Health Care

In response to a request to review antitrust enforcement actions involving hospitals by the Department of Justice and the Federal Trade Commission (FTC), GAO found that of 397 acute care hospital mergers reviewed by Justice and the FTC in the 13 year period of fiscal year 1981 through fiscal year 1993, less than 4 percent were challenged. For an additional 13 percent of these mergers, Justice or the FTC conducted a preliminary investigation and then allowed the mergers to go forward. The remaining 83 percent of cases involved no more than the required initial filing of notice of proposed merger. Neither Justice nor the FTC has ever challenged a hospital joint venture. GAO also found that the hospital industry has actively sought enactment of state laws that would confer antitrust immunity to collaborative actions by hospitals, such as mergers, joint ventures, and sharing of patients and equipment. Since 1992, 18 states have enacted regulatory programs for state approval of hospital activities that can fall under antitrust statutes. Such state laws are sought because under the state action immunity doctrine established by the Supreme Court, certain anticompetitive conduct regulated by the states may be immune from federal antitrust enforcement action.

GAO found that: (1) from fiscal year (FY) 1981 through FY 1993, DOJ and FTC challenged less than 4 percent of the 397 acute care hospital mergers and conducted only preliminary investigations for another 13 percent of these mergers; (2) DOJ and FTC have never challenged a hospital joint venture; (3) in September 1993, DOJ and FTC issued a joint statement on various joint health care activities outlining six circumstances under which they would not challenge the providers' activities; (4) 18 states have enacted regulatory programs for state approval of certain hospital activities which have effectively removed them from federal antitrust jurisdiction; (5) 10 state programs cover other health care providers such as physicians, nursing homes, and ambulatory surgical centers that are licensed to provide health care services; (6) many health association officials believe the state programs are necessary to alleviate the fear of antitrust liability among hospital officials; and (7) the 18 state laws vary considerably in the types of providers and activities covered, state approval authorities, antitrust enforcement officials' role in approving and monitoring activities, the questions and issues to be addressed prior to approval, and the extent of postapproval state supervision.