Source: National Public Radio
The bizarre part of all this is that many monopolized hospitals are technically considered “nonprofits” There are, apparently, “a lot of nonprofits to be made in the healthcare industry,” according to Zack Cooper, an economist at Yale School of Public Health.
He doesn’t take their “nonprofit” status very seriously. He sees it more like a game where instead of making profits that are distributed to shareholders, nonprofit hospitals take the extra money they make and use it for executive compensation and buying shiny stuff. Cooper says nonprofit hospitals tend to “overinvest in technology. And the irony of that is that you get even more expensive gizmos that are probably not necessary in the first place — and they suck more money into the healthcare system.”
Being a non-profit offers hospitals some quirky benefits. They don’t have to pay taxes like for-profit businesses do. And while the FTC can block anti-competitive mergers between non-profit hospitals, they are hamstrung in investigating non-profit hospitals for anti-competitive conduct under current law. “It’s sort of crazy,” Cooper says.
Cooper recently launched a project called “1% Steps For Healthcare Reform.” The idea behind it is, basically, that America’s healthcare system is such a daunting mess that we should focus on achievable, incremental steps to improving it. Dealing with hospital consolidation, he says, should be one of the top priorities. And he recently co-wrote a policy brief that outlines steps to deal with it.
For starters, Cooper says, America’s got to beef up the budget for federal antitrust authorities. They’re outgunned and undermanned and they’re struggling to keep up with the tidal wave of mergers and acquisitions we’ve seen. Next, federal antitrust authorities to take enforcement actions against nonprofit hospitals. And he offers a range of technical legal ideas that he hopes will tip the scales of antitrust law more in favor of American consumers.
According to the Detroit Free Press, Michigan’s two largest hospital systems, Spectrum Health and Beaumont Health, have no geographic overlap between them, meaning they’re not direct competitors in local markets. This may help their case. But, Cooper says, there’s some evidence that suggests that even mergers like these, “cross-market mergers,” result in higher prices for consumers.
We reached out to Spectrum Health for a statement. “We see the proposed integration with Beaumont Health being no different,” they responded. “We have integrated several hospitals and understand the need for high quality care in local communities. Patients benefit from a comprehensive health system with many locations and levels of care that are connected and available depending on their need.”
We’ll have to wait to see if Biden’s executive order will have any effect on the proposed merger. Cooper is stoked that the White House is highlighting the issue of hospital monopolization. But, so far, it’s mostly just words on paper that “encourage” federal agencies to do something about it. We’ll need congressional action and more work at the FTC to do something real about this issue.