Competitive Effects Analyses of Hospital Mergers: Are We Keeping Pace with Dynamic Healthcare Markets?

• Author: Margaret E. Guerin-Calvert
• DOI: 10.1177/0003603X1405900304
• Published date: 01 September 2014
• Date: 01 September 2014
• Subject Matter: Hospital Mergers—Articles & Commets

THE ANTITRUST BUL L E T I N :Vol. 59, N o. 3/Fall 2 014 :505

Competitive effects analyses of

hospital mergers: Are we keeping pace

with dynamic healthcare markets?

BY MARGAR ET E. GUE RIN-CA LVERT*

The healthcare industry is undergoing significant realignment driven

by economic, policy, demographic, and other factors. Merging parties

and enforcement agencies desire frameworks that capture full merger

effects including quality, benefits, and efficiencies and provide reliable

competitive effects predictions grounded in market realities. Market

structure measures alone have proven poor predictors of anticompeti-

tive effects or enforcement activity. Competitive effects analysis must

(and the current models do not) reflect the incentives, ability, and

impact of insurers’ responses to post-merger pricing with adjustments

to incentives and network structure that can control provider market

power without diminishing efficiencies. It is imperative to alter current

models forthese insurer incentives and the differentiated hospital reim-

bursementbids that result in lower costs of caredelivery.More compre-

hensive anal ysis of merger ben efits and impa ct of patient st eering

toward highvalue and cost effective care will enrich economic analysis

of mergersand improve reliability of competitive effects predictions.

KEY WORDS:competitive effects; antitrust; healthcare; hospitals; mergers;

efficiencies; models

© 2014by Federal Legal Publications, Inc.

* Senior Consultant, Compass Lexecon, a wholly owned subsidiary of

FTI Consulting, Inc. and President and Senior Managing Director, Center for

Healthcare Economics and Policy,FTI.

AUTHOR’S NOTE:I benefited substantially from discussion of the issues and topics

herein with Bobby Willig, Loren Smith, and Susan Manning and my colleagues at

Compass Lexecon. The views expressed herein are my own and not those of any

organization with which I am or have been affiliated.