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Myth: Antitrust Enforcers Block Many Hospital Mergers

Blog Post · October 24, 2016

Leemore Dafny Slide: Myth: Antitrust Enforcers Block Many Hospital Mergers

Contested vs. Uncontested Hospital Acquisitions Click To Enlarge.

The federal antitrust authorities review a large number of hospital transactions each year, but they rarely challenge them. Two key takeaways of the above chart are:

  1. If your deal is contested by the authorities, in their view it violates competition laws, and that stance is not taken lightly or adopted frequently.
  2. Most deals will clear the Federal Trade Commission’s hurdle, so the hospital industry landscape will be largely determined by what hospital boards choose to do.

Mergers continue to close at a steady pace, notwithstanding the lack of quantitative, large-sample evidence of quality improvements and cost reductions from hospital mergers. The one result that continues to emerge from research studies is that mergers and market concentration tend to result in higher prices.

It’s important to appreciate that every merger is different, and some may well generate benefits that will be passed on to consumers. But boards shouldn’t assume that if the FTC fails to object, their merger is likely to fall in this category. Authorities place “guardrails” on the merger highway, but they don’t set the speed or direction of merging parties.

 

This blog post originally appeared in NEJM Catalyst on March 4, 2016.


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