Legislation could add more scrutiny to healthcare mergers | Bills and Laws

The skinny

Lawmakers in Congress have introduced a bill that could potentially add more scrutiny to hospital and healthcare mergers.

From left, Reps. Michael Burgess, R-Texas; Drew Ferguson, R-Ga.; and Debbie Dingell, D-Mich. (Images from Congress)

Sponsors

Republicans and Democrats are sponsoring the measure. Reps. Michael Burgess (R-Texas), Drew Ferguson (R-Ga.), and Debbie Dingell (D-Mich.) are the main sponsors.

Summary

The lawmakers say the bill would require the U.S. Department of Health and Human Services to examine how the regulatory process is affecting healthcare mergers. The department would be required to produce annual reports to Congress to determine if Medicare payment rules are affecting consolidation.

Sponsors have dubbed the bill the “Providers and Payers COMPETE Act of 2023” (H.R. 3284).

Supporters

Proponents of the bill say the measure could lead to lower costs and better care for Americans.

"Our healthcare system demands a comprehensive examination to eliminate anti-competitive practices," Burgess said in a statement. "This legislation will empower HHS with a thorough understanding of the implications of new payment proposals, fostering a climate of competition and shielding American patients from exorbitant health care costs. By doing so, we are safeguarding both patient autonomy and financial well-being."

Expressing a similar sentiment, Dingell said, “The increasing consolidation we are seeing across the healthcare industry drives up prices and undermines health care equity This legislation will ensure that HHS fully understands the implications of new payment proposals on further consolidating the health care system, to improve competition and better protect patients from higher health care costs.”

Critics

The American Hospital Association says it is opposed to the legislation.

​​“HHS is not charged with protecting competition and it lacks the necessary expertise in this area,” AHA wrote. “These new responsibilities are unnecessary since two other federal agencies — the Department of Justice’s Antitrust Division and the Federal Trade Commission — already have jurisdiction over federal antitrust enforcement. These agencies routinely study, report on and take action to protect competition in the health care sector for the benefit of consumers.”

Perspective

Members of Congress, Democrats and Republicans alike, continue to demonstrate more concern about the impact of healthcare mergers. The House Ways and Means Committee approved the measure in July with a 23-17 vote.

Lawmakers have expressed dismay about the potential reduction of competition, and worry about Americans paying more and getting less for healthcare. Lawmakers introduced a separate bill to allow insurers and employers more freedom to contract with hospitals, without entering into pacts with other affiliated hospitals or providers.

The White House has expressed its concerns. President Joe Biden issued an executive order directing federal agencies to look carefully at healthcare mergers, including hospital consolidations, to ensure there is sufficient competition. The FTC has applied more scrutiny to hospital deals, particularly those involving organizations in the same market.

While merger activity dropped due to the COVID-19 pandemic, more hospital consolidations have taken place in 2023, and more are expected in the coming months.

The pace of mergers in the broader healthcare industry has slowed compared to a year ago, but analysts expect more activity this year and in 2024.

Hospitals have generally pushed back against efforts to put more roadblocks to mergers and acquisitions. Health systems have said consolidations can lead to broader efforts to improve care across large populations, offer resources to develop tools to improve treatment and expand healthcare options to underserved communities.

This is a new, ongoing series looking at legislation that affects hospitals and the healthcare industry. If you have suggestions for measures worthy of attention, email Ron Southwick, senior editor: [email protected].