Integrating healthcare quality concerns into the US hospital merger cases : a mission impossible

Abstract

Hospitals merge to constrain costs and improve quality. Although hospital consolidation can yield substantial cost and qualitative efficiencies, it can also harm competition by creating market power. Can the agencies and the courts strike the appropriate balance between the quality improvements a hospital merger brings and the risk of market power? Can they assess the quality improvements stemming from the hospital merger and weigh them against potential anticompetitive harm? And, if yes, how? These questions are not easy. However, this essay raises and examines them. Exploring the seminal US hospital merger cases, it underlines that the agencies, driven by the belief that healthcare is not special, focus more on the mergers’ impact on prices and less on quality. It concludes that the agencies, by narrowing their analysis to the price concerns of a hospital merger, disincentivize merging parties from bringing quality of care arguments at the heart of the merger analysis and health policy researchers from developing research examining hospital mergers’ impact on quality. It suggests that the Federal Trade Commission (FTC) should issue guidelines explaining what quality dimensions it values most on the basis of the main objectives of the US healthcare system and how these dimensions can be balanced against harm to competition.