Changing attitudes on large hospital system mergers

The Federal Trade Commission (FTC) can try to prevent consolidation in different industries and in different markets. For example, if two large healthcare systems are the only two large networks that serve a geographic area, the FTC might oppose their merger. KFF Health News reported that currently 19 states have laws that can exempt hospital systems from the FTC's decisions about mergers, but five states have already repealed those laws, and a sixth one is considering doing so.

Industry consolidation through mergers leads to less competition and is therefore considered anti-competitive behavior. Some previous health networks have been able to convince regulators that a merger might save an ailing health system or that a merger might enable the combined entity to provide better service, potentially at less cost. What those networks claim before the merger might actually be very different from what actually happens after the merger. For example, without adequate competition, the new entity can command higher prices. Of course, once a merger has happened, reversing the merger is difficult. Hence, some states have found that even if hospital systems agree ahead of the merger to comply with certain requirements, such reassurances are not adequate. The FTC has commented that those exemptions "have failed to protect local communities from the harmful effects of anticompetitive hospital mergers." For that reason, some states have reversed their laws to allow those exemptions.