Help us ensure access to fair and competitive healthcare markets for you and your family.

Description:

Competition works best when many companies in the market compete for your business. Often, one owner buys many companies, consolidates them, or combines them to eliminate competition and the benefits of competition to you.

Consolidation in the healthcare industry can occur in many ways:

• Mergers – When large companies merge with each other, eliminating competition in the market. This loss of competition can occur across pharmaceutical companies, hospitals and other providers, insurers, and more.
• “Roll-ups” (also called serial acquisitions) – When a firm buys multiple small but similar businesses in the same area. Such conduct reduces the number of competitors over time. 
• Cross-market mergers – When firms that work in the same industry but in separate geographic areas merge. For example, a hospital system in one part of the state acquires a hospital in another part of the state. These mergers may harm competition if the merged firm uses its newly amassed influence—influence over, for example, a statewide employer or other insurer—to affect price, access, or quality.   
• Partial acquisitions – When a firm gets less-than-full control of another competing firm. These acquisitions may harm competition by giving the partial owner an ability to influence strategic decisions of the competing firm. Such loss of competition could reduce the partial owner’s incentive to compete and give the partial owner access to non-public, competitively sensitive information.
• Vertical mergers – When companies along varying levels of the supply chain merge. For example, a hospital system that buys a large physician practice that does a lot of patient referrals. These mergers may harm competition by:
  • lowering incentives to compete;
  • limiting a rival firm’s access to a product, service, or route to market;
  • giving or increasing access to a rival’s non-public, competitively sensitive information; or
  • deterring rivals or potential rivals from investing.
• Joint venture – When competing companies combine or share resources to achieve a common goal. A joint venture may harm competition if it involves agreements to influence prices, access, quality, or innovation.

When healthcare firms consolidate or pursue a joint venture, they often say that it will result in “efficiencies.” Healthcare firms may close or downsize their facilities. Such conduct may result in higher prices, lower quality, less access to care, and fewer job opportunities.

If mergers or joint ventures substantially lessen competition or tend to create a monopoly, they violate antitrust law.

Examples:

• A private equity company buys a series of nursing homes or medical practices in the same area. It also uses its influence to enter into agreements with other providers that fix prices.
• A health insurance company buys several medical practices that compete with each other. It also prohibits its medical practices from contracting with rival health insurance companies.
• A pharmacy benefit manager buys a series of small independent pharmacies or specialty pharmacies. It also uses its influence to reimburse its pharmacies at a higher rate than other pharmacies.
• A hospital system buys other hospitals, outpatient facilities, or medical practices. It also alters its referral patterns to favor its practices over competing hospital systems. 
• After a merger, a hospital system closes some of its facilities or reduces services. Such conduct results in higher prices, longer wait times, less access to care, lower quality, or job loss.
• After an acquisition, providers change their coding practices to upcharge payers and produce overpayments without changes in care.
• A hospital system acquires minority interests of a competing hospital system. They can:
  • appoint board members,
  • watch board meetings,
  • impact operational decisions,
  • veto the competing hospital’s ability to raise capital, or
  • access competitively sensitive information.
• Competing hospital systems start a joint venture to share competitively sensitive information or divide markets.

Description:

Competition helps healthcare employees get higher wages, better benefits, and improved working conditions. Patients can also benefit. A more competitive healthcare workforce may increase access to treatments and quality of care. Sometimes employers make agreements with each other (written or verbal) that limit competition. 

Agreements among competitors to limit or fix the terms of employment for employees (current and potential) can violate the antitrust laws. For example, wage-fixing, no-poach, and no-solicitation agreements between competitors are unlawful. Other agreements, such as non-compete clauses, constrain a single firm’s decision-making about wages, salaries, or benefits. These agreements may be illegal in certain circumstances.

Examples:

• A hospital prohibits an employee from working for another hospital or physician practice for a specific period of time or in a particular geographical area after employment ends.
• A large employer in a geographic area follows a no-rehire policy for employees that leave the job.
• A health system revokes a physician’s medical staff privileges for having ownership in a competing facility.
• Different employers agree to set wages at the same level or give the same benefits.
• Different employers agree not to poach or recruit each other’s employees.
• An employer requires an employee to sign an agreement saying they will not compete with the employer after leaving the job.
• Competing employers agree to divide employees among themselves.
• Competing employers share terms and conditions of employment, including current and future wage information.

Description:

Healthcare companies should compete for your business. Competition often results in lower prices, better quality, greater access, and increased innovation. Sometimes companies make agreements with each other (written or verbal) instead of competing.

That behavior can violate federal laws. Antitrust laws prohibit certain kinds of agreements among competitors. This includes:

• Price fixing – When competitors agree to raise, fix, or maintain the price of goods or services. 
• Bid rigging – When competitors agree in advance on the price or terms of their competitive bids. The government or a business may identify and request goods or services from another company through the competitive bidding process to award business contracts.
• Market allocation – When competitors agree to divide markets among themselves. Market allocation includes agreeing to sell only to specific customers or areas.

