US Vice President and 2024 Democratic presidential candidate Kamala Harris delivers remarks before departing George Bush Intercontinental Airport in Houston, Texas, on Aug. 1, 2024, as she returns to Washington, DC. (Mark Felix/AFP via Getty Images/TNS)
Bernard J. Wolfson, Phil Galewitz | (TNS) KFF Health News
When Kamala Harris was California’s top prosecutor, she was concerned that mergers among hospitals, physician groups, and health insurers could thwart competition and lead to higher prices for patients. If she wins the presidency in November, she’ll have a wide range of options to blunt monopolistic behavior nationwide.
The Democratic vice president could influence the Federal Trade Commission and instruct the departments of Justice and Health and Human Services to prioritize enforcement of antitrust laws and channel resources accordingly. Already, the Biden administration has taken an aggressive stance against mergers and acquisitions. In his first year in office, President Joe Biden issued an executive order intended to intensify antitrust enforcement across multiple industries, including health care.
Under Biden, the FTC and DOJ have fought more mergers than they have in decades, often targeting health care deals.
“What Harris could do is set the tone that she is going to continue this laser focus on competition and health care prices,” said Katie Gudiksen, a senior health policy researcher at University of California College of the Law, San Francisco.
The Harris campaign didn’t respond to a request for comment.
For decades, the health industry has undergone consolidation despite government efforts to maintain competition. When health systems expand, adding hospitals and doctor practices to their portfolios, they often gain a large enough share of regional health care resources to command higher prices from insurers. That results in higher premiums and other health care costs for consumers and employers, according to numerous studies.
Health insurers have also consolidated in recent decades, leaving only a handful controlling most markets.
Health care analysts say it’s possible for Harris to slow the momentum of consolidation by blocking future mergers that could lead to higher prices and lower-quality care. But many of them agree the consolidation that has already taken place is an inescapable feature of the U.S. health care landscape.
“It’s hard to unscramble the eggs,” said Bob Town, an economics professor at the University of Texas.
There were nearly 1,600 hospital mergers in the U.S. from 1998 to 2017 and 428 hospital and health system mergers from 2018 to 2023, according to a KFF study. The percentage of community hospitals that belong to a larger health system rose from 53 in 2005 to 68 in 2022. And in another sign of market concentration, as of January, well over three-quarters of the nation’s physicians were employed by hospitals or corporations, according to a report produced by Avalere Health.
Despite former President Donald Trump’s hostility to regulation as a candidate, his administration was active on antitrust efforts — though it did allow one of the largest health care mergers in U.S. history, between drugstore chain CVS Health and the insurer Aetna. Overall, Trump’s Justice Department was more aggressive on mergers than past Republican administrations.
Harris, as California’s attorney general from 2011 to 2017, jump-started health care investigations and enforcement.
“She pushed back against anticompetitive pricing,” said Rob Bonta, California’s current attorney general, who is a Democrat.
One of Harris’ most impactful decisions was a 2012 investigation into whether consolidation among hospitals and physician practices gave health systems the clout to demand higher prices. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit against Sutter Health, the giant Northern California hospital operator, for anticompetitive behavior. Sutter settled with the state for $575 million.
In 2014, Harris was among 16 state attorneys general who joined the FTC in a lawsuit to dismantle a merger between one of Idaho’s largest hospital chains and its biggest physician group. In 2016, Harris joined the U.S. Department of Justice and 11 other states in a successful lawsuit to block a proposed $48.3 billion merger between two of the nation’s largest health insurers, Cigna and Anthem.
Attempts to give the state attorney general the power to nix or impose conditions on a wide range of health care mergers have been fiercely, and successfully, opposed by California’s hospital industry. Most recently, the hospital industry persuaded state lawmakers to exempt for-profit hospitals from pending legislation that would subject private equity-backed health care transactions to review by the attorney general.
A spokesperson for the California Hospital Association declined to comment.
As attorney general of California, Harris’ work was eased by the state’s deep-blue political hue. Were she to be elected president, she could face a less hospitable political environment, especially if Republicans control one or both houses of Congress. In addition, she could face opposition from powerful health care lobbyists.
Though it often gets a bad rap, consolidation in health care also confers benefits. Many doctors choose to join large organizations because it relieves them of the administrative headaches and financial burdens of running their own practices. And being absorbed into a large health system can be a lifeline for financially troubled hospitals.
Still, a major reason health systems choose to expand through acquisition is to accumulate market clout so they can match consolidation among insurers and bargain with them for higher payments. It’s an understandable reaction to the financial pressures hospitals are under, said James Robinson, a professor of health economics at the University of California-Berkeley.
Robinson noted that hospitals are required to treat anyone who shows up at the emergency room, including uninsured people. Many hospitals have a large number of patients on Medicaid, which pays poorly. And in California, they face a series of regulatory requirements, including seismic retrofitting and nurse staffing minimums, that are expensive. “How are they going to pay for that?” Robinson said.
At the federal level, any effort to blunt anticompetitive mergers would depend in part on how aggressive the FTC is in pursuing the most egregious cases. FTC Chair Lina Khan has made the FTC more proactive in this regard.
Last year, the FTC and DOJ jointly issued new merger guidelines, which suggested the federal government would scrutinize deals more closely and take a broader view of which ones violate antitrust laws. In September, the FTC filed a lawsuit against an anesthesiology group and its private equity backer, alleging they had engaged in anticompetitive practices in Texas to drive up prices.
In January, the agency sued to stop a $320 million hospital acquisition in North Carolina.
Still, many transactions don’t come to the attention of the FTC because their value is below its $119.5 million reporting threshold. And even if it heard about more deals, “it is very underresourced and needing to be very selective in which mergers they challenge,” said Paul Ginsburg, a professor of the practice of health policy at the University of Southern California’s Sol Price School of Public Policy.
Khan’s term ends in September 2024, and Harris, if elected, could try to reappoint her, though her ability to do so may depend on which party controls the Senate.
Harris could also promote regulations that discourage monopolistic behaviors such as all-or-nothing contracting, in which large health systems refuse to do business with insurance companies unless they agree to include all their facilities in their networks, whether needed or not. That behavior was one of the core allegations in the Sutter case.
She could also seek policies at the Department of Health and Human Services, which runs Medicare and Medicaid, that encourage competition.
Bonta, California’s current attorney general, said that, while there are bad mergers, there are also good ones. “We approve them all the time,” he said. “And we approve them with conditions that address cost and that address access and that address quality.”
He expects Harris to bring similar concerns to the presidency if she wins.
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This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.
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(KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs of KFF — the independent source for health policy research, polling and journalism.)
©2024 KFF Health News. Distributed by Tribune Content Agency, LLC.
Originally published at Tribune News Service