TITLE: Federal Trade Commission Bans Noncompete Agreements, Urges More Protections for Healthcare Workers
https://www.medscape.com/viewarticle/federal-trade-commission-bans-noncompete-agreements-urges-2024a10007y0?form=fpf
EXCERPT: The Federal Trade Commission (FTC) voted Tuesday to ban noncompete agreements, possibly making it easier for doctors to switch employers without having to leave their communities and patients behind. But business groups have vowed to challenge the decision in court.
The proposed final rule passed on a 3-2 vote, with the dissenting commissioners disputing the FTC's authority to broadly ban noncompetes.
Tensions around noncompetes have been building for years. In 2021, President Biden issued an executive order supporting measures to improve economic competition, in which he urged the FTC to consider its rulemaking authority to address noncompete clauses that unfairly limit workers' mobility. In January 2023, per that directive, the agency proposed ending the restrictive covenants.
While the FTC estimates that the final rule will reduce healthcare costs by up to $194 billion over the next decade and increase worker earnings by $300 million annually, the ruling faces legal hurdles.
US Chamber of Commerce president and CEO Suzanne P. Clark said in a statement that the move is a "blatant power grab" that will undermine competitive business practices, adding that the Chamber will sue to block the measure.
The FTC received more than 26,000 comments on noncompetes during the public feedback period, with about 25,000 supporting the measure, said Benjamin Cady, JD, an FTC attorney.
Cady called the feedback "compelling," citing instances of workers who were forced to commute long distances, uproot their families, or risk expensive litigation for wanting to pursue job opportunities.
For example, a comment from a physician working in Appalachia highlights the potential real-life implications of the agreements. "With hospital systems merging, providers with aggressive noncompetes must abandon the community that they serve if they [choose] to leave their employer. Healthcare providers feel trapped in their current employment situation, leading to significant burnout that can shorten their [career] longevity."
Commissioner Alvaro Bedoya said physicians have had their lives upended by cumbersome noncompetes, often having to move out of state to practice. "A pandemic killed a million people in this country, and there are doctors who cannot work because of a noncompete," he said.
It's unclear whether physicians and others who work for nonprofit healthcare groups or hospitals will be covered by the new ban. FTC Commissioner Rebecca Slaughter acknowledged that the agency's jurisdictional limitations mean that employees of "certain nonprofit organizations" may not benefit from the rule.
"We want to be transparent about the limitation and recognize there are workers, especially healthcare workers, who are bound by anticompetitive and unfair noncompete clauses, that our rule will struggle to reach," she said. To cover nonprofit healthcare employees, Slaughter urged Congress to pass legislation banning noncompetes, such as the Workforce Mobility Act of 2021 and the Freedom to Compete Act of 2023.
FTC Chief Says Tech Advancements Risk Health Care Price Fixing
https://kffhealthnews.org/news/article/ftc-lina-khan-price-fixing-noncompete-mergers/
EXCERPT: New technologies are making it easier for companies to fix prices and discriminate against individual consumers, the Biden administration’s top consumer watchdog said Tuesday.
Algorithms make it possible for companies to fix prices without explicitly coordinating with one another, posing a new test for regulators policing the market, said Lina Khan, chair of the Federal Trade Commission, during a media event hosted by KFF.
“I think we could be entering a somewhat novel era of pricing,” Khan told reporters.
Khan is regarded as one of the most aggressive antitrust regulators in recent U.S. history, and she has paid particular attention to the harm that technological advances can pose to consumers. Antitrust regulators at the FTC and the Justice Department set a record for merger challenges in the fiscal year that ended Sept. 30, 2022, according to Bloomberg News.
Last year, the FTC successfully blocked biotech company Illumina’s over $7 billion acquisition of cancer-screening company Grail. The FTC, Justice Department, and Health and Human Services Department launched a website on April 18, healthycompetition.gov, to make it easier for people to report suspected anticompetitive behavior in the health care industry.
