Biden Order Targets Hospital Mergers, Surprise Medical Bills

The White House call for revised enforcement guidelines to promote hospital competition will likely amplify federal scrutiny of hospital mergers, which health economists say have raised prices.

The Biden administration order, released Friday, encouraged the Justice Department and Federal Trade Commission to review and possibly revise their merger guidelines. It highlighted hospital consolidation, which the order said has harmed consumers.

The order also called for the Health and Human Services Department to support rules limiting surprise medical bills and requiring that hospitals disclose their prices. The Trump administration ordered hospitals to make their prices public starting Jan. 1, but many hospitals have failed to comply.

The recommendations come after the federal government has already stepped up its review of healthcare competition and pricing practices.

Last December, the FTC sued to stop Hackensack Meridian Health’s agreement to acquire Englewood Healthcare Foundation. Hackensack Meridian is fighting the FTC suit, said a spokesman, who declined to comment further.

That same month, two hospital systems, Methodist Le Bonheur Healthcare and Tenet Healthcare Corp. , called off a two-hospital deal in Tennessee after the FTC sued to halt the sale.

HHS proposed rules in early July to limit surprise medical bills, as stipulated by a law enacted last year, called the No Surprises Act, targeting the high charges patients can face if they see a doctor that their health insurer doesn’t cover.

The Justice Department and FTC last issued joint guidance for certain healthcare mergers about 25 years ago, Leemore Dafny, a health economist at Harvard Business School, said. Since then, consolidation among hospitals has surged.

Some health economists have reported in recent years that hospital prices rise when competitors combine, but the quality of care doesn’t improve. Citing the findings, economists have urged tighter scrutiny of proposed mergers and acquisitions.

“The status quo hasn’t worked,” said Dr. Dafny, who testified in favor of revising hospital merger enforcement guidelines at a House subcommittee hearing last April. “If we can’t help the markets, we will have to give up on the markets.”

New York City threw a ticker-tape parade for essential workers, including those in hospitals, schools and government. It was the first such event since the start of the pandemic. Photo: Reuters

Justice Department and FTC officials said they would soon begin a review of merger guidelines. “The current guidelines deserve a hard look to determine whether they are overly permissive,” the statement said.

One major hospital trade group rejected the administration’s move. “Miring hospitals in legal and bureaucratic red tape will simply slow critical care to the bedside,” said Chip Kahn, president and chief executive officer of the Federation of American Hospitals, which represents for-profit companies.

American Hospital Association CEO Rick Pollack said deals already undergo review by state and federal agencies. Deals also benefit acquired hospitals, which gain resources when joining larger systems, he said.

Hospital mergers rose in number roughly a decade ago and have remained high, though deal making dipped in the pandemic, according to Irving Levin Associates Inc.

Dignity Health and Catholic Health Initiatives merged in 2019 to become one of the nation’s largest hospital systems. In 2018, Aurora Health Care and Advocate Health Care created a regional giant in the Midwest, while Bon Secours Health System Inc. tied up with Mercy Health across the Midwest and mid-Atlantic.

Price transparency rules have exposed large differences in the price for the same service at the same hospital. The Trump administration’s rule required hospitals to make public the previously secret rates they negotiate with private insurers.