The Market Institute President Charles Sauer has a new article in Real Clear Health highlighting a recent executive order by the Biden Administration to use antitrust enforcement.
“In a move that would warm Joseph Stalin’s dead heart, the Biden Administration released (yet) another Executive Order, this one instructing federal agencies to ramp up their use of antitrust and other interventionist federal policies to “promote competition.”
The Federal Trade Commission’s Bureau of Competition Assistant Director Mark Seidemann says this has the FTC “feeling invigorated and looking to fulfill the order’s call to be aggressive on antitrust enforcement.” This is hardly surprising, since FTC Commissioner Lina Khan is one of the leading advocates of aggressive and novel use of antitrust to implement the “progressive” agenda.
Khan is a leading proponent of replacing the consumer welfare standard—where the federal government limits antitrust enforcement to those cases where anti-competitive activities can be proven harmful to consumers—with what she calls a holistic approach to antitrust. Khan’s holistic approach requires the federal government to consider a wide range of effects of market consolidation. For example, Khan and her allies want an increased focus on how consolidation affects labor markets. According to Seidemann, this could affect how the FTC analyzes hospital mergers, particularly where the merging hospitals draw from the same labor pool.
In practice, this could mean the FTC will disapprove mergers within the medical industry even if consolidation would benefit patients!
Biden’s competition executive order actually signaled out the health care industry, and the FTC has blocked four hospital mergers this year. The FTC is looking for other ways to limit concentrations in the health care market.
One way to limit or reverse concentration in the health care industry would be for the administration and the FTC to work with Congress to repeal laws that encourage consolidation to the detriment of patients and providers. A good place to start would be the law our current President famously called a “big f$#$%in’ deal,” the Affordable care Act a.k.a. Obamacare.
Increased consolidation is not an “unintended consequence” of Obamacare. The law’s architects wanted to encourage consolidation because they believed it would, in the words of an open letter signed by Obama’s top health care advisors “…. unleash forces that favor integration across the continuum of care.” The results of the consolidation are far from what they intended.
Hospital mergers and acquisitions reached a record 115 in 2017, according to health care expert Sally Pipes. Obamacare is helping make the sole practice a thing of the past. Over 5,000 physician practices were absorbed into larger healthcare systems just between 2015 and 2016. Researchers at Northwestern University found that physician prices increase by an average of 14% after being acquired by a larger system. Consolidation also diminishes quality of care as physicians are unable to spend the same amount of time with patients, much less develop personal relationships with the patient, when they are employees of large corporation instead of the boss of their own practice with the power to ensure they uphold the highest standards of care.
This is yet another example of Ludwig von Mise’s observation that government interventions always create a new set of problems justifying new government interventions. Obamacare failures have justified not just the FTC’s increased use of antitrust to stop hostile mergers, but the renewed push form progressives to nationalize healthcare under the guess of “Medicare for All.”
FTC actions blocking further mergers and acquisitions in the health care industry will only make the problem worse, since FTC bureaucrats are incapable of determining what mergers are the result of Obamacare (and other government policies). Therefore, actions they do take are likely to harm patients and fail to provide changes that will benefit patients and providers.
Instead of furthering government intervention in the healthcare marketplace, Biden, Khan, and other progressives should join with free-market health care proponents to eliminate those provisions of Obamacare that increase consolidation. There must also be increased efforts to repeal state-level “certificate of needs” laws. These laws require a business to “prove” to a bureaucrat that there is sufficient demand in a given area to justify building a new hospital.
As if anyone would invest the money and time to construct a new hospital without first determining if there was sufficient demand to sustain the new facility!”