DOJ Antitrust Head Remains Focused on Health Care in Era of Consolidation

Speaking at an industry conference on November 13, U.S. Assistant Attorney General Bill Baer reiterated the government’s focus on competition concerns in the health care industry. According to Baer, head of the Department of Justice’s Antitrust Division, while the Affordable Care Act (ACA) “promotes collaboration and integration, it does not and was not meant to give anyone a free pass from the antitrust laws.”  Calling competition “central to the provision of affordable quality health care in the U.S.,” Baer briefly outlined two key areas for continued agency enforcement: mergers and anticompetitive agreements between competitors.

Baer stressed that merger enforcement remains a priority for the Department of Justice (DOJ), the Federal Trade Commission (FTC), and state attorneys general. When reviewing a potential merger, Baer stated that the government will look at the future of the market – not at how the markets appear today – and will evaluate how local companies may increasingly compete regionally or nationally. In addition, Baer noted that two typical procompetitive justifications for combinations may carry little weight with the government:

  • The “countervailing market power” justification may not be effective moving forward. Baer expressed skepticism that consumers win when a merger is justified by creating more bargaining leverage. DOJ may thus question a merger between two national insurers, for example, if the parties justified the combination solely on gaining leverage in negotiations with hospitals and doctors.
  • The government will investigate to ensure that mergers are not designed simply to take advantage of higher reimbursement rates even when there is no change in care provided.

Baer also trumpeted recent government wins beyond merger enforcement, remarking that effective “antitrust enforcement extends beyond reviewing mergers.”  The government will investigate potentially anticompetitive agreements even where competitors do not agree on prices, such as agreements to limit advertisements in a competitor’s market, group boycotts by providers and trade associations, and exclusive contracts.

Health care will remain in the antitrust enforcers’ sights in 2016 and beyond. The DOJ’s antitrust chief left no doubt in an aggressive summary of his agency’s role: “Our job is to block mergers that threaten to reduce competition; our job is to challenge competitors who want to conspire rather than compete; and our task is to ensure that companies do not raise barriers that deny competitors the opportunity to enter new markets or expand their existing market presence.”