Managing Principal Tasneem Chipty and Vice President Asta Sendonaris Publish on Antitrust and Efficiency Considerations in Health Care Mergers

November 24, 2015

In response to the Patient Protection and Affordable Care Act of 2010 (ACA), many health care providers have sought to consolidate through a series of hospital-to-hospital and hospital-to-physician group mergers. According to the providers, these mergers are intended to deliver improved population health management, through better clinical integration, to better satisfy the requirements of the ACA and qualify for the associated financial incentives. To date, no provider has successfully convinced antitrust enforcers that the claimed efficiencies are cognizable and sufficient to offset competitive concerns. In their recent American Health Lawyers Association (AHLA) article, "Economists' Perspective on the Efficiency Defense in Provider Consolidations: What Works, What Doesn't Work, and What We Still Don't Know" (AHLA Connections, September 2015), Managing Principal Tasneem Chipty and Vice President Asta Sendonaris examine antitrust oversight across recent provider mergers, drawing lessons on the "dos and don'ts" of the efficiency arguments.

Specifically, the authors discuss the efficiency claims and evidence from three litigated provider mergers: Tenet Healthcare,Promedica, and St. Luke's-Saltzer. They explain that the ACA presents health care providers with incentives to merge, but providers hoping to argue that efficiencies will offset any harm from increased market power should be prepared with credible evidence to support such claims. The balancing test requires that when the presumption of anticompetitive harm is large, the potential gains from cognizable efficiencies need to be sufficiently large. In such instances, the standards for proving claimed efficiencies are typically high, and provider mergers in response to the ACA are no exception.

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