A former lawyer spoke to Becker's Hospital Review about how President Donald Trump's declaration to maintain a "pro-business" stance may prove difficult in terms of hospital and health system mergers and acquisitions activity.
Joseph Lupica, chairman of Newpoint Healthcare Advisors, spoke with Becker's Hospital Review about how President Trump's "pro-business" platform may create conflicting ideals in the world of healthcare M&A. Mr. Lupica said the individuals President Trump plans to appoint to the Federal Trade Commission will have to make a choice, in certain situations, as to which business endeavor they support, potentially pitting certain subsections of the industry against one another.
"While the President's campaign promises and early appointees signaled a pro-business stance[,] I would ask, 'pro which business?' In healthcare, monopoly practices by hospital businesses could injure other businesses like health plans and employers buying coverage. Take the proposed PinnacleHealth/UPMC merger … the Sherman and Clayton Acts look for monopolies and combinations that restrain competition. Whether the Pinnacle combination restrains competition depends on multiple factors like the definition of market boundaries to determine market share and whether customers (here, payers and the premium-paying businesses) have alternatives for buying services from providers in that market.
[But] think about how provider-sponsored health plans affect markets. If we look beyond the pricing of hospital services alone and examine the combined cost of insurance premiums and provider rates, deals like UPMC/Pinnacle actually offer the potential to lower healthcare spending in a region overall ... The new UPMC/Pinnacle will be a provider, but UPMC also brings its own health plan into central Pennsylvania [which] will actually introduce more competition into the payer marketplace. To deal with the intense competition, the UPMC Health Plan will probably have to make money the old-fashioned way — by offering lower premiums to the employer/patient market, and they can only do that with affordable rates from a network of cost-effective providers, which includes UPMC/Pinnacle — their own provider. The FTC might even smile ... at the downward pressure on costs in the employer/patient marketplace of premium payers."
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