States Intensify Efforts to Regulate Health Care Mergers

By Consumers for Quality Care, on July 12, 2023

California and New York are taking steps to further monitor health care mergers, introducing measures that empower state attorneys general to block deals and establish robust review processes, Axios reports.

Beginning next year in California, health care systems proposing a merger will be required to provide a 90-day notice to the Office of Health Care Affordability. The goal is to evaluate whether certain acquisitions might lead to higher costs or the elimination of essential services, hurting consumers in the process.

This state-level action complements the efforts of federal agencies like the Justice Department and Federal Trade Commission (FTC), which typically focus on anticompetitive behavior in mergers valued above $101 million.

The California review process will involve a preliminary report, comment period, and final report, which could take several months. The broad scope of the law means it could apply to various health care entities, including insurers, provider groups, and hospitals.

New York has also enacted measures to increase scrutiny of health care mergers. Earlier this year, the state passed a law mandating that health care entities provide a 30-day notice to regulators before closing any deal.

While most states require advanced notice of health care mergers, only Connecticut, Massachusetts, Oregon, and Washington have implemented regulations that mandate notice for all transactions between health entities, according to research from the Center for American Progress.

This growing state-level scrutiny serves as an additional layer of oversight alongside federal agencies. As they act to address concerns related to consolidation and anticompetitive behavior, some experts argue that the FTC’s resources have not kept pace with the rapid consolidation within the health care industry.

Decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to keep a close eye on hospital mergers and to work to ensure that consumers don’t foot the bill for anti-competitive practices.