Joint Initiative to Scrutinize Healthcare M&As by PE Funds
文摘
社会
2024-03-08 13:43
中国香港
On March 5, 2024, the Department of Justice’s (DOJ’s) Antitrust Division, the Federal Trade Commission (FTC), and the Department of Health and Human Services (HHS) jointly issued a Request for Information (RFI) to solicit public comments about the impacts of consolidation in the healthcare industry.1 The agencies’ inquiry reflects the Biden Administration’s continued scrutiny of competition and prices in the healthcare and pharmaceutical industries and its broader initiative to apply antitrust laws more aggressively to private equity deals.The RFI coincided with an already-scheduled workshop hosted by the FTC titled, “Private Capital, Public Impact: An FTC Workshop on Private Equity in Health Care.” During this Workshop, FTC Chair Lina Khan and DOJ Assistant Attorney General (AAG) Jonathan Kanter outlined the agencies’ concerns about anticompetitive mergers and pricing strategies by private equity funds in the healthcare industry, with AAG Kanter explaining that RFI responses “will give us the information to tackle private equity and corporate greed head-on.”The agencies’ heightened concerns are likely motivated by ongoing trends within the healthcare industry that they allege avoided significant antitrust scrutiny by previous administrations, such as:acquisitions of independent physician practices by private equity roll-ups or hospital systems, and the effect on rates for payors;
payors’ mergers with healthcare providers and the impact on patient experiences and costs;
serial acquisitions of regional healthcare providers and ancillary services by private equity firms; and
“cross-market mergers” between hospital networks in different geographic regions and the impact of the merged providers’ bargaining power on rates for public and private payors.
Federal Antitrust Agencies Continue to Scrutinize the Healthcare IndustryOn top of this effort, the FTC and HHS continue to solicit public comments on how pharmacy benefit managers (PBMs or “pharmaceutical middleman groups”) have allegedly contributed to shortages of generic drugs through an earlier RFI issued on February 14, 2024.Similarly, on March 5, 2024, the White House announced the creation of its Strike Force on Unfair and Illegal Pricing, which the DOJ and the FTC will jointly lead.2 This initiative primarily addresses the President’s efforts to improve consumer protections against “junk fees” and unfair practices. The White House has also restated its commitment to protecting Medicare Advantage consumers and promoting competition in healthcare markets.3States Are Closely Monitoring Regional Healthcare TransactionsStates are following the FTC and the DOJ by using antitrust laws to go after healthcare mergers and acquisitions and anticompetitive practices. For instance, on February 27, 2024, Colorado AG Phil Weiser announced an agreement with U.S. Anesthesia Partners (USAP) and its private equity owner, Welsh Carson, to settle charges stemming from allegations of anticompetitive conduct in Colorado.4 The allegations in the Colorado case are similar to those made by the FTC in a lawsuit filed on September 29, 2023, against USAP and Welsh Carson over its portfolio in Texas. The FTC’s lawsuit accused USAP and Welsh Carson of engaging in a scheme to consolidate and monopolize the anesthesiology market in Texas through serial acquisitions of anesthesia practices in Texas in addition to entering into market allocation and price-fixing arrangements with the remaining anesthesia providers in Texas, all resulting in significant price increases for patients.5 After accusing USAP and Welsh Carson of similar anticompetitive practices in Colorado, the Colorado AG reached a settlement that requires Welsh Carson and USAP to terminate exclusivity contracts the entities have with various hospitals in Colorado, release and modify noncompete agreements with clinicians, and pay a fine of $200,000 to the state.6 The RFI announced this week is likely the agencies’ effort to gather more evidence to support similar investigations.The RFI Will Gather Information About Several Types of Transactions in HealthcareIn the RFI, the agencies emphasized the need to analyze and understand the effects of transactions, especially nonreportable transactions, involving healthcare providers, facilities, or ancillary services by the following categories of acquirers:Private equity funds or other alternative asset managers: These transactions may come in the form of a) direct acquisitions, b) transactions structured to facilitate private equity investments, or c) investments in assets other than stock and bonds, such as acquisitions of underlying real estate of a hospital or nursing home.
Health systems: These transactions may come in the form of a) vertical integrations, such as when a health system acquires independent physician practices, or b) horizontal integrations when a health system partially acquires a hospital. The agencies noted concerns that vertical transactions such as health systems acquiring physicians may result in the resulting entities having less incentive to compete for patients, payers, and healthcare workers.
Private payers: These transactions may include when insurers purchase primary care practices outright or become partial owners in the practices. The agencies expressed concerns that the resulting transactions may cause acquiring payers to raise prices for rival payers’ members to use the acquired practices, remove the acquired practice from rival payers’ networks, or vertical integrations with other entities like PBMs, which may affect pricing and access to prescription drugs.
The RFI seeks public input from various stakeholders, including patients, consumer advocates, doctors, nurses, healthcare administrators, employers, private insurers, PBMs, group purchasing organizations, nursing homes, hospice facilities, and hospitals. The RFI also seeks input from academics and other experts who have studied the impact of corporate ownership in healthcare.For more information or advice concerning this RFI, please contact Maureen Ohlhausen, Beau Buffier, Michelle Yost Hale, Brendan Coffman, or any member from the antitrust and competition practice.
[1]See Request for Information.[2]Press Release, White House, FACT SHEET: President Biden Announces New Actions to Lower Costs for Americans by Fighting Corporate Rip-Offs (Mar. 5, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/05/fact-sheet-president-biden-announces-new-actions-to-lower-costs-for-americans-by-fighting-corporate-rip-offs/.[4]Press Release, Phil Weiser, Colo. Att’y Gen., Private equity-run U.S. Anesthesia Partners to end Colorado health care monopoly under agreement with Attorney General Phil Weiser (Feb. 27, 2024), https://coag.gov/press-releases/usap-health-care-monopoly-attorney-general-phil-weiser-2-27-2024/.[5]Complaint, FTC v. U.S. Anesthesia Partners, Inc., No. 4:23-cv-03560 (S.D. Tex. Sept. 29, 2023).![]()
