Federal Antitrust Enforcement in Health Care

In previous Expert Voices essays, William Vogt, Austin Frakt and James Robinson discussed consolidation in hospital markets and cited a large and growing literature that finds a direct correlation between consolidation and hospital prices, with at best mixed evidence of improved quality. All three essayists suggested that the Federal Trade Commission must do more to limit anticompetitive consolidations. In fact, the FTC and the Department of Justice sucessfully challenged numerous hospital mergers through the early 1990s until a string of losses in key court cases in the mid-1990s led them to suspend prospective merger challenges for about a decade while they regrouped. In this essay I describe how academic economists helped to reverse the tide of antitrust litigation losses by developing more precise merger analytic tools that emphasize the importance of negotiating strength between merging providers and payers. I also take a look forward at the new frontier of antitrust enforcement that is evolving with the rise of vertically integrated delivery systems.