On October 26, 2023, Deputy Assistant Attorney General Andrew Forman delivered remarks at the Capitol Forum: Heath Care Competition Conference regarding U.S. antitrust enforcement and competition policy related to the healthcare industry. Forman focused on two topics: "(1) some key questions and concerns around healthcare competition in the U.S. and how the Antitrust Division is trying to address them and (2) some perspectives on the intersection between antitrust and the real world, including around healthcare." He indicated that the Antitrust Division is committed to using its civil enforcement power, beyond just merger control, to investigate and bring cases regarding anti-competitive conduct. Forman posited that there are significant problems with the healthcare industry, which represents almost 20 percent of GDP, and that he sees antitrust enforcement as one of the ways to address these problems.

Key Takeaways

Private Equity

DOJ "remains vigilant" in scrutinizing consolidation via roll-ups and ownership of healthcare entities. Forman highlighted the FTC's recent case against the roll-up of anesthesia practices in Texas and stressed that DOJ is equally committed to scrutinizing interlocking directorates that could violate Section 8 of the Clayton Act.

Healthcare Combinations

Forman noted that "the web of relationships and money flows are complex [in healthcare transactions], and the analysis often does not fit neatly into historical boxes like horizontal or vertical." Forman focused in particular on concerns regarding provider and payer consolidation. He pointed to the industry trend of having multiple layers of providers, insurance companies, PBMs, pharmacies and/or other services under "one roof" and entanglements across different "stack ups" as harmful to competition in the industry. He expressed skepticism that this trend was providing value to patients.

Data

Forman described concentration of ownership of large amounts of data in the healthcare space as problematic. This focus on data ownership is consistent with scrutiny of data ownership and access across various industries, and may be particularly salient in the healthcare space where much of the innovation is driven by uses of data. Healthcare providers should be particularly careful in how they share competitively sensitive information in light of DOJ's withdrawal of policy statements that had permitted certain "safety zones" of information sharing between competitors in the healthcare industry.

Labor Markets

Despite DOJ's recent losses relating to challenges of alleged anti-competitive labor market practices, Forman nevertheless indicated that the agency remained focused on bringing those cases. He indicated that the DOJ wanted the public to know that the "cops are on the beat" and they are not just interested in the big cases but also smaller ones reflecting narrower, discrete competition problems.

Conclusion

Forman noted that several empirical studies from well-respected economists analyze the following issues with the healthcare industry:

(1) that increasing prices are a key driver of higher private healthcare spending, (2) that quality of care suffers from lack of competition, (3) that healthcare workers' wages are depressed by lack of competition, (4) that employers are shifting more healthcare costs to workers and (5) that provider consolidation in the same markets and even adjacent markets can lead to higher pricing.

DOJ intends to use antitrust enforcement as one important piece of an overall solution to these issues. Healthcare companies should consult with experienced counsel to help them navigate this rapidly changing enforcement landscape.

For More Information

If you have any questions about this Alert, please contact Sean P. McConnell, Sarah O'Laughlin Kulik, any of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.

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