The American Hospital Association, the industry’s largest trade group, has often criticized the Biden administration’s approach to antitrust enforcement. In comments in September on proposed guidance the FTC and Justice Department published for companies, the AHA said that “the guidelines reflect a fundamental hostility to mergers.”
Price fixing removes competition from the market and generally makes goods and services more expensive. The agency has argued in court filings that price fixing “is still illegal even if you are achieving it through an algorithm,” Khan said. “There’s no kind of algorithmic exemption to the antitrust laws.”
By simply using the same algorithms to set prices, companies can effectively charge the same “even if they’re not, you know, getting in a back room and kind of shaking hands and setting a price,” Khan said, using the example of residential property managers.
Khan said the commission is also scrutinizing the use of artificial intelligence and algorithms to set prices for individual consumers “based on all of this particular behavioral data about you: the websites you visited, you know, who you had lunch with, where you live.”
And as health care companies change the way they structure their businesses to maximize profits, the FTC is changing the way it analyzes behavior that could hurt consumers, Khan said.
Hiring people who can “help us look under the hood” of some inscrutable algorithms was a priority, Khan said. She said it’s already paid off in the form of legal actions “that are only possible because we had technologists on the team helping us figure out what are these algorithms doing.”
Traditionally, the FTC has policed health care by challenging local or regional hospital mergers that have the potential to reduce competition and raise prices. But consolidation in health care has evolved, Khan said.
Mergers of systems that don’t overlap geographically are increasing, she said. In addition, hospitals now often buy doctor practices, while pharmacy benefit managers start their own insurance companies or mail-order pharmacies — or vice versa — pursuing “vertical integration” that can hurt consumers, she said.
The FTC is hearing increasing complaints “about how these firms are using their monopoly power” and “exercising it in ways that’s resulting in higher prices for patients, less service, as well as worse conditions for health care workers,” Khan said.
TITLE: The True Cost of Megamergers in Healthcare: Higher Prices
https://www.wsj.com/health/healthcare/the-true-cost-of-megamergers-in-healthcare-higher-prices-5c58e8db
EXCERPT: Prices for surgery, intensive care and emergency-room visits rise after hospital mergers. The increases come out of your pay.
Hospitals have struck deals in recent years to form local and regional health systems that use their reach to bargain for higher prices from insurers. Employers have often passed the higher rates onto employees.
Such price increases added $204 million to national health spending, on average, in the first year after a merger of nearby hospitals, according to a study to be published Wednesday by American Economic Review: Insights.
Workers cover much of the bill, said Zack Cooper, an associate professor of economics at Yale University who helped conduct the study. Employers cut into wages and trim jobs to offset rising insurance premiums, he said. “The harm from these mergers really falls squarely on Main Street,” Cooper said.
Premiums are rising at their fastest pace in more than a decade, driven up by persistently high inflation across the economy. Rising costs have fueled contentious negotiations that have led some hospitals and insurers to cancel contracts, leaving patients in the lurch.
Hospital mergers make the price pressures worse.
“When those hospitals have market power, they can use that to extract high prices from insurers and those costs are ultimately passed onto consumers,” said Amanda Starc, an associate professor of strategy at Northwestern University, who wasn’t involved in the new study.
Hospitals say mergers create efficiencies and combine resources to make strategic investments and improve quality. Operating costs drop by 4%-7% on average at acquired hospitals after a deal, research shows. Quality stays the same or declines after mergers, studies have found.
The American Hospital Association’s general counsel, Chad Golder, said the study was incomplete because it didn’t include prices for some big insurers.
For the study, researchers analyzed claims from three of the nation’s largest insurers: CVS Health’s Aetna, UnitedHealth’s UnitedHealthcare and Humana.
They found that mergers raised prices by 1.6% over the two years afterward, on average, and by 5.2% where deals gave hospitals hefty market power under federal guidelines.