And now this is interesting, from the Chicago Tribune:
Federal Trade Commission filed a lawsuit Friday to block the planned merger of two Chicago-area hospital chains, saying that the combination of Advocate Health Care and NorthShore University HealthSystem would stifle competition in northern Cook and Lake counties.
Advocate is the largest hospital chain in Illinois with 12 hospitals, spread across the Chicago area and Peoria. NorthShore is the dominant health care provider north of Chicago with four hospitals in Evanston, Skokie, Glenview and Highland Park.
This is the third hospital consolidation plan that the FTC has filed suit to stop in the past month. Once is happenstance, twice is a coincindence, but three lawsuits against hospital mergers and consolidations looks like it is now the official policy of the FTC to be extremely skeptical of hospital mergers that lead to regional consolidation. Mergers that are merely footprint expansions probably will still go through as long as the acquiring entity is not already a major national player.
Now why is this important?
TLDR: Fewer hookers and worse blow
Market power is how hospitals and other providers can charge significantly above market clearing rates on the private insurance market. Breaking up already consolidated entities is much harder than preventing market moving combinations from being built. This is a necessary first step to start getting pricing under control. A longer view step is either regulating local hospital market movers as regulated utilities or breaking them up into smaller, competing units that can not cooperate nor collude. The other approach is to use monopsony power of a single major purchaser to go market power to market power to get better pricing for the public.
The problem with that approach is that it requires two friendly chambers of Congress, a friendly president and a Supreme Court that thinks the New Deal is settled law. We’re not going to get that entire combination any time soon.
So we are left with regulatory leverage where a pro-competition White House can use its executive powers to pursue an anti-current business agenda that is looking to unlock significant consumer surplus from the current market power derived deadweight loss. This is a cost control measure that can be pursued without Congressional input so it is one of the many ways that 2016 elections matter.
jharp
I wonder what thoughts come to the mind of a teabagger when they read a piece like this.
I really wouldn’t have a clue.
Makes me wish more more trolls posted here.
dr. bloor
Sorry, couldn’t resist.
Nunca El Jefe
The hospital where my youngest son was born, 4 years ago, has undergone 3 name changes. It’s crazy town all over, here in the Chicago area. Most surprising to me is when you see these changes at far offsite facilities which were only completed weeks beforehand. On a practical level, we have managed to keep all of our regular physicians in our network but it’s been difficult to find out whether or not that’s true after every change. Given what you have been discussing here over the last few months I find that it highlights how uncomfortable it can be for people, as they are in the middle of changes in both the network of physicians and facilities and any changes made by the insurance provider.
As the one having to cough up the cash to both of those entities the relative lack of visibility can be frustrating. Your perspective has been helpful, thank you.
Richard Mayhew
@dr. bloor: No, I am thinking the FTC will come down big on the two national insurer mergers for at least significant chunks of the business lines that overlap in the same region.
japa21
@Richard Mayhew: That has been the thinking even within those companies. And it is interesting because the larger the insurance company the more leverage they have against providers to get better rates, but it also means the insurance companies have more power to set premiums when they aren’t in competition.
I like your choice of phrasing, such as “pro-competition” and “anti-current business agenda”. For all the GOP talks about free market, which by definition not only allows but promotes competition, everything the are really for stifles competition to the benefit of the big boys.
Yutsano
I guess this means the era of Catholic hospitals (and restricting health choices for women) is coming to a wrap right?
Villago Delenda Est
@japa21: American corporations LOATHE an actual free market. They will do everything in their power (short of lowering prices and reducing hookers and blow slush funds for execs) to find a way to kill off any competition. It’s always build toward a monopoly with fantastic efficiencies of scale and keep the savings for aforementioned hookers and blow, and gouge the consumer.
Rentiers need to be euthanized.
WereBear
They lie. Always.
I love these posts, even though I don’t understand everything they discuss, I learn enough to figure out how much the ACA will be saving us… down the road.
Unfortunately, I deal with people who can’t see that. “My rates went up this year! Stupid Obamacare!”
Drives me nuts.
Yutsano
@WereBear: I recall my rates going up every single year I have had insurance. It’s just now there is a convenient boogeyman with bonus melanin to assist in the blame.
DJAnyReason
Fewer hookers
Betty Cracker
@WereBear: I hear that “My rates went up this year! Stupid Obamacare!” refrain too. A selective amnesia strikes these folks, wiping out all memory of double-digit cost increases in the pre-Obamacare world, I guess.
