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Strong, clear antitrust policy saves lives

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scholten jd 18-10-23

J.D. Scholten

SIOUX CITY: Right now, the failures of our healthcare system are on full display. Hospitals and their healthcare workers are overwhelmed and strapped for resources. Patients are receiving bills for COVID-19 testing and treatment that reach into the tens of thousands of dollars. The death count in America just topped 25,000 — and it could reach a quarter million.

One part of this equation is the concentration of the healthcare industry that has created fewer hospital beds, higher prices, lower quality of care and fewer resources for doctors, nurses and healthcare workers. This undoubtedly has compromised our ability to treat patients during this crisis.

Waves of consolidations and closures have plagued our nation’s hospitals with more than 680 mergers over the past decade alone.

Additionally, the reduction of about 600,000 hospital beds over the last 30 years has left our national public health infrastructure woefully unprepared for a global pandemic. This has affected urban and rural America alike: 72 percent of big metropolitan areas have highly concentrated hospital markets, and 13 percent are very highly-concentrated. And in 2019, rural America saw a record number of rural hospital closures, and another 430 rural hospitals are on the brink of closure if their financial situations do not improve. All in all, our hospital bed capacity is more than 10,000 beds short of the current projected need to respond to the coronavirus crisis.

As resources dwindle, research has proven that hospital mergers also contribute to rising health care costs and likely are a major factor in declining healthcare quality. During this coronavirus crisis, uninsured Americans could face up to $75,000 in hospital bills, an exorbitant fee and even more outrageous considering that hospitals are charging whatever they can get away with because they have the monopoly power to do so. This fact holds true with all consolidated industries: when a few players own a large percentage of the market share, there’s little incentive to reduce costs or improve the quality. It’s also easy to either buy out smaller players or simply push them out of business altogether.

During these recent years of hospital consolidation, a series of mergers and acquisitions has also increased the risk of supply shortages. In 2019 alone, hospital mergers and acquisitions were valued at $91.2 billion. These mergers pushed “just-in-time” supply chains that minimized inventories and downgraded manufacturing capacity.

We recently learned how devastating these anticompetitive mergers can be. The New York Times and ProPublica reported that public officials created a plan to address a glaring hole in our medical system’s preparedness: a ventilator shortage. The federal government signed a contract with Newport Medical Instruments, a small company in California to produce cheap, mobile ventilators that could accelerate production in the event of a pandemic. The work started and the company was on schedule to file for market approval, when Covidien, a multi-billion dollar company, bought Newport to prevent them from building a cheaper product that would undermine Covidien’s profits.

Suddenly, the ventilator program was dead. It took years for the government to line up another contract, and as you can see from this pandemic, it’s been too little, too late. Now, we have states trying to fill the gap by finding their own ventilator supply and sending supplemental ones to other states. These policies and practices are not sustainable for consumers and completely unfair to the hardworking doctors, nurses and other healthcare professionals who are working on the healthcare front lines. It’s a mess, and we must do better.

We need to reflect on these failures and have the foresight to make much-needed changes to our healthcare system. That starts with enforcing our antitrust laws in the healthcare industry and preventing the creation of these monopolies that can rake in profits at the expense of our health and well-being. Here are a couple of key steps we can take:

— Give the Federal Trade Commission and the U.S. Department of Justice more funding and resources to review and monitor mergers in the healthcare industry and challenge anti-competitive conduct.

— Adopt stricter scrutiny on anti-competitive conduct in horizontal mergers between hospitals as well as vertical mergers between hospitals, drug manufacturers, pharmacies, insurers and more.

— Repeal state COPA statutes that protect healthcare organizations from federal antitrust scrutiny and lead to healthcare mergers.

Will enforcing our antitrust laws solve everything? Will it magically give every American affordable, quality healthcare? Of course not. But it is a strong step in the right direction to lower hospital costs, improve patient care and ensure the resources needed to fight the next pandemic.

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