users as rewards for adherence and completing tasks or engaging with the App. At 13 weeks, frequent users of the App were more than 56% more likely to achieve viral suppression and regular App users were more than twice as likely to self-report near perfect ART adherence at benchmark periods of the study. Another study, offering social support, with participants at or above 60 years of age across a period of 6 months showed the 30 participants accessed the App more than 2400 times for an average nearing 9 minutes per session.

Many of the studies working to understand best practices in client engagement, messaging, and positive outcomes are exceptionally limited. Beyond the cohort size, technology barriers appear to the biggest hurdles; including ensuring clients have appropriate devices for any particular App design, updated software, ensuring App accessibility across hardware platforms (phones, tablets, computers), appropriate data plans, and access to mobile data signal or Wi-Fi services.

Another avenue under exploration includes modernizing the time-tested aid delivery method of airdrops with drones to reach hard-to-reach rural area health care providers. However, as Uganda Medical Association’s secretary general, Mukuzi Muhereza, cited, drones only address medication transportation to health centers, not issues of medication shortages or transportation barriers from client homes to those same health care providers.

When given this topic for this week, my contract manager questioned “if this can be done in Uganda, why can’t it be done in rural Alabama?” Which is a good question…with lots of discussion worthy of following.

The business that cannot be escaped when discussing consumer data and tech also cannot be avoided in discussing health care delivery systems innovation: Amazon. In 2018, Amazon acquired PillPak, including all their state-based pharmacy licensing agreements, now billed toward Prime customers as Amazon Pharmacy. While posing as a potential exploration into the health care landscape, Amazon Pharmacy’s effort builds upon a concurrent effort to make the company’s voice assistants HIPAA compliant. However, much of Amazon’s effort don’t necessarily fall inside the entity scope requiring patient privacy compliance as HIPPA and explicitly cites compliance with law enforcement activities, recalling community fears associated with molecular surveillance and the criminalization of HIV status. Particularly, Amazon has been known to exploit its collection of user data for the sake of profit, skirt regulatory requirements on technicalities and mutilation of language, and frankly, lacks ethical grounds worthy of potentially courting government funding in light of its anti-labor practices.  Additionally, Amazon has faced numerous data breaches in the last few years and European Union former executives for Amazon have warned the company does not do enough to ensure security of users’ information. Garfield Benjamin gives a deeper dive into the history and context of these concerns, many already experienced in the United Kingdom, here.

That doesn’t mean Amazon, or any company making similar inroads into direct-to-consumer care models, is “always” a bad actor. Indeed, with the Federal Aviation Administration’s recent approval to study Amazon’s drone delivery system, known as Amazon Air, the possibility of delivery to your door within the hour of an appointment is deeply appealing to many consumers seeking easier access to medication. It just means the risks of the moment, of unanswered questions and unregulated technicalities needs to be addressed – and with expediency. Because just as with injectable ARVs being the next wave of innovation in ARVs, streamlining the consumer experience with greater privatization and expanded home delivery options is also on the horizon.

We have this brief moment, now. Where the mega-movers, like Amazon, and regulators, can reach outside of the provider and payer communities and discus with patient and consumer communities to ask us what we’re worried about. If public payers are not prepared to integrate appropriate reimbursements, leverage those reimbursements to ensure our privacy and access to care, to further Health Justice, then we run the risk of only furthering existing disparities, even more than COVID has. Between the rural hospital crisis only deepening and the Biden administration already running into push back on including expanding broadband access in its infrastructure package, as easy examples of the necessary “what-abouts” if we’re to meet this moment for its actual potential – for either good or ill.

Stakeholders across the spectrum should look beyond any development of their own proprietary App functions and into the broadest approach to this space to ensure consumer trust is maintained as one of the highest priorities, collaborative rather than competitive efforts so as not to duplicate efforts or get lost in the sea of App developments, and ensure our technology reflects our values as communities, not just that of those who may find new avenues of profit on our backs.