Wall Street Journal Reports on Antitrust Investigations of Hospital-Physician Transactions

September 14, 2012

For hospitals and physicians, this article and this type of regulatory attention means renewed attention to assessing the antitrust aspects of consolidation efforts. It also serves as a quick reminder to review closely the Stark Law and Anti-Kickback Statute aspects of consolidation efforts.

After increased scrutiny from antitrust regulators, California’s attorney general sent subpoenas to several big hospital operators in the state, including San Francisco-based Dignity Health and San Diego’s Scripps Health and Sharp HealthCare, to investigate whether growing consolidation among hospitals and doctor groups is increasing the price of medical care. Although specifics of the inquiry are not known, the probe, which has been underway for several months, examines hospital systems’ reimbursement from the insurers and seems to focus on whether the systems are given increased market power from ownership of hospitals and coalition with physicians in a way that violates antitrust law.

Debate exists as to whether consolidation of hospital systems with physician groups does indeed increase medical costs. The American Hospital Association contends that such mergers do not consistently drive up medical costs and that increased prices can be attributed to various factors. A study published in the journal Health Affairs, however, suggests otherwise, noting that such mergers lead to a “shift in negotiating strength toward providers, resulting in higher payment rates and premiums.”

(Anna Wild Mathews, “Doctor, Hospital Deals Probed,” Wall Street Journal, Sept. 14, 2012, B1.)