State Legislation Tries to Shield This Hospital Merger from Federal Scrutiny

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February 18, 2016; Herald-Dispatch (Huntington, WV)

The West Virginia legislature is considering a bill that would exempt Cabell Huntington Hospital from state and federal antitrust laws. Specifically, the bill seeks to exempt organizations subject to the oversight of the West Virginia Health Care Authority.

NPQ has reported on the tension between the Affordable Care Act (ACA) and the Federal Trade Commission (FTC). The FTC is designed to protect consumers from unfair business practices, including trusts and monopolies. The ACA is designed to reward large healthcare systems serving all patient needs for large groups of individuals.

Large healthcare systems often resemble “one-stop shop” healthcare trusts with hospital-owned clinics, hospital-employed physicians, and hospital-operated insurance companies offering policies featuring preferential coverage for the hospital’s own providers and facilities. With frequent mergers, acquisitions, and closures of hospitals, many communities face market domination by a single provider—a monopoly.

The FTC’s concerns have justification in research. NPQ reported on a study by the Robert Wood Johnson Foundation (RWJF) that shows fewer healthcare choices results in higher costs. The RWJF study is ongoing, however, and it remains to be seen whether the implementation of the ACA (also ongoing) will affect the findings already observed. Contrary to the FTC and the RWJF, the logic model for the ACA assumes that each patient having a “medical home” and receiving comprehensive, coordinated care will result in lower costs for patients, insurers, and government at all levels. The lower costs envisioned by the ACA come from incentivizing providers to focus on wellness and health rather than surgical procedures and interventions once diseases and conditions are already present.

Will West Virginia be successful in thwarting the FEC? It depends on how the legislation is drafted to conform to a 2013 U.S. Supreme Court decision that supported the FTC and invalidated a hospital merger in Georgia. It also depends on how the current Supreme Court justices—and a new justice, once confirmed—interpret both the statute and their own 2013 decision.—Michael Wyland