Personal views of Patricia Cameron
Based on observations of hospital mergers in the state of Maryland over the last 15 or so years, I have a few comments for your consideration. Please pass this on to Timothy Muris and Melvin Orlans. If the FTC focuses on competition without considering its effects on patients, you may be missing the point. The point, in my opinion, is not that competition is always better than no competition, but that competition that improves patient care is far better than competition that takes away from patient care.
Because health care does not follow the same laws of economics as other consumer goods, the same rules cannot apply to hospital mergers without some consideration of these differences. Competition may or may not be a good thing in hospital activity, depending on the type of competition.
Competition that drives improvements in quality obviously should be the primary goal of any competition/trade policy. and that seems to be driven by a desire or need to attract the best physicians and nurses. But too often competition becomes a grab for market share, maybe in an attempt to behave like producers of other consumer goods, with the result that money is spent on advertising, buying physician practices, requiring physicians to admit to selected hospitals, anda other tactics that waste money that should have been spent on better training for nurses, more nurse FTEs, or improved data systems. Competition can also take away from good patient care when decision on how to spend their money result in the need to cut corners on the easiest things to cut, which is almost always staffing levels or other things that directly affect patient care.
for example, I've seen two basic types of mergers between hospitals. When two hospitals in one market area (or an overlapping market area) merge, and consolidate services that were otherwise duplicative (including management, overhead and advertising), it appears that patients and physicians have benefited. This has not resulted in lower quality of care and higher prices. Just the opposite, I would argue. Prices are hard to judge here because of hopsital rate regulation, but even if they did go higher, I would still argue the same, since the motivation behind a hospital board in this situation will be to optimize patient care without cutting corners. But everything I've seen indicates that patients are better off, physicians are happier, and services in those communities make better sense than they did before, or would ever have without the merger, from a policy viewpoint.
Examples in Maryland are the Western Maryland Health System in Cumberland, and the Shore Health Sytem in Easton.
The other type of merger is what I refer to as the positioning for market share type of merger - one hospital in each of several markets, like MedStar and Johns Hopkins Health System. In each case, I think quality of care has improved as a result of the merger, but not through consolidation of services. Here, quality has improved through access to greater expertise, for physicians, hospital staffs, and patients. But otherwise, savings to the public are not apparent. Competition becomes fierce, and expensive, based on the desire to grab market share. Significant television and radio time, the sides of buses, duelling ads at all major sporting events, billboards, and even their own hollywood television shows! And this wastes money that could be better spent to improve patient care. But the consistent thing is that the motivation of boards of trustees remains to optimize patient care. In Maryland, unique around the country, there are no for-profit hospital systems. To me that is the key difference.
The answer, in my opinion, is to kraft an approach as much different from normal market behavior as the healthcare industry warrants. Instead of assuming that competition is good and no competition is bad, just make sure that incentives are in place to assure that competition is always based on quality improvements, and not on grabbing market share, or improving the stock price. Hopital report cards is one step in the right direction, if they spend their 'profits' on looking better on meaningful measures of quality than their competitors.