Federal antitrust merger enforcement standards: a good fit for the hospital industry?

• Published in: Journal of health politics, policy and law Vol. 20; no. 1; p. 137
• Main Authors: Bazzoli, G J, Marx, Jr, D, Arnould, R J, Manheim, L M
• Format: Journal Article
• Language: English
• Published: United States 1995
• Subjects: Antitrust Laws - standards; Government Agencies - standards; Guidelines as Topic; Health Facility Merger - legislation & jurisprudence; Health Facility Merger - standards; Hospital Bed Capacity; Hospital Costs; Legislation, Hospital; Marketing of Health Services - legislation & jurisprudence; Marketing of Health Services - standards; Patient Admission; Reimbursement Mechanisms; United States; United States
• ISSN: 0361-6878
• DOI: 10.1215/03616878-20-1-137

We examine the implications of the 1992 Horizontal Merger Guidelines for the hospital industry and subsequent policy statements that were developed for health care providers. Application of antitrust policy to hospitals has raised several concerns, mainly because many communities have few hospitals and economic forces in the industry are accelerating interest in intramarket mergers and provider network development. We address several issues, including the standing of hospitals relative to the market concentration thresholds of the merger guidelines, market concentration compared among challenged and unchallenged mergers of the 1980s, findings of previous research about the relationship between market concentration and competition in hospital markets, and differences in characteristics other than market concentration that are relevant to the merger guidelines among challenged and unchallenged mergers. We found that (1) the specific standards articulated in the merger guidelines do not provide good predictability of when a hospital merger challenge would occur, and (2) comparisons of challenged and unchallenged mergers in similarly structured markets suggest that enforcement actions may deviate in practice from the enforcement principles of the merger guidelines. We consider several options for refining antitrust enforcement policy. Refinement of enforcement policies is important given the industry restructuring that is likely through health care reform.