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The vast consolidation among health-care providers in the aftermath of the Affordable Care Act's enactment has led to much debate over the benefits of mergers in the health-care industry. In 2016, the Federal Trade Commission filed motions in federal court to enjoin three hospital mergers in various parts of the country. This amounted to more challenges to hospital mergers in a single year than any year in recent history. Though two of these motions succeeded at the district court level, both were overturned on appeal, which led many to wonder what the effect of these decisions would be on future health-care mergers. While many fear that hospital mergers lead to higher prices for consumers, there are also those who contend that mergers lead to efficiencies, which allow merging parties to utilize resources more effectively, increase the quality of patient care and coordination, and potentially save lives. This Note argues that the possibility of quality-enhancing or life-saving efficiencies is worth the risk that consumers see increased prices. To allow mergers that may realize these types of efficiencies, antitrust enforcement agencies and courts must begin placing greater weight on merging parties' efficiency arguments by easing the current standard. Additionally, in light of new research suggesting that cross-market health-care mergers, or mergers between providers in different geographic markets, affect bargaining dynamics between providers and insurers, this Note argues that parties' relative bargaining power must be considered in agencies' and courts' analyses of the competitive landscape relevant to a merger.

The United States relies on competition to balance costs and quality in the health care system. But concentration is increasing throughout the hospital, physician, and insurer markets. Midsize community hospitals face declining demand and growing competition from both larger hospitals and smaller freestanding diagnostic and surgical centers, leaving the midsize hospitals vulnerable to closure or merger with other facilities. Competition among insurers has been limited by the development of hospital systems that extend the bargaining power of "must-have" hospitals (those perceived to provide the best care for complex and less common conditions) across local health care markets. Government antitrust enforcement could play an important role in maintaining competition in both the hospital and insurer markets, but in many markets, the impact of that enforcement has been limited to date. Policy makers should consider supplementing antitrust activities with strategies that combine competition and regulation-for example, by regulating selected prices and structuring competition to cover entire insurance markets., (Project HOPE—The People-to-People Health Foundation, Inc.)

This Article argues that recent calls for antitrust enforcement to protect health insurers from hospital and physician consolidation are incomplete. The principal obstacle to effective competition in health care is not that one or the other party has too much bargaining power, but that they have been buying and selling the wrong things. Vigorous antitrust enforcement will benefit health care consumers only if it accounts for the competitive distortions caused by the sector's long history of government regulation. Because of regulation, what pass for products in health care are typically small process steps and isolated components that can be assigned a billing code, even if they do little to help patients. Instead of further entrenching weakly competitive parties engaged in artificial commerce, antitrust enforcers and regulators should work together to promote the sale of fully assembled products and services that can be warranted to consumers for performance and safety. As better products emerge through innovation and market entry, competition may finally succeed at lowering medical costs, increasing access to treatment, and improving quality of care.

Antitrust enforcement has a crucial role to play in consolidated health care markets as providers undertake mergers, acquisitions, and other types of collaborations to integrate care and achieve greater size and scale. But antitrust enforcers and policy makers need to refine their approach in two fundamental ways. First, in addition to focusing on whether particular transactions or conduct will increase prices above competitive levels, a more pressing concern should be on assuring that health care markets are conducive to fundamental changes in how care is reimbursed and delivered - that is, the impact on payment and health care delivery innovation. Second, it is important to recognize the practical limits that apply to antitrust enforcement, both in terms of existing law and precedent and the constrained resources available to government enforcers. Government resources can be leveraged substantially through greater collaboration among federal and state antitrust enforcers, government payers, health care regulators, and economists and other policy makers. This can result in not only better-targeted antitrust enforcement actions but also payment and regulatory initiatives that can produce better-functioning and more competitive health care markets., (Copyright © 2015 by Duke University Press.)

