HMO consolidations: how national mergers affect local markets.
The health maintenance organization (HMO) industry has undergone a wave of national consolidations in recent years. The most notable among these were between United HealthCare and MetraHealth (1995), PacifiCare Health Systems and FHP International (1996), Aetna Life and Casualty and U.S. Healthcare (1996), and Aetna and Prudential's health care unit (1999). This paper examines HMO consolidation from 1994 to 1997, looking first at concentration at the national level and then at the consequences of national consolidations for local markets. Whereas earlier mergers may have caused only a small increase in the type of local market concentration that may increase prices, later and currently proposed mergers may be motivated by considerations of increasing local market concentration. However, the concentration-increasing effect of national mergers was offset by the concentration-decreasing effect of HMO entry and growth. The analyses suggest that antitrust policy still has a role to play in ensuring that HMO markets remain open to new entry and in evaluating the effect of national mergers on local market concentration. (+info)
American health care and the law--we need to talk!
The first section of this paper highlights five critical legal developments over the past half-century that, while not reflecting considered policy judgments about how the health care industry should operate, put American health care on some surprising paths. The second part then observes five fundamental policy contradictions discernible in health care law today, each of which reflects severe ambivalence in public attitudes toward health care. Although such confusion in the law is interesting in itself, the main purpose of the paper is to propose, in section three, the creation of a permanent high-level forum, perhaps in the Institute of Medicine, where leaders from the health and legal worlds could meet regularly with a view to helping the legal system resolve some of the policy confusion that exists. (+info)
Whither antitrust? The uncertain future of competition law in health care.
Although instrumental in ushering in competition to the health care industry and later in safeguarding the competitive structure of markets, antitrust law has come under attack. A series of questionable judicial decisions has clouded the standards applicable to analyzing health care markets. Legislative efforts to immunize conduct from antitrust challenge also have gathered support in recent years. This study finds scant economic or policy basis for these developments and concludes that anti-managed care sentiments have diluted enthusiasm for applying competitive principles in health care. This phenomenon has resulted in outcome-driven judicial decisions and legislative activity geared to serving political expediency rather than sound policy tenets. The paper recommends heightened antitrust scrutiny of provider and insurer markets by federal and state enforcers and increased empirical research into the workings of imperfect health care markets and the effects of past antitrust decisions. (+info)
Why competition law matters to health care quality.
Competition law (encompassing both antitrust and consumer protection) is the forgotten stepchild of health care quality. This paper introduces readers to competition law and policy, describes its institutional features and analytic framework, surveys the ways in which competition law has influenced quality-based competition, and outlines some areas in need of further development. Competition law protects the competitive process--not individual competitors. It guides the structural features of the health care system and the conduct of providers as they navigate it. Competition law does not privilege quality over other competitive goals but honors consumers' preferences with respect to trade-offs among quality, price, and other attributes of goods and services. (+info)
Relevance of federal antitrust statutes to clinical practice.
With the advent of Medicare prospective payment systems, health care entities and physicians were forced to decrease expenses by sharing services and to increase revenue by attempting to jointly negotiate better reimbursement from third- party payers. Both activities have raised the specter of prosecution under antitrust laws that have been with us for more than a century but are poorly understood by practicing physicians. Recent monopolistic activities in the health care arena have prompted the Federal Trade Commission to file actions under specific acts of Congress, eg, the Sherman Anti-Trust Act, Clayton Act, Federal Trade Commission Act, Robinson-Patman Act, and Celler-Kefauver Act. Inasmuch as it is likely that specialties such as vascular surgery as a business will undergo substantial transformation, physicians need to be aware of the severe civil and criminal sanctions imposed if they are found guilty; fines that are several times actual damages; activities that raise antitrust issues including utilization review, medical staff privileges for competing specialties, participating provider agreements, and predatory pricing; and affirmative defenses and relief available in terms of specific exemptions. As health care providers react, innovate, and adjust to stay solvent, their business strategies will surely continue to be scrutinized for antitrust behavior by federal and state officials. The physician must have a basic understanding of the groundrules that govern any contemplated business strategy so that common pitfalls may be averted. (+info)
Critical issues in hospital antitrust law.
Antitrust litigation involving hospitals is common. This paper describes recent developments and underlying issues in antitrust law with respect to hospital-hospital relations, hospital-physician relations, and hospital-payer relations. A key unanswered question in each of these areas is how government regulation and public purchasing affect competitive markets for hospital services. (+info)
Protecting competition and consumers: a conversation with Timothy J. Muris. Interview by William Sage.
In this interview with William Sage of Columbia University, Federal Trade Commission (FTC) chair Timothy Muris discusses his commission's role in the health care arena. He details the FTC's antitrust and consumer protection activities in a variety of sectors, including hospitals, physicians, and pharmaceuticals. Muris affirms the commission's belief that markets benefit consumers and that markets need basic rules to operate. The FTC's role is to enforce those rules, based on empirical evidence, in as much of the economy as possible, including health care. (+info)
Monopoly, monopsony, and market definition: an antitrust perspective on market concentration among health insurers.
James Robinson uses the Herfindahl-Hirschman Index (HHI) to compute the concentration of commercial health insurance markets in most of the states during the past four years. The HHI is the analytical foundation for the federal antitrust merger guidelines, so we consider his findings from an antitrust perspective. Market concentration provides an important benchmark for antitrust analysis, but it does not, standing alone, indicate the presence of problematic (anticompetitive) behavior or a problem that antitrust law can solve. Even if it did, there are major problems in treating individual states as discrete insurance markets. Unless the market is correctly defined, any analysis of market concentration is thoroughly unreliable. (+info)