FTC is full steam ahead on sweeping noncompete ban, reinforcing antitrust, agency head tells docs

Healthcare lobbying organizations’ efforts to carve out industry-specific exemptions in recently proposed Federal Trade Commission (FTC) policies are unlikely to see their requests reflected in the regulator’s final rulemaking, Commissioner Lina Khan suggested this week.

Speaking in a keynote panel at the American College of Emergency Physicians’ (ACEP’s) annual meeting this week, Khan outlined major proposals and enforcement actions that she described as much-needed updates to decades-old competition policy.

These efforts included January’s proposed ban on noncompete agreements, new merger and acquisition guidance for antitrust enforcement, at least three cases of successful litigation to block noncompetitive health system mergers and last month’s lawsuit targeting a private equity firm’s alleged “roll-up scheme” in the Texas anesthesia market.

The former focus was of particular interest to the conference’s practitioner attendees. When asked by an audience member whether the FTC was receptive to public comments urging the noncompete ban to be limited to low-wage earners, or to include exemptions within healthcare, Khan replied that her team had received far more feedback from individuals from healthcare than any other individual sector.

“We’re looking at all those comments very closely and figuring out where to land,” she said. “But I'll be honest, the overwhelming number of comments are firmly in support of the FTC proposal to ban noncompetes across the board. And so, we take that very seriously.”

Comments submitted by healthcare employer groups like the American Hospital Association (PDF) had criticized the FTC’s “sweeping” noncompete ban and highlighted retention difficulties that would be shouldered by the for-profit portion of the hospital sector. Meanwhile, the American Medical Association, the country’s largest physician professional organization, recently adopted an official position opposing noncompete clauses for employed physicians.

ACEP attendees also pushed Khan on whether the FTC had any plans to mitigate pay cuts or midlevel replacements healthcare employers could potentially adopt should the full ban go into effect.

Khan responded that the hypothetical was “an interesting question” but “not something that the FTC would necessarily be able to act upon.”

In regard to the administration’s “reinforced” merger scrutiny, Khan noted that the FTC is taking the labor impacts of a merger into account with its assessments and proposed guidelines. Though the regulator hasn’t always come out on top in its deal challenges, Khan said the successes have already made an impact.

“Overall, we're now hearing that Wall Street dealmakers are thinking about antitrust risk at the beginning of a proposed transaction instead of at the end, showing that our aggressive enforcement posture is deterring illegal deals,” she said.

Khan also acknowledged that the FTC has “for decades” been heavily focused on horizontal consolidation—for instance, hospitals acquiring other hospitals to grow market power—and “in particular, usually looking at local systems.” She said the regulator is keenly aware of the vertical integration deals that have risen over the past decade and data suggesting they introduce conflicts of interest or reduced quality care—though she held back on saying whether the commission would be launching enforcement actions against healthcare providers specifically based on vertical integration concerns.

Private equity’s potentially detrimental role within healthcare is another ongoing area of interest for the FTC and the administration, the chair continued. Outside of challenging the alleged Texas roll-up scheme, Khan noted that this summer’s proposed changes to the Hart-Scott-Rodino Form, a pre-merger notification requirement, should help the regulator get a better handle on when a private equity firm is targeting anticompetitive consolidation.

Still, she said that the FTC is seeking additional insight into private equity’s impact and encouraged providers to submit comments on their experiences. To clinicians who may be witnessing degrading care or other concerns due to their organization’s recent buyout, she encouraged them to go directly to their representatives for relief.

“There are a set of lawmakers, both at the federal and state level, that are extremely concerned about the role of private equity in healthcare, and so continued engagement with them [can drive changes,]” she told ACEP attendees. “I’ll just say, this is probably one of the issues on which we do see bipartisan concern. I get to meet pretty regularly with lawmakers on both sides of the aisle, and the incursion of private equity in healthcare is something that they’ve just seen firsthand how it’s affected their communities. They’re very concerned about it, so we just really encourage you, urge you to stay in touch.”