The antitrust laws stand to protect consumers of health care services from conduct that would raise prices, lower quality, and decrease innovation by lessening competition. Importantly, though, vigorous antitrust enforcement does not impede accountable care organizations (ACOs) and similar collaborations that advance these same goals of better and more efficient care; in fact, by fostering competitive markets, the antitrust laws encourage such initiatives. This article summarizes the legal framework that the federal antitrust agencies - the Federal Trade Commission and the Antitrust Division of the US Department of Justice - use to analyze ACOs and other collaborations among health care providers. It outlines the guidance provided by the federal antitrust agencies concerning when ACOs and other provider collaborations likely would harm competition and consumers. In addition, it reviews common antitrust issues that can arise with ACOs and provides examples of enforcement actions that have prevented health care providers from taking or continuing anticompetitive actions., (Copyright © 2015 by Duke University Press.)

US health care is in ferment. Private entities are merging, aligning, and coordinating in a wide array of configurations. At the same time, there is a great deal of policy change. This includes the federal government's Affordable Care Act, as well as actions by Medicare, state legislatures, and state agencies. The health system is built upon markets, which determine how (and how well) goods and services are delivered to consumers, so it is critical that these markets work as well as possible. As the primary federal antitrust enforcement agencies, the Federal Trade Commission and the Department of Justice are charged with ensuring that health care markets operate well, but they are not alone. The functioning of health care markets is also profoundly affected by other parts of the federal government (notably the Centers for Medicare and Medicaid Services) and by state legislation and regulation. In this current period of such dynamic change, it is particularly important for the antitrust agencies to continue and enhance their communication and coordination with other government agencies as well as to maintain vigilant antitrust enforcement and consumer protection in health care markets., (Project HOPE—The People-to-People Health Foundation, Inc.)

When health insurance administrators contemplate mergers or consolidations of their plans, the transactions are generally subject to federal or state antitrust review. Regulators have traditionally examined proposed transactions for their posttransaction market power and the anticipated operating efficiencies and then decided whether to permit the transaction. Given the somewhat speculative nature of preand posttransaction market power and efficiency projections, antitrust policymakers should consider allowing the mergers or consolidations of health insurance plans to proceed while regulators subject the process to posttransaction review and enforcement.

Hospitals routinely enter into contracts with radiology groups for the right to be the exclusive providers of radiologic services at the facilities in exchange for the groups' agreeing to provide and manage all aspects of those services within the hospitals. These exclusive contracts generally result in radiology departments and associated equipment being closed off to physicians who are not part of the contracting groups. Although exclusive contracts offer obvious benefits to the physicians who receive them and obvious disadvantages for those who are excluded, they also present pitfalls for physicians in the chosen group. Part 1 of this article discussed the legal issues raised by exclusive contracts. Part 2 weighs the practical advantages and disadvantages of exclusive contracts for physicians covered and not covered by such contracts and strategies for avoiding them, as well as provisions that can be included in medical staff bylaws to protect physicians from the automatic termination of privileges when a hospital enters into or terminates an exclusive contract. The remainder of the article provides tips on specific provisions of exclusive contracts that should be included or avoided.

Hospitals routinely enter into contracts with radiology groups for the right to be the exclusive provider of radiology services at the facility in exchange for the group agreeing to provide and manage all aspects of that service within the hospital. These "exclusive contracts" generally result in the radiology department and associated equipment being closed off to physicians who are not part of the contracting group. Exclusive contracts are generally considered to be good for physicians who have them and bad for those excluded by them. In fact, while exclusive contracts offer obvious benefits to the physicians who receive them and obvious disadvantages for those who are excluded, they also present pitfalls for physicians in the chosen group. Part I of this article discusses the legal issues raised by exclusive contracts. Although these agreements appear to be anti-competitive, most courts have rejected antitrust challenges to exclusive contracts. Excluded physicians have had much greater success in attacking exclusive contracting arrangements on breach of contract and procedural/due process grounds. Exclusive contracting arrangements can also raise concerns under the Medicare-Medicaid anti-kickback statute if the contracting physicians are required to pay consideration or accept less than fair market value compensation in exchange for exclusive contracts. These agreements can also raise issues under the Stark II physician self-referral law if the contracting physicians are in a position to refer Medicare or Medicaid patients to the hospital. Part II of this article will discuss the advantages and disadvantages of exclusive contracts for physicians covered and not covered by such contracts, as well as strategies for avoiding them or minimizing their potential adverse impact. It also will discuss specific provisions of exclusive contracts that should be included or avoided.

