Milton Friedman, an American economist and writer once said,
Do you agree with Friedman? Do antitrust laws do more harm than good? What if I asked you the same question in regards to the healthcare industry? After reading an article in the New York Times, I would have to disagree with Friedman. In my post, I will explain why I think antitrust laws, along with appropriate antitrust training are extremely beneficial for organizations, especially those in the healthcare sector..
I came across an interesting article in The New York Times about the wave of hospital mergers and their effect on the public. Hospital mergers occur when two healthcare facilities merge into one single system. I knew this would be met with some serious opposition, after having read about the Time Warner and Comcast potential merger in the news. The Federal Trade Commission (FTC) has argued that mergers aren’t doing anyone any good and are only in place to reduce competition. Hospitals can usually achieve the benefits of coordinated care without a full merger. To reinforce their statement, the FTC is using the Clayton Antitrust Act which seeks to prevent anticompetitive practices such as banning mergers that may substantially lessen competition. According to the director of the FTC’s Bureau of Economics, “hospitals that face less competition charge substantially higher prices.”
The opposing argument: Doctors and hospitals are saying that they must merge to survive and thrive under the Affordable Care Act. I was really confused after reading this statement, because I thought that the Affordable Care Act helped reduce costs for hospitals because more patients have Medicaid coverage. If I were on “Who Wants to be a Millionaire?” I’d need to use a lifeline to get some clarity.
Antitrust Laws Are Important
Antitrust laws are important because not only do they help lower costs by increasing competition among hospitals, but also help improve quality of care. The increased competition incentivizes hospitals to provide better quality, or more affordable, care than their competition. It’s critical for businesses, especially healthcare institutions, to comply with antitrust or competition laws. For the few times that I do go see the doctor, I would hate for the price to increase dramatically just because there is less competition among companies. Competition is healthy! It drives people to want to do and be better.
The FTC might consider providing antitrust training to those that are are proponents of mergers. Do hospitals understand the upsides and downsides of a merger? Are they aware that they might be able to reap the benefits of lower cost without a full merger? Do they even understand what antitrust is? From personal experience, before I started working at a governance, risk, and compliance company, I had little to no idea of what antitrust actually meant and maybe doctors and hospital administrators are in the same position.
It was only after I began to delve into these articles that I became more familiar with the topic. I found The New York Times article to be very interesting because it raised a huge dilemma that could affect me personally. If hospitals do ignore the FTC’s warnings and decide to merge, then that only means an increase in price for consumers. Thankfully I try and limit my doctor visits to once a year, if ever, but millions of Americans depend on the healthcare system for their well being. Healthcare is already expensive as it is here in the US, why make it worse?
It is important for organizations to familiarize employees with applicable antitrust laws and emphasize the need to avoid business practices that would violate antitrust and competition laws. Maybe an antitrust training course like ours could help engage others to better understand organizations’ antitrust policies, so that individuals can make educated decisions that impact society as a whole.