The Federal Trade Commission (FTC) advised the New York State Department of Health against granting an antitrust law exception to SUNY Upstate Medical University and Crouse Health System’s merger bid.
SUNY Upstate and Crouse proposed plans to merge in April. In July, they filed an application with the state for the certificate of public advantage (COPA) that would allow them to move forward.
FTC answered the health department’s request for public comment with an 88-page submission (PDF) that argued a merger would likely drive higher costs, lower care quality, reduce access to care and lead to lower wages for hospital workers.
“Research has shown that [COPAs] frequently lead to higher prices and lower quality care for patients and lower wage growth for nurses, pharmacy workers, and certain other non-medical skilled workers,” Elizabeth Wilkins, director of the FTC Office of Policy Planning, said in a statement. “We do not believe granting this COPA will benefit the people of the state of New York.”
States with COPA laws allow hospitals to avoid federal antitrust enforcement should they demonstrate that a merger’s benefits outweigh the negative impacts of reduced market competition, such as higher prices and reduced quality of care. The laws often come with specific terms such as price controls or mechanisms to pass along cost savings and efficiencies and are supervised by state departments of health and attorneys' general offices.
The health systems’ proposal would bring Crouse Hospital’s operations under the Upstate Medical University Health System. In creating a system of more than 13,000 employees and 1,200 licensed inpatient beds, the organizations said the merger would “markedly increase clinical training opportunities for tomorrow’s healthcare providers.”
The federal regulator, however, noted that a merger would give the combined organization control over 67% of commercially insured inpatient hospital services in New York’s Onondaga County and would see the area’s hospital options shrink from three to two. More than 35% of SUNY Upstate and Crouse patients view the other party’s hospital as their next best choice for care, the FTC wrote.
Close competition to date between the two systems appears to benefit patients and employers due to payers being able to negotiate and pass along lower reimbursement rates, according to a preliminary analysis conducted by the FTC and referenced in the letter. The two also compete for employees, likely resulting in stronger wages and benefits for staff, the FTC argued.
The FTC and other market stakeholders interviewed by the regulator warned that there is little evidence suggesting a merger’s benefits would outweigh its potential harms.
The commission also noted that conditions floated by the systems to limit potential negative consequences following the merger “are vague and unenforceable, and appear to be nothing more than aspirational goals that fall short of the types of ‘conduct remedies’ that other state health authorities have attempted as part of COPA oversight.”
FTC commissioners voted 4-0 to submit the comment to the state health department, with Commissioner Noah Phillips abstaining.
The FTC has come out as a staunch opponent of COPAs, writing in an August report that mergers approved by states with COPA legislation often bring few, if any, of the promised benefits to their markets.
The regulator also is taking a hard stance on provider consolidation at large. Over the past several months its injunctions have shut down hospital deals in Utah and New Jersey.