The head of a small hospital system in South Carolina thought there was something wrong with Hill-Rom's pricing policies. Now that system and some 3,000 other hospitals await a hearing this week on the proposed dollar 337.5 million class-action settlement reached with the bedmaker. Patrick de Maynadier, left, of Hill-Rom, says his company has discontinued the "bundling" practices contested in the lawsuit.

When used in the health care industry, an MFN clause is a contractual agreement that guarantees a health insurer the same best price as their market competitors. MFN clauses have the effect of unnecessarily raising consumer costs, reducing choice among providers, constraining access to care and preventing the development of alternative health care delivery models. The purpose of this paper is four-fold. First, to design a four-quadrant matrix to evaluate the pro-competitive and anticompetitive purposes and effects of MFN clauses under Section 1 of the Sherman Act. Second, to defeat the jurisprudential presumption that MFN clauses are pro-competitive in the health care industry and to recommend that this presumption be abolished. Third, to examine the U.S. Department of Justice's paradigmatic shift over the last decade toward prosecuting large insurers who employ MFN clauses resulting in U.S. Consent Decrees. Fourth, to outline the indicia of a meritorious claim against an insurer who employs an MFN clause.

Hospitals should take steps to ensure their recent consolidations can withstand renewed FTC antitrust scrutiny. The FTC will likely focus its attention on: Virtual mergers, in which "merging" organizations have combined operations while maintaining a degree of managerial independence; Mergers that were originally justified on the basis of projected efficiencies or lower prices; and Mergers of not-for-profit and for-profit organizations.

Although instrumental in ushering in competition to the health care industry and later in safeguarding the competitive structure of markets, antitrust law has come under attack. A series of questionable judicial decisions has clouded the standards applicable to analyzing health care markets. Legislative efforts to immunize conduct from antitrust challenge also have gathered support in recent years. This study finds scant economic or policy basis for these developments and concludes that anti-managed care sentiments have diluted enthusiasm for applying competitive principles in health care. This phenomenon has resulted in outcome-driven judicial decisions and legislative activity geared to serving political expediency rather than sound policy tenets. The paper recommends heightened antitrust scrutiny of provider and insurer markets by federal and state enforcers and increased empirical research into the workings of imperfect health care markets and the effects of past antitrust decisions.

This Article begins with an antitrust primer, then analyzes the appropriate application of antitrust principles to nonprofit healthcare providers. In light of the inherent charitable character of nonprofit healthcare providers, the author contends that the government and the courts should accord some deference to nonprofit hospitals when they are seeking approval of mergers. To date, this has not generally been the case, although a few recent court decisions have rested their approval of mergers, in part, upon the nonprofit character of the merging entities. The author, in particular, believes the paradigmatic local nonprofit hospital with a community board is less likely than a for-profit hospital to abuse any market power that it may obtain through a merger; consequently, any such merger should not be analyzed solely under the traditional presumptions of antitrust jurisprudence. Rather, the premerger analysis should involve meaningful consideration of the hospital's charitable character.

