Market Consolidation and Merger Review
The Forgotten Anti-Monopoly Law: The Second Half of Clayton Act Section 7 (Texas Law Review)
Robert H Lande, John M Newman, Rebecca Kelly Slaughter
The authors of this article analyze the second prong of Section 7 of the Clayton Act, which prohibits mergers that "tend to create a monopoly." In comparison to the well-known first prong that seeks to "substantially lessen competition," the second prong is posited to wield more statutory power as it does not contain a requirement for a certain degree of harm to be shown before a legal violation can be brought ("quantum-of-harm"). Additionally, the second prong does not require evidence of actual competition effects. The authors argue that this requirement reduction would allow mergers to be stopped proactively before monopoly power is established. The article suggests that by failing to utilize this prong fully, enforcement has allowed entities to escape regulation despite potentially harmful results. Enforcement revision with the inclusion of the second prong is urged to allow for increased enforcement capabilities that would ordinarily slip through the cracks, and that use of it would lend itself to greater protection for consumers and market competition.
Health Equity and Hospital Markets: Differences in the Association of Market Concentration and Quality of Care by Patient Race/Ethnicity and Payer (Medical Care)
Alexander C. Adia, Charleen Hsuan, Hector P. Rodriguez
This study examines whether regulators should include the effects of consolidation on health equity when conducting merger reviews. The research assesses how the concentration of the hospital market impacts the quality of care delivered to patients with a specific focus on potentially preventable hospitalizations. The authors looked to determine if the impacts patients encounter are associated with race/ethnicity and/or insurance type (i.e., private versus non-commercial). Through analyses completed across fourteen states, the investigators found a higher tendency to experience preventable hospitalization among patients who were both racial/ethnically diverse and had non-commercial insurance, especially in highly concentrated markets. Disparities varied between various groups, with higher rates affecting Asian/Pacific Islander populations, those on Medicaid, and those without insurance coverage. This study highlights the complex manner in which hospital markets with high levels of concentration interact with equity of care, demonstrating that while some groups of patients may benefit from such a market, others may be harmed by it. Moving forward, recommendations include the inclusion of factors, such as equity, in antitrust enforcement and pre-merger reviews for hospitals. The authors note future research will be critical to increasing understanding of how vulnerable populations of patients are disparately impacted by hospital consolidation compared to other communities.
Acquisitions to Enter New Markets (Journal of Economic Perspectives)
Carl Shapiro
In 2023, the U.S. Merger Guidelines were issued by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in an effort to update the federal framework for assessing whether proposed mergers violate Section 7 of the Clayton Act that may "substantially lessen" competition or "tend to create a monopoly." This article critiques the 2023 Guidelines with a specific focus on cross-market acquisition transactions whereby a new entity enters the market simply by acquiring a current firm. Shapiro argues these acquisitions have historically resulted in increased innovation, competition, and consumer benefit. Furthermore, he warns that the 2023 Guidelines shift the focus from the most important factor, harm to consumers, and instead overly focuses on competitor harms. By contrasting the U.S. and the European Commission frameworks, Shapiro calls for a less ambiguous and more concrete economic approach to cross-market acquisition evaluation guidelines.
Healthcare Costs and Payment Models
Medicaid Prescription Denials May Result in Higher Overall Costs (JAMA)
Samantha Anderer
Procedural prescription denials, often affecting Medicaid patients, are viewed by some as needed to prevent unnecessary spending. Through analysis of Medicaid data claims from 2022-2023, the researchers of this study seek to determine the effects of these prescription denials with a specific focus on unintended medical spending increases. Patients who had experienced denial of at least one prescription were compared to those who had not while controlling for various factors such as diagnoses and geography. Results suggest that patients who had been denied coverage of at least one medication from 20 classes of common drugs experienced increased rates of visits to the emergency department and/or hospitalization within 60 days of the claim denial. The findings suggest that procedural denials meant to reduce costs in drug spending may, in actuality, result in higher medical costs downstream. The authors recommend health plans account for such consequences in prescription claim denials when initially drafting prescription coverage.
Policy Strategies To Propel Community Health Centers Into Value-Based Payment (Health Affairs Forefront)
Hope Glassberg Henry Chung Jordanna Davis Adam J. Falcone Anthony Shih
Value-Based Payment Models (VBP) transition healthcare initiatives from a “volume to value” incentive model to one where patient outcomes are valued and rewarded. This article provides insight into how policymakers can assist Community Health Centers (CHCs) in transitioning to a VBP model despite the barriers these centers often face. The authors suggest that CHCs are in a prime position to utilize this incentive model due to their focus on serving underserved communities. However, significant obstacles such as constrained financial availability and infrastructure instability can make such a transition challenging to envision and undertake. Tactics such as enhancing knowledge and visibility of VBP participation, improved funding, and uniform VBP contracting terms are recommended as solutions to these barriers. It is argued that targeted financial investments in CHCs would allow for ease of transition with increased availability of financial risk, resulting in reduced healthcare costs and improved quality of care. The authors urge for the adoption of VBP at CHCs due to its ability to increase equity of healthcare quality and coverage for underserved communities.
Challenges With Effective Price Transparency (Peterson-KFF Health System Tracker)
Gary Claxton, Lynne Cotter, and Shameek Rakshit
This report describes the findings from an evaluation of the transparency data recently made available by the federal Transparency in Coverage (TiC) rule requiring insurers to disclose their negotiated rates for healthcare coverage publicly. The rule was passed to promote competition and empower consumers by improving accountability on healthcare service prices. Despite its goal, the study found that the data that has been shared is lacking in practical usability and is overly dense and unorganized, making it difficult to pull out any concrete information. Issues such as contradictory rates for identical services and price listings for services/procedures that providers do not carry out have resulted in an inability to confidently draw accurate conclusions. To remedy these challenges, the authors of the report call for policy modifications specifically targeting clarity, organization, and usability to ensure actual data transparency. Additional suggestions include a uniform formatting system, increased regulatory schemes, and collaboration among researchers, stakeholders, and federal agencies to ensure the data can be interpreted. Without such revisions, the report posits that the intended patient empowerment will not be achieved.