FTC on Hospital Consolidation in Ohio: Merger “will probably result in ‘higher health care costs for patients, employers and employees’.”

The New York Times‘ Robert Pear reports that the Federal Trade Commission (FTC) has rejected an “Ohio hospital merger in a closely watched case that could slow the consolidation of health care providers around the country.”

According to Pear “the commission ruled that the merger of the ProMedica Health System and St. Luke’s Hospital would ‘substantially lessen competition’ in the Toledo area, allowing the hospitals to charge higher prices.  The merger, justified by the hospitals as a way to prepare for ‘health care reform,’ will probably result in ‘higher health care costs for patients, employers and employees,’ the commission said.  ProMedica had argued that the merger would advance the type of collaboration promoted by President Obama under the new health care law. The commission rejected this argument. The ruling serves notice that such cooperation runs the risk of being seen by regulators as anti-competitive behavior in violation of antitrust law.”

Pear reports that the hospitals will appeal the rejection to the 6th Circuit Court of Appeals.  This process could take more than a year.

Pear picks up this quote from Thomas L. Greaney, an expert on health and antitrust law at St. Louis University, “This decision sends a signal, a warning, to hospitals: You will be scrutinized extremely closely if you undertake a merger with a close competitor.”

The conclusion from the FTC Chairman Jon Leibowitz:

“Hospitals are a big driver of health costs. No matter what happens in the Supreme Court on the Affordable Care Act — and I hope it is upheld — competition will play a vital role in ensuring that health costs don’t continue to rise as fast as they have in the past.”

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