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FTC should allow mergers that further reform’s goals, with monitoring for ill effects
The Federal Trade Commission’s antitrust challenge of ProMedica’s joinder agreement with St. Luke’s Hospital in Maumee, Ohio, will have a negative impact on healthcare organizations nationwide as they evaluate how best to proceed with consolidation and collaboration, in an era of uncertainty and change in healthcare. Just weeks after the FTC was granted a preliminary injunction in the ProMedica legal action, the FTC filed a similar action against another healthcare organization in Albany, Ga.
We’re at the dawn of a new day in how healthcare is to be delivered in this country. Regulatory agencies such as the FTC would better serve the country’s citizens by keeping pace and adapting to reflect the new healthcare environment. Instead, the agency has developed a short and swift answer of “no” to many of us who are attempting to develop a model that better meets the needs of this new day— preferring that healthcare organizations spend potentially hundreds of millions of dollars unnecessarily on bricks and mortar that could otherwise be used to meet the healthcare needs in their communities. With so much at stake, “no” should not be an option.
Healthcare organizations in midsized communities the size of Toledo, Ohio, where there are fewer competitors, will likely begin to resist potential collaboration or mergers—no matter how beneficial it would be to the community— because a merger of two competitors in communities of this size will be virtually certain to create a “presumptively unlawful” violation— according to the FTC. Add to this the very challenging standards that the merging entities would need to meet to rebut the FTC’s claims, and the impact on future hospital and health system mergers could be stifling.
Collaboration is key—today and tomorrow. At a recent annual meeting of the American Hospital Association, Dr. Donald Berwick, CMS administrator, stated that Phase I of the Patient Protection and Affordable Care Act related to the moral challenge of creating a coverage mechanism to ensure Americans can receive health insurance. He added that this connection alone cannot resolve the healthcare issues in this country.
We agree with Berwick that collaboration, innovation and partnership are crucial to achieving the long-term sustainability of the three fundamental aims of the CMS as it
The FTC should allow the collaboration with St. Luke’s to proceed with regulatory oversight.
enters phase II: Better health, better care and lower cost through improvement.
We are experiencing—and will continue to experience—radical change in healthcare. At the center of that change is collaboration among healthcare organizations and clinical integration. Clinical integration is the key to ensuring that patients receive the best care, at the right time, in the right location from all of their providers. And that requires intense collaboration and partnerships among hospitals, doctors, nurses and other caregivers. Unfortunately, the recent aggressive actions by the FTC will dull any appetite by healthcare organizations to work together for fear of a heavyhanded reaction to any potential merger.
In this new healthcare environment, achieving greater degrees of clinical integration is critical to achieving better patient outcomes. It does that by delivering higher quality care, and by making the medical system less expensive, more efficient and easier to navigate for patients and providers.
Hospitals in communities across the country are trying to create these types of partnerships. But outdated regulatory barriers, including confusing and stifling antitrust policies that fail to recognize the changing competitive dynamic in the market for healthcare services, stand in the way.
It is not logical for the government to expect healthcare organizations to achieve radical change without removing barriers. Achieving the CMS’ fundamental aims of bet- ter health, better care and lower costs will require innovative approaches. Outdated regulatory barriers are inconsistent with current and future demands in healthcare—and could result in organizations needing to reduce services. It is imperative that regulatory agencies such as the FTC seek new and innovative approaches that allow new ideas to move forward with necessary constraints.
There are solutions. For example, Christine Varney, assistant attorney general of the antitrust division for the U.S. Justice Department, has acknowledged the potential for a new approach to evaluating mergers. This approach would not be an unequivocal “yes” or “no” to a merger, but a willingness to compromise and allow an organization to partner in the best interests of the community, with constraints against certain effects with regulatory oversight in the courts.
With this idea in mind, ProMedica believes the FTC should consider a community commitment agreement that will allow the joinder with St. Luke’s to continue with appropriate safeguards and regulatory oversight. This approach would enable the combined organizations to integrate in ways that will achieve the CMS goals while still protecting the public interest. It is an approach that could serve as a model for other communities nationwide and deserves strong consideration versus stifling opposition.
There are many benefits for the community from collaboration between organizations such as ProMedica and St. Luke’s, yet the FTC continues to use outdated standards that no longer apply in this next generation of healthcare. The result of its legal action forecasts a chilling future for collaboration in the national healthcare community. On the other hand, a willingness by the FTC to take a new approach in how it evaluates mergers could go a long way to achieving that new, brighter day in healthcare.
Randy Oostra is president and CEO of ProMedica, Toledo, Ohio.