Examples:

• Competing healthcare companies, such as providers or pharmaceutical companies, collectively set prices or negotiate reimbursement rates at certain prices or levels.
• Competing healthcare companies divide customers among themselves.  
• Competing healthcare companies agree to only bid in certain areas or on certain projects.
• Competing healthcare companies agree to take turns to win bids.
• Competing healthcare companies agree to allow the same companies to win or lose a bid.
• Competing healthcare companies agree to stop providing anticipated discounts or rebates.
• Competing healthcare companies agree to end up winning the same amount of work over a series of bids.
• Competing healthcare companies agree to not market to customers in each other’s geographies.

Description:

Patients need to know about their healthcare options and costs to make informed choices. Transparency promotes competition by helping consumers to make better choices. Actions to limit transparency can violate several federal laws, such as the antitrust laws.

Examples:

• A hospital system or insurer inserts language into their contracts that keeps patients from knowing the negotiated rates or other costs of services.
• A hospital or insurer does not provide the prices of services in a public and easy-to-read format.
• A healthcare provider or electronic health information/records vendor interferes with access, exchange, or use of patient’s electronic health information that is permitted under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and consistent with how the patient wants to access their electronic health information.

Description:

Healthcare companies sometimes add language into their contracts with other companies or with patients that limits competition or enter into settlements that have the same effect. These clauses, contracting practices, and settlement agreements come in many forms.

Examples:

• Anti-tiering and anti-steering clauses (also known as anti-innovation, anti-incentive, or anti-discounting clauses): These clauses keep a health insurer from giving incentives, such as discounts, to guide patients to use cheaper or higher quality healthcare providers. These clauses impede competition by lessening incentives to lower cost, provide quality care, and innovate.

  This can occur when:

  • A hospital system requires an insurer to put all its physicians, hospitals, and healthcare facilities in the most favorable tier of providers.
  • A hospital system requires an insurer to put all its physicians, hospitals, and healthcare facilities at the lowest cost-sharing rate, so patients do not go to other providers.

• Exclusive contracting: Exclusive contracting prevents buyers from contracting with any other seller. This may harm competition and result in higher prices.

  This can occur when:

  • A dominant healthcare provider prevents an insurer from contracting with other competing providers.
  • A dominant health insurer prevents a healthcare provider from contracting with other competing insurers.

• All-or-nothing clauses: These clauses require a health insurer to contract with all the providers’ facilities or none at all. Health insurers often need to include a “must-have” provider in their network to sell a viable health plan. By inserting an all-or-nothing clause, health systems can use their “must-have” provider to make sure their other facilities are included in the network. They can also demand higher rates for all facilities in the entire health system. These clauses can harm competition because they result in higher prices and less innovation.

  This can occur when:

  • An insurer wants to contract with a single hospital. However, the hospital system requires the insurer to contract with all its facilities at high rates.

• Commercial price parity clauses: These types of clauses may harm competition by facilitating illegal agreements on price among commercial competitors or unlawful acquisition or maintenance of a monopoly. This can result in higher prices and reduce competition that would benefit consumers.

  This can occur when:

  • A hospital system guarantees that an insurer will receive better or equal terms as those provided to any other insurer.
  • An insurer requires a provider to certify that the agreed-upon negotiated reimbursement rates are the best rates available.
  • An insurer requires a provider to share negotiated reimbursement rates paid by other insurers.

• Generic drug delay tactics: Brand drug manufacturers use various tactics to delay or block generic drug manufacturers from launching their lower-priced generic drug alternatives.

  This can occur when:

  • Brand drug manufacturers agree to settle patent lawsuits with generic drug manufacturers by paying the generic manufacturer to delay the launch of generic drugs.
  • Brand drug manufacturers make new, minor modifications to a brand drug with an expiring patent while decreasing or eliminating production of the original version of the brand drug.
  • Brand drug manufacturers improperly list their patents in the Orange Book.
  • Brand drug manufacturers prevent generic drug manufacturers from obtaining drug samples for necessary testing.
  • Brand drug manufacturers sell or threaten to sell an authorized generic drug to delay the launch of generic drugs.

Description:

Healthcare companies accumulate data at a rapid pace. Acquisition and control of large amounts of data by a few companies can threaten healthy competition. It may allow those companies to prevent other companies from entering the market and reduce future innovation. It may also allow them to determine who gets care at what price. These companies also may be able to surveil their rivals or use data to harm competition. Certain conduct may violate the antitrust laws even if such conduct is consistent with HIPAA.

Examples:

• An insurer acquires a company to access and obtain data rights to claims data of other competing insurers.
• A hospital or insurer shares detailed utilization or claims data among competitors.
• A healthcare provider or electronic health information/records vendor interferes with access, exchange, or use of a patient’s electronic health information that is consistent with how the patient wants to access their electronic health information.

Description:

Certifying bodies or accreditation organizations can impose unnecessary requirements on healthcare providers. Unnecessary requirements can raise the costs of practicing medicine. They can also reduce the number of healthcare practitioners participating in the marketplace. These requirements can harm competition and increase the cost of healthcare services.

Example:

• Certifying bodies or accreditation organizations ask physicians to meet unnecessary requirements to stay certified.