An Integrative Approach to Evaluating Healthcare Provider Mergers in the Era of the ACA by Kent Bernard :: SSRN

Annual healthcare spending in the United States is estimated at about $3 trillion, and is projected to grow to over $4.5 trillion by 2020. The healthcare industry impacts every American, involves serious amounts of money, and has an expenditure growth rate that may well be unsustainable.

Yet, in reviewing how U.S. authorities apply antitrust law to the markets for healthcare provider services, it becomes apparent that the agencies do not readily incorporate the policy goals of healthcare reform legislation such as The Affordable Care Act into their analysis and are instead assuming that the industry today still must fit into the boxes of traditional analysis. But incentives and practices have changed the delivery of healthcare services. The antitrust enforcement agencies and courts need to account for these incentives and look at the realities of the delivery of medical services today. They need to integrate the antitrust analysis that has served us so well with the realities driving the delivery of healthcare going forward.

The thesis of the analysis here is that the antitrust review process should not stop once there is a determination that a provider merger is likely to substantially lessen competition in a narrow market for the specific provider services in question. That analysis needs to move on from the narrow relevant market used to make the initial prediction of whether there is likely to be an adverse effect from a merger to consider more broadly whether there is sufficient evidence presented that such a loss of competition in one relevant product market is counterbalanced, or outweighed, by projected cost savings in the broader market for healthcare provider services (e.g., a hypothesized increase in the cost of primary care physician services that is compared to a hypothesized decrease in hospital admissions and the costs thereof).

Source: An Integrative Approach to Evaluating Healthcare Provider Mergers in the Era of the ACA by Kent Bernard :: SSRN

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