States' Merger Review Authority Is Associated With States Challenging Hospital Mergers, But Prices Continue To...

Area of Science:

• Health Law
• Antitrust Law
• Health Policy

Background:

• States utilize antitrust laws to prevent anticompetitive harms from proposed hospital mergers.
• Additional state laws, including charitable trust, nonprofit corporation, health and safety, and certificate-of-need laws, can complement or substitute antitrust laws in merger review.

Purpose of the Study:

• To examine the extent to which states use administrative processes, empowered by various laws, to review and challenge proposed hospital mergers.
• To assess the impact of state merger review authority on the outcomes of challenged hospital mergers and subsequent market concentration.

Main Methods:

• Observational study analyzing hospital merger data from 2010-2019.
• Analysis of state laws governing merger notification, review, and challenge processes.
• Comparison of market concentration and price changes in states with robust merger review authority versus other states.

Main Results:

• Out of 862 proposed hospital mergers between 2010-2019, only 4.9% were challenged by states.
• Twenty-five challenges originated in the eight states with the most robust merger review authority, resulting in two mergers blocked, three abandoned, and twenty approved with conditions.
• Hospital market concentration and prices increased similarly in states with robust review versus other states, suggesting conditional approvals may not fully mitigate competitive concerns.

Conclusions:

• While advanced state merger review authority shows potential for improving hospital markets, current practices indicate that most challenges do not adequately address competitive concerns.
• Further development of state frameworks is needed to effectively improve poorly functioning hospital markets through merger oversight.