Thursday, February 9, 2023
More on Nonprofit Hospital Mergers
Mt. Rushmore in the South Dakota Black Hills
Who knew nonprofit hospitals could be predatory?! Earlier this week, Sam told us about a proposed hospital merger between Minnesota's Fairview Health Services and South Dakota's Sanford Health. The merger, attempted once before and now back on the table, prompted an interesting comment and then a call from Michael, a South Dakota cowboy who specializes in nonprofit organizations. We talked awhile about how a kid from DC ended up wandering the Black Hills. As it turns out, the merger and others like it, has prompted nationwide attention, including in Congress where two Congresswomen have proposed the Stop AntiCompetitive Healthcare Act. The bill doesn't seem to have much opposition -- perhaps because for-profit hospitals welcome the assist -- and would allow the FTC to intervene in nonprofit hospital mergers. Under current law nonprofit hospitals are exempt from FTC jurisdiction because the definition of "corporations" includes only for-profit entities. But the proposal would extend FTC jurisdiction "with respect to unfair methods of competition, [to] any hospital organization or cooperative hospital service organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code." Here is the press release:
WASHINGTON – U.S. Representatives Pramila Jayapal (WA-07) and Victoria Spartz (IN-05) today introduced the bipartisan Stop Anticompetitive Healthcare Act. The bill would amend the Federal Trade Commission Act to expand antitrust enforcement to non-profit hospitals. Currently, the FTC has no ability to stop anticompetitive actions by non-profit hospital systems.
“Being able to access quality, affordable healthcare is crucial to living well and to thriving. There is no question that hospital consolidation hurts patients by causing healthcare costs to jump and removing choice,” said Congresswoman Primila Jayapal. “My bipartisan bill with Congresswoman Spartz would put in important guardrails to prevent corporations from putting profits over proper patient care without changing anything else about a hospital’s non-profit status. We are saying enough is enough with corporate profiteering off people’s illnesses in our healthcare system.”
“Hospital consolidation and lack of competition is a major factor driving unsustainable health care prices,” said Congresswoman Victoria Spartz. “More than one of eight Americans and one of six Hoosiers are in collections due to medical debt, which is unacceptable. Non-profit hospital status should not be a loophole to avoid antitrust enforcement.”
A 2020 report by the Medicare Payment Advisory Commission found that hospital mergers lead to higher healthcare prices for patients. An analysis by the New York Times also found that hospital consolidation virtually eliminated competition and caused hospital admission costs to rise. Areas with the highest rate of hospital consolidation had prices go up between 11% and 54%.
Working Americans bear the brunt of hospital mergers, with higher costs and diminished quality of care. Preventing hospitals from engaging in anticompetitive behavior that stifles choice and the ability to seek affordable, quality care will be crucial to lowering healthcare costs for working families.
Nonprofit hospitals are also exempt from certain price fixing prohibitions too. Who knew! We really need a whole section of law -- a separate subtitle, maybe -- devoted solely to nonprofit hospitals. And maybe churches too. Just a thought.
I must admit to being mystified as to the purpose of the proposed legislation. FTC already regulates hospital mergers involving nonprofits. In fact, there's a SCOTUS case from the last decade:
Supreme Court upholds FTC blockade of Georgia hospital merger
Just this week, the following appeared:
FTC celebrates after SUNY Upstate, Crouse Health System scrap merger plans
From the article:
“In a Thursday statement, Elizabeth Wilkins, director of the FTC’s Office of Policy Planning, celebrated news of the merger’s demise.
“It is very good news for patients and healthcare workers in upstate New York that this proposed merger is not going to happen,” she said in the statement. “FTC staff had an active investigation into the effects of the proposed merger. … The merged entity would have had a combined share of nearly 67% of commercially insured inpatient hospital services in Onondaga County, and the proposed merger would have reduced the number of hospital options available for nearly all patients from three to two.”
I'd note here than that SUNY Upstate is a public hospital and Crouse Health is a 501(c)(3) public charity.
Posted by: Michael L. Wyland | Feb 24, 2023 7:21:34 AM