My response is that they and their idiotic elected representatives are the ones who insisted on retaining the inefficient private insurance component and employer-based delivery system. Given that albatross, Obamacare has performed heroically to mitigate the worst effects of their precious free market approach. But if they want to cut costs in half while maintaining or improving outcomes, they should get back to us when they’re ready to discuss “socialized medicine.”
Mai.naem.mobile
I know this isn’t an open thread but Miss Lindsay just dropped out of the presidential race.
Wiesman
@DJAnyReason: Fewer hookers
Fewer hookers is probably right, but maybe he meant the same quantity, but less quality?
WereBear
@Wiesman: I’m sure most executives figure with better blow, the hookers will look better anyway.
gex
Hopefully this will included slowing the Catholic Church from expanding into more and more systems and imposing their dogma on women’s health care options.
WereBear
Yes, a million times!
I think it’s something men just cannot understand because a) their equipment is not used as a pawn in several religious systems and b) it just, you know, doesn’t “come into play” with the medical system the way a woman’s does.
If men encountered the same eagerness to have their testicles removed in mid-life as women do with their ovaries after menopause, a LOT would change!
Richard Mayhew
@gex: Unfortunately, it probably would not in most cases that I am aware of.
In the situations I’ve seen, it is either a local small hospital chain (1-3 hospitals) buying out another hospital that is about to go under and the FTC is reluctant to get in the way of a last minute kick-save attempt.
OR the situation is a national hospital group is buying a hospital in a region where they don’t have a significant presence, so the concentration in the market stays the same, the labels are different from the FTC POV.
inkadu
@Yutsano: Well, if it makes you feel any better, a Catholic hospital near me was purchased by the secular hospital, so… silver lining.
satby
@Yutsano: Advocate is run (or was) by Evangelical Lutherans and also restricted abortion access, though they were less obstructive of birth control. I worked for them a while when I was a private investigator, undercover as a nurses aide while we investigated a suspected ring of prescription drug thieves. They were always so worried about the higher revenue out patients that all the wheelchairs in the place were kept at the entrances, and floor staff wasted lots of time stealing each other’s sole wheelchairs to transport inpatients to therapy and tests while the entrance ones sat empty but unable to be used.
mclaren
So maybe Mayhew can explain to us, in the midst of the usual dishonest fake “good news” he keeps posting about how America’s shitty broken health care system is allegedly getting better, exactly why the Martin Shkrelis of the world won’t just keep jacking up prices for all drugs by 150,000 percent?
Preventing massive hospital mergers may help contain costs in the margin, but it won’t do fuck-all when sociopaths like Shkreli decide to increase life-saving drug prices from $1 a pill to $100,000 a pill. And what’s to stop ’em?
Seriously? Who is going to stop them?
Congress? Dream on. The Obama administration? Not on your life. Hillary? Get real. The FDA? Don’t make me laugh.
Americans are fucked, stuck, ‘n outa luck. If you get sick, make sure you’ve got dual citizenship in Canada so you can get decent affordable nationalized single-payer health care. That’s your only option. With drive-by doctoring and Shkreli-priced meds, if you rely on Obamacare, you’re going to lose your house and your car and your life savings and you’ll be sitting in a fucking cardboard box on the street holding up a sign that reads WILL WORK FOR TRIPLE BYPASS.
mclaren
@Betty Cracker:
WRONG!
Betty, I hear from people all the fucking time who rage and tear their hair about the double-digit premium increases they’re getting on their ACA exchange health care policies. 28% in one year. $35% in one year. A whopping 150% in one year.
It just goes on and on and on and on. Don’t try to tell me the ACA has fixed this problem. It hasn’t. The basic problem was never greedy insurance company, it’s greedy corrupt doctors and greedy corrupt big pharma and greedy corrupt hospitals and greedy corrupt imagine and path labs.
The ACA places no restrictions on how much medical devicemakers or imaging labs or path labs or hospitals or doctors can increase their prices — unless they’re dealing with medicare patients. And just try finding a personal physician who will accept medicare/Medicaid in your area. Just try.
cmorenc
@mclaren:
I had no problem at all finding a personal physician in the Duke Raleigh health system who would accept my Medicare (actually Blue Cross PPO Medicare).