Bipartisan bill revives efforts to expand FTC oversight to nonprofit hospitals

U.S. Representatives Pramila Jayapal (Washington) and Victoria Spartz (Indiana) introduced bipartisan legislation to step up federal antitrust oversight of nonprofit hospitals.

The Stop Anticompetitive Healthcare Act would give the Federal Trade Commission authority to investigate nonprofit hospitals for anticompetitive behavior. 

Nonprofits make up more than 48% of all hospitals in the country, or about 2,900 facilities. Presently, the FTC has jurisdiction to review all hospital mergers but is barred from enforcing antitrust laws against what it deems to be anticompetitive practices of nonprofit groups. Despite bipartisan support, the bill has helped reintroduce debate regarding the effects of hospital mergers on patient care.

“The rule of law is a principle under which all individuals and entities are accountable to the laws that are equally enforced,” said Spartz in a press release. “The Stop Anticompetitive Healthcare Act fixes a loophole allowing tax-exempt hospitals to avoid antitrust enforcement.” 

The proposed legislation would amend section 4 of the Federal Trade Commission Act to prohibit “unfair” competition by “any hospital organization or cooperative hospital service organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code.”

The bill was initially introduced in December at the end of the previous congressional term with reference to a 2020 report (PDF) by the Medicare Payment Advisory Commission.

The report found that consolidated markets showed higher healthcare prices for patients. However, the report also stated that the effect of mergers on hospital costs was not clear in theory or analysis. The efficacy of government intervention in smaller mergers was also called into question.

Various smaller studies have supported the assertion that consolidation increases the price of care. One analysis by The New York Times assessed 25 metropolitan areas that exhibited the highest rates of hospital consolidation between 2010 and 2013 to find that the price private insurance paid for the average hospital stay increased in most areas between 11% and 54% in the subsequent years.

America's Health Insurance Plans has expressed a similar stance, arguing that hospital consolidation leads to increased insurance premiums and no evidence of quality of care improvements.

The American Hospital Association (AHA) has responded by zooming in on improvements in overall patient care and maintenance of rural access to hospitals that it contends consolidation allows.

“Health systems typically acquire rural hospitals when these hospitals are under financial distress,” the association wrote in testimony to the House Committee on Education and the Workforce Subcommittee on Health. “Research has shown that rural hospitals are less likely to close after acquisition compared to independent hospitals and that mergers have improved access and quality of care for rural hospitals.”

AHA argues that mergers and acquisitions are an integral tool hospitals use to “increase access, provide quality care and manage financial pressures and risk.” Consolidation provides the opportunity to scale in order to reduce costs that ultimately preserve access to care, the association wrote.

Additionally, an analysis cited by the AHA and performed by Kaufman Hall found that 40% of affiliated hospitals gained one or more services following an acquisition.

A pair of JAMA studies were cited by the AHA in support of hospital consolidation. The first found that a “full-integration approach” led to improvements in mortality and readmission rates, while the second showed reductions in mortality due to common conditions, such as heart failure and stroke, in rural settings.

Jayapal and Spartz argue that improved financial standings of consolidated hospitals is a money grab flippant toward the health needs of Americans.

“Health care is a human right, and there’s no reason why, in the richest country in the world, people shouldn’t be able to access quality, affordable health care,” said Jayapal. “But too often, the corporations that run hospital chains put profits over patients—leading to worse outcomes and massive, unpayable bills. My bill with Congresswoman Spartz will put in place critical guardrails to rein in predatory practices.”

In 2021, following the U.S. District Court’s injunction against Hackensack Meridian Health’s proposed acquisition of Englewood Healthcare Foundation, both nonprofit organizations, FTC Office of Public Affairs Director Lindsay Kryzak expressed her opposition to hospital mergers.

“Too many hospital mergers lead to jacked up prices and diminished care for patients most in need,” Kryzak said in a statement. “It remains a mystery why these two hospital systems decided to pursue a highly suspicious merger in the middle of a global pandemic. The Court has hit pause on this merger, which the FTC alleges is unlawful. Hospital executives hatching merger plans should take note.”

The nonprofit duo called off the planned merger in April 2022.