Objective: To examine the theoretical possibility of monopsony behavior under managed care insurance., Study Design: Use of microeconomic theory to examine how managed care plans with market power would be expected to behave, and effects of that behavior on consumer and supplier welfare., Principal Findings: The article shows that, under managed care monopsony, the welfare of consumers may be increased but overall economic welfare will necessarily be reduced. It offers a test for whether the lower prices paid by managed care buyers with larger market share represent welfare-reducing monopsony or a welfare-increasing movement away from provider monopoly. The test says that, if the quantity of inputs (supplied under conditions of increasing long-run marginal cost) declines, monopsony is present. The article also argues that the translation of lower provider prices into lower premiums is consistent with welfare-reducing monopsony by nonprofit health plans. In contrast, for-profit health plans that obtain monopsony may reduce the welfare of consumers as well as that of input suppliers. These theoretical conclusions are shown to be consistent with recent empirical research indicating a negative relationship between buyer market power and cost per enrollee., Conclusions: Traditional antitrust policy has not been able to deal well with monopsony. The article concludes that health plans that use their market power to reduce medical spending may harm the well-being both of specialized medical workers and of consumers of medical care. Antitrust policy may need to be modified to deal with this situation.

Objective: Antitrust enforcement can improve the performance of large, vertically integrated physician-hospital organizations (PHOs). Objective: To examine the recent court decisions in the Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic antitrust case to understand better the benefits and costs of vertical integration in healthcare., Summary and Conclusions: Vertical integration in the Marshfield Clinic may have had the benefits of reducing transactions and uncertainty costs while improving the coordination between ambulatory and inpatient visits, but at the cost of Marshfield Clinic's monopolizing of physician services and foreclosing of HMO entry in northwest Wisconsin. The denial of hospital staff privileges to non-Marshfield Clinic physicians combined with certificate-of-need regulations impeded physician entry and solidified Marshfield Clinic's monopoly position. Enforcement efforts of recent antitrust guidelines by the U.S. Department of Justice and the Federal Trade Commission will need to address carefully the benefits and costs of vertically integrated systems.

Objective: To discuss the implications of the rapid transformation of the healthcare financing and delivery system for competition, social welfare, and antitrust policy., Principal Finding: Horizontal and vertical consolidations can enhance efficiency but can also be anticompetitive in markets characterized by entry barriers., Recommendation: Active enforcement of the antitrust laws is essential to ensure that competition in healthcare markets will lead to procompetitive, rather than anticompetitive effects. However, healthcare antitrust enforcement policy must be flexible enough to allow efficient new forms of organization and practice to emerge.

Objective: To describe the landscape of state antitrust activity and review related research and policy issues. In particular, to examine state laws that attempt to immunize mergers among healthcare providers from state and federal antitrust prosecution and consent decrees issued by state attorneys general permitting healthcare providers to merge., Data Sources: State laws attempting to immunize collaborative activities from state and federal antitrust prosecution and consent decrees between state attorneys general and collaborating healthcare providers., Principal Findings: State antitrust agencies have been more willing than federal antitrust agencies to approve mergers that are contingent on the fulfillment of specific conditions that require continued oversight., Conclusions: Research is needed to inform policymakers about the consequences of state-approved mergers on market performance.

The Federal Trade Commission and the U.S. Justice Department are on a four-case losing streak with hospital mergers they have tried to stop for antitrust reasons. Theories explaining why the trustbusters can't hit a home run abound. Some point to the loss of key players who have signed on with the private sector. Others say the complex economic models introduced in court can throw judges a curve ball.

Managed care has shifted purchasing decisions from patients towards payers. While this shift has been associated with increased price competition in provider markets, we believe that it may enhance the potential for consumer injury from mergers in geographic markets previously considered immune to antitrust concerns (e.g. suburban components of large metropolitan areas). In addition, recent changes also increase concerns about mergers in product submarkets such as tertiary care.

Exclusive contracts between hospitals and physicians are common. In most instances they raise no anticompetitive concerns. However, especially in rural markets, exclusive contracts may be used to foreclose actual and potential competitors and thereby decrease competition. The courts should weigh the benefits and costs of exclusive contracts in these areas.