Hospitals claim the ACA demands mergers: Are judges warming up to the argument?

Judges have largely dismissed the argument that hospitals need to merge to meet the demands of the Affordable Care Act, but a Pennsylvania judge recently accepted the "Obamacare-made-me-do-it" defense, according to the National Law Review.

In defense to an antitrust challenge by the FTC, plenty of hospitals have argued mergers are necessary to meet ACA goals, such as moving away from the fee-for-service model and providing high quality care more efficiently.

Although the argument failed on numerous occasions, a Pennsylvania judge recently accepted it. He let the contested merger of Penn State Milton S. Hershey (Pa.) Medical Center and Harrisburg, Pa.-based PinnacleHealth System go through, in part because he said it was needed to adapt to changes in the industry brought on by the ACA.

The judge's ruling differs from the position others have taken. In many cases, the FTC's argument that healthcare providers will use increased scale to negotiate higher payments from insurers has proven convincing.  

FTC Chairwoman Edith Ramirez reiterated the agency's view in a May 12 speech. She said the FTC recognizes that healthcare is shifting in the direction of risk-based payments and population health management, which hospitals argue requires scale. However, she said the scale can also lead to hospitals exerting market power on insurers.

The FTC has repeatedly asserted there is no conflict between antitrust laws and the care coordination provisions of the ACA.

"If you look at the ACA, it specifically says it's not meant to supplant competition and we think it is quite clear that the goals of the ACA and antitrust are in harmony, not in conflict," Deborah Feinstein, director of the FTC's Bureau of Competition, told reporters at a briefing at the National Press Club last December.

More articles on antitrust issues:

Judge rejects FTC's attempt to block PinnacleHealth-Penn State Hershey merger
Cigna CFO: We underestimated the 'depth and complexity' of antitrust investigation
In the Midwest, health systems go big or go home: The new reality of system dominance

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