AAFP Warns Legislators About Bill to Speed Review of Mergers

March 29, 2016 03:26 pm News Staff

As the rapid pace of hospital mergers drives up health care costs, leaves patients with fewer choices and puts pressure on primary care physicians to join large systems or sell their practices, the AAFP is warning legislators that a proposed law could exacerbate the problems.

[File folder with Merger and Acquisition and financial graphs]

The Standard Merger and Acquisition Reviews Through Equal Rules Act seeks to speed up proposed mergers by limiting the power of an important federal regulator, a move over which the AAFP has strong concerns.

Introduced by Rep. Blake Farenthold, R-Texas, the bill would strip the Federal Trade Commission (FTC) of its authority to review potential mergers in administrative courts. The bill passed the House with strong Republican support despite sharp criticism from FTC Chairwoman Edith Ramirez. It now moves to the Senate, where a version of the measure was introduced last year.

AAFP Board Chair Robert Wergin, M.D., of Milford, Neb., wrote a letter(2 page PDF) to House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif., warning that any weakening of FTC authority over health industry mergers could compromise the goal of reducing Medicare and Medicaid costs.

"We believe Congress should be diligent in using all available resources to curb activities that clearly increase the cost of health care for the federal government and the more than 100 million people covered by these two programs," Wergin wrote.

Mergers of health systems in the same state can lead to price increases ranging from 6 to 10 percent, according to one recent study(www.kellogg.northwestern.edu) of 23 proposed mergers -- 20 of which were completed -- of acute care hospitals that the FTC investigated between 1996 and 2011. The problem is compounded as mergers and acquisitions of hospitals and health systems have increased steadily(www.hfma.org) from 50 in 2005 to 102 in 2014.

"Decades of research clearly demonstrate that, with few exceptions, mergers and acquisitions in the health care industry tend to result in higher prices and fewer choices for consumers," Wergin wrote.

Supporters of the bill believe the process used by the FTC to review potential mergers is too time consuming. They say the process instead should conform to one used by the Department of Justice, which cannot halt a merger in administrative courts and has a higher burden of proof when trying to show a merger is anti-competitive. Both federal agencies have authority to review mergers; they divide the responsibility based on their areas of expertise.

The AAFP has made an aggressive push in Congress and among regulatory agencies such as the FTC for proposed mergers to be more closely monitored for potential negative impact on patient choice of physicians and access to care.