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FTC against COPA laws for hospital mergers

The Federal Trade Commission (FTC) is pleading with state legislators not to use Certificates of Public Advantage (COPA) for hospital mergers, warning that doing so will raise patient costs, impede wage growth for healthcare workers, and make it more difficult to comply with regulations.

The agency published a policy paper on Monday outlining its investigation into the effects of COPAs, which began in 2017. The certificates, which have gained popularity recently, are intended to limit the FTC's ability to challenge mergers it believes will harm competition by shielding hospital mergers from federal antitrust laws in favor of state oversight.

"Experience and research demonstrate that COPA oversight is an inadequate substitute for competition among hospitals and a burden on the states that must conduct it.… FTC staff invites state lawmakers to work collaboratively with competition policy experts to minimize the negative effects of further anticompetitive hospital consolidation and avoid using COPAs." according to the FTC.

The FTC investigated the effects of COPAs at particular hospitals in North Carolina, Montana, and Maine in a fact sheet. The agency claimed that the COPAs demonstrated the risk of "eventually having an unregulated monopolist" by causing significant increases in commercial inpatient prices both during and after the certificates' expiration.

Minnesota, South Carolina, Tennessee, Texas, Virginia, and West Virginia are additional states that have approved hospital mergers through COPAs. After the underlying legislation was repealed, Minnesota, Montana, and North Carolina no longer permit the use of the certificates.

Hospitals must "devote significant resources to compliance" with the conditions of the certificates, according to the FTC's warning about the risks of COPAs' impact on compliance. Hospitals eventually lobbied for the repeal of COPA oversight or fewer COPA requirements as a result, the agency claimed, defeating the COPA's original intent.

The FTC also cited studies showing how hospital mergers harm benefits and wage growth for staff members, including nurses, pharmacists, and unskilled workers.

According to Elizabeth Wilkins, director of policy planning for the FTC, "despite hospital claims that COPAs will result in lower costs and improved population health outcomes, we are not aware of any proven benefits of COPAs. We urge state lawmakers to consult local health insurers, employers, and workers regarding the potential impact of COPA legislation." 

The FTC carefully examines mergers in the healthcare industry to ensure competition. The proposed merger of HCA Healthcare and Steward Health Care System in Utah was challenged by the agency in court in June due to concerns about anticompetitive behavior. As a result, the two hospital systems abandoned the deal in July.


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