FTC opposes North Carolina bill on hospital mergers

The Federal Trade Commission is opposing legislation in North Carolina that could potentially make it easier for UNC Health System to acquire other hospitals.

The FTC sent a letter to North Carolina lawmakers expressing their opposition to the measure. The commission says the legislation would improperly shield UNC Health from antitrust regulations governing mergers. The bill would allow mergers that could result in higher costs for consumers, reduced healthcare access, and lower wages for workers, the FTC argues.

The commission also notes that it has raised similar concerns in other states regarding hospital consolidation, arguing state oversight shouldn’t supercede antitrust laws regarding healthcare mergers.

The North Carolina Senate passed the bill by a 48-0 vote in May. The North Carolina House of Representatives is now considering the bill (S-743).

• Read more: These planned hospital mergers collapsed. Here’s why.

As written, the bill would make mergers, acquisitions, collaborations and partnerships immune from both federal and state antitrust regulations. Under the bill, future employees of UNC Health would no longer be part of the state’s retirement plan; they would be covered under a new plan created by UNC Health.

UNC officials contend that the state legislation would enable them to take steps to expand healthcare options to underserved communities across North Carolina, including rural areas, The News & Observer reported.

In the letter, the FTC argues the legislation “would likely foster anticompetitive conduct to the detriment of North Carolina healthcare patients and workers.”

The commission also argues that UNC Health could pursue mergers or partnerships without the state legislation.

“Antitrust carve-outs are unnecessary for UNC Health to engage in appropriate collaborative activities,” the FTC said in the letter. “The antitrust laws are not a barrier to the formation of healthcare collaborations that benefit patients and employers without raising competitive concerns.”

However, the FTC said that when hospitals gain substantial market power, they often pass higher prices onto consumers, including higher co-payments, deductibles and other out-of-pocket charges.

North Carolina Treasurer Dale Folwell, a Republican, has opposed the legislation, which has strong GOP support. Folwell said the bill would help UNC Health “expand their monopolistic footprint,” leading to “lower quality, lower access and higher-cost health care,” WRAL News reported.

The FTC has been applying more scrutiny to hospital mergers, particularly those involving organizations in the same region.

The FTC is also seeking court approval to block LCMC Health’s acquisition of three hospitals from HCA Healthcare in Louisiana. The FTC has said it wants to stop LCMC from integrating the hospitals into the system until federal regulators can review the transaction. Louisiana state officials have approved the deal.

The American Hospital Association, America’s Essential Hospitals and other groups sent a joint letter to FTC Chairwoman Lina Khan describing regulators’ actions as “an unjustifiable overreach.”

President Biden’s administration and lawmakers in Congress have expressed concern about the rising consolidation of hospitals and health systems, and those concerns have crossed party lines.

Hospital merger activity slowed substantially during the COVID-19 pandemic, but there have been some notable transactions and discussions of partnerships in recent months.

Kaiser Permanente announced plans to acquire Geisinger Health earlier this spring, along with the formation of a new organization called Risant Health. Geisinger would be the first member of Risant, which would look to acquire other health systems.

Two Wisconsin systems, Froedtert Health and ThedaCare, announced plans to merge in April. UnityPoint Health and Presbyterian Healthcare Services said in March that they are exploring a merger.

Atrium Health and Advocate Aurora Health completed their merger in December. The two systems formed Advocate Health, which is now one of America’s largest nonprofit hospital systems. Some officials in North Carolina, where Atrium is based, raised concerns about that merger as well.