San Diego Law Review

The Never-Ending Quest for Clarity Amidst Uncertainty: Hospital M&A and Antitrust Scrutiny

Author(s)

Ross E. Bautista

Editor(s)

Faculty editor: Larry Alexander

Details

Publication Law Review
Volume 54
Issue 1
Start Page 149
Month March
Year 2017
Type Article
Subject Area

Abstract

Although critics say hospitals justify mergers in the same way as they did during the M&A boom of the 1990s,[1] these critics frequently link the current wave of mergers with the purpose of becoming more integrated and efficient to achieve the level of cost savings and improved quality that the United States and patients currently require.[2] However, the results from hospital consolidation remain uncertain because of the limited and mixed evidence about its impact on quality of care and price.[3] Part I of this Article discusses the recent surge in hospital M&A activity.[4] Part II brings some clarity by discussing the most frequently cited justification to this current wave of mergers—the Affordable Care Act (ACA).[5] Concurrently, with the uncertainty surrounding the ever-changing healthcare landscape and the rising number of hospital transactions, the Federal Trade Commission (FTC) and Department of Justice (DOJ) (collectively, the Agencies) apply an increased level of scrutiny on modern healthcare transactions.[6] While both public and private forces fuel the drive toward hospital consolidation, the Agencies enforce a myriad of roadblocks to hospital mergers. Although hospital executives and the Agencies alike direct their actions towards the broad goal of improving health care, their independent actions are dissimilar and have uncertain results.[7] Beyond the uncertainty caused by the ACA and the dynamic healthcare industry, Part III focuses on antitrust law and its framework as applied to previous hospital mergers, illustrating how courts add more confusion to an already uncertain field by applying unclear antitrust laws.[8] Part IV attempts to bring some clarity by shedding light on the court’s most recent analysis of a hospital merger.[9] Instead of applying the per se or “Rule of Reason” approach, this Article proposes that, in theory, courts now slide along the analytical continuum by using a quick look approach to scrutinize hospital mergers, which increases the amount of uncertainty and lack of clarity surrounding hospital M&A.

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