The Federal Trade Commission (FTC) is pushing North Carolina legislators “to reconsider” a bill exempting UNC Health and its collaborators from antitrust enforcement with a warning that the “unnecessary” carve-outs would harm patients and healthcare workers alike.
North Carolina Senate Bill 743 was unanimously passed by the state’s senate in early May and is being considered by the North Carolina House.
According to its text, the bill would allow the state-owned, nonprofit, academic system’s board to “enter into cooperative agreements with any other entity for the provision of healthcare, including the acquisition, allocation, sharing or joint operation of hospitals or any other healthcare facilities or healthcare provider, without regard to their effect on market competition."
In a June 5 letter penned to North Carolina lawmakers (PDF), FTC directors wrote that the collaborative agreements the bill authorizes include acquisitions, market allocation, information sharing and joint contract negotiations between the system and other public and private entities—all of which could harm competition within the state.
“Therefore S-743 would likely lead to increased healthcare costs—in the form of higher premiums, co-pays, deductibles, and other out-of-pocket expenses—and reduced quality and access to healthcare services for North Carolina patients. It could also result in reduced wages and benefits for healthcare workers,” the FTC wrote in its letter.
Lawmakers supporting the bill have said that the exemptions could allow UNC Health—which spans 16 hospitals, 20 hospital campuses and over 900 clinics—to rescue struggling healthcare facilities before they are forced to shut down.
In its letter, the federal regulator said it was “concerned” that lawmakers’ proposed legislation could be “based on inaccurate premises” regarding current antitrust laws and whether UNC Health needs the exemption.
Federal antitrust agencies already recognize that the acquisition of a failing organization “is not likely to cause competitive harm,” the FTC wrote. Additionally, the antitrust laws already on the books “are not a barrier to the formation of healthcare collaborations that benefit patients and employers without raising competitive concerns,” the agency wrote, implying that S-743 would enable the opposite.
“There is a significant and growing body of empirical economic research showing that increased consolidation and certain kinds of coordination among healthcare providers increase the risk of higher prices without any improvements in quality,” the directors wrote.
The FTC noted that its staff “takes no position at this time” on the legal approach used in the bill that would qualify UNC Health for the exemptions, as those questions “are fact-intensive inquiries that would require further investigation.”
The agency’s opposition falls in line with the Biden administration’s harsher stance on antitrust. Monday’s letter also calls back to a 2022 publication by the FTC urging states to ditch certificates of public advantage, a type of legislative exemption with deal-specific terms that the agency said often fails to preserve market competition.
Anticompetitive practices have also become a talking point on Capitol Hill, where, during a mid-May House subcommittee hearing, one witness highlighted UNC Health’s carve-out as “the most recent and, in many ways, the most brazen instance of this trend.”