Friday, July 9, 2021
During the first part of my summer, I wrote a review on Senator Amy Klobuchar's April 2021 book, Antitrust: Taking On Monopoly Power From the Gilded Age to the Digital Age. That turned out to be a very enjoyable, stimulating task and my article will be published late summer or early fall. This gave me the incentive to rethink how antitrust law, as a form of pro-consumer-protection "competition" rules might affect long-term care, including the concentration of ownership and operation of nursing homes and other types of "senior living." The student editor for the Law Review, Claudia Bernstein (Dickinson Law, Class of 2022), also has been captured by the topic, and she sent me an article today from the New York Times that furthered this inquiry. A key passage:
[In the U.S.] Fewer new businesses are starting. Existing businesses have slowed the pace at which they hire new workers . . . . Workers are less likely to switch jobs or move to a new city. Companies are investing in new buildings and equipment at a lower rate. And small businesses make up a shrinking share of the economy.
Together, these trends suggest that the economy suffers from a lack of fair competition, many economists believe. Large corporations are often able to increase profits not by providing better products than their rivals but instead by being so big that they exercise power over workers and consumers. The government also plays a role, through policies that protect existing companies at the expense of start-ups and new entrants into an industry.
The technical term for excess profits from a lack of competition is “monopoly rents.” Just think about how frustrated you may have been by the customer service from an airline, cable-television provider or health insurer. And then imagine how frustrating it may be to work there. Despite the problems at these companies, consumers and workers don’t always have good alternatives.
In my local area, there is a variation on this problem. As I have written about recently, county officials are proposing to close the county's "nursing home," which in my experience has been well run and served as a viable alternative for necessary services, including memory care. The likely purchaser will be a for-profit company (a modest-size, relatively new tri-state regional player). The county hopes to cease "having to subside the facility with general tax money." But, without those "subsidies," consumers' payment for care will have to increase, affecting residents unlikely to have the ability to pay more. As one article on the history of Pennsylvania's county nursing home conversions concludes:
County-owned homes, once ubiquitous, are becoming less common in Pennsylvania. Facilities that have been privatized generally have lower ratings on common metrics; a York Dispatch study in 2018 found that 15 formerly county-owned facilities sold since 2005 had an average rating of 1.9 stars out of five on the common scale used by the Centers for Medicare and Medicaid Services, while the state’s 21 county-owned homes averaged 3.1 stars [out of a possible 5 stars].