The State of Competition in the U.S. Healthcare Industry

The U.S. healthcare system has been undergoing significant changes since the passage of the Affordable Care Act in 2010, which helped precipitate a wave of hospital and healthcare system consolidation, as providers sought out ways to achieve scale to reduce costs and improve quality.

Over the same period of time, the U.S. Federal Trade Commission (FTC) and Department of Justice, Antitrust Division (DOJ) continued to closely scrutinize provider transactions.  The FTC in particular reinvigorated its hospital merger enforcement in the early 2000s and successfully challenged a number of hospital mergers in court, losing only once recent challenge in court in nearly two decades.

In 2020, the healthcare industry grappled with the COVID-19 pandemic and faced extraordinary challenges, not only with respect to providing care, but also financially as systems struggled with declining revenues and margins.

Healthcare systems largely survived 2020, and while the pandemic is not behind us, we are seeing and likely will continue to see growth and increased transaction activity in 2021 and 2022, including consolidation among competing systems and “vertical” transactions, which combine market participants at different levels of the healthcare industry, such as insurance companies and hospitals.   Yet these transactions may present antitrust concerns, and the FTC and DOJ continue to ramp up their enforcement efforts in the healthcare industry.  As a result, the U.S. healthcare industry will continue to be one of the main targets of government antitrust enforcement (along with “Big Tech”).

For an in-depth discussion of these issues, listen to John Carroll and Michael Cohen’s conversation in Nota Bene Episode 119: The State of Competition in the U.S. Healthcare Industry, available at: https://www.sheppardmullin.com/notabene-279