The Future of Health Care Mergers Under Trump

Though there has been a flurry of merger and acquisition activity in recent years, industry experts are unsure whether the merger momentum will continue under President-elect Donald Trump’s administration, according to The New York Times.

Here are five things to know about how M&A activity in the healthcare industry may be affected under the Trump administration.

1. President-elect Trump nominated Sen. Jeff Sessions (R-Ala.) to replace Attorney General Loretta Lynch. While it is unclear how the department will handle antitrust cases under Sen. Sessions, the impact from the change in leadership will not be felt immediately. The outcomes of the two major antitrust cases in the insurance market, the Anthem-Cigna and Aetna-Humana mergers, are expected to be decided before Mr. Trump takes office in January. However, the new administration might still have an impact on the mergers, particularly if either the companies or the government decide to appeal the decision, according to the article.

2. According to the article, there is little expectation the Department of Justice under President-elect Trump would drop the cases if the insurers lost and appealed. However, any agreed upon settlement deal may be less onerous to the insurers involved.

3. There is a chance the federal government’s approach to healthcare mergers may not change, according to the article. “There is a history of bipartisan support for antitrust enforcement in healthcare,” said Leslie Overton, a partner at Alston & Bird and a former DOJ official. “I don’t think we should expect a wholesale shift, based on the change from Democratic to Republican.”

4. The Federal Trade Commission’s position on M&A activity may change even less, according to industry experts interviewed by The New York Times. The independent agency is less subject to the political preferences of the president and of Congress.

5. Industry experts also suggest the possible repeal of the ACA will not impede the increasing M&A activity of the past few years. According to the article, hospitals may feel more pressure to join together if the ACA is repealed due to reduced Medicare and Medicaid payments and increased volumes of uninsured patients.

Is antitrust the answer to hospital consolidation?

Is antitrust the answer to hospital consolidation?

Image result for Is antitrust the answer to hospital consolidation?

robust literature on the benefits of competition in the health care marketplace shows that when health care markets are competitive, prices tend to be lower, quality tends to be higher, and people have more choices for care. Competition is a remarkably powerful tool that needs to be wielded more effectively. The good news is that ensuring competition is already the law of the land. The problem is that with the pace of consolidation, monitoring potential anticompetitive effects will be increasingly difficult as the FTC is tasked with examining a rapidly increasing number of mergers. The FTC needs renewed focus from policy makers to ensure that it can do its job effectively.

Healthcare mergers and acquisitions in 2016: Running list

http://www.healthcarefinancenews.com/slideshow/healthcare-mergers-and-acquisitions-2016-running-list?mkt_tok=eyJpIjoiWlRkaE16VTBPRGhrTmpWbSIsInQiOiIxRk44S3JKdEd3Mzl5czNscEJZNjI1N210RWE0b0RxNWd3RHhoZUg2TXJCM3U2QnZJWm1VcFhMS2daQ1pmRzEyTG5DU2E0cWFCdGtWQlJKS0N0NE51Y2FubWdZbWptcTRhVHRZaTZJNDM1VT0ifQ%3D%3D

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FTC puts an end to Penn State-PinnacleHealth deal

http://www.fiercehealthcare.com/finance/ftc-prevails-squelching-penn-pinnaclehealth-deal

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Thanks to the Federal Trade Commission, the Penn State Health and PinnacleHealth merger will not go forward.

Plans to merge were called off late last week, according to PennLive.com. The Penn State Board of Trustees voted unanimously to call off the deal, which would have created a four-hospital system in the Harrisburg region, including Penn State’s Hershey Medical Center and the three PinnacleHealth facilities.

The FTC and the Pennsylvania Attorney General intervened in the deal late last year, with both claiming that residents in Central Pennsylvania would have few alternatives for other healthcare providers, leaving the likelihood open that the merged entity would raise prices. Thetransaction was initially approved by a U.S. District Court in May, but the parties were dealt a blow when the ruling was reversed by the U.S. Third Circuit Court of Appeals last month.

The aborted deal cost Penn State an estimated $17.6 million in legal fees and other costs, according to PennLive.

The case is part of what has been heightened scrutiny of recent hospitals deals by both federal and state regulators. In November, the FTC intervened in a deal between two rural hospitals in West Virginia, Cabell Huntington Hospital and St. Mary’s Medical Center. The agency recently prevailed in a 2010 case where it intervened in ProMedica’s acquisition of St. Luke’s Medical Center in Toledo, Ohio. The agency is also fighting a proposed merger between Advocate Health Care and NorthShore University HealthSystem in Chicago, although as in the Penn State matter, it has lost at the lower court level.

FTC Chairwoman Edith Ramirez expressed concern earlier this year that ongoing hospital mergers will soon impact healthcare pricing around the U.S., but deal-making appears to go on unabated. That’s despite the fact that a recent analysis suggested that mergers even across markets can lead to double-digit cost increases.

DOJ says Aetna, Humana are trying to derail antitrust case

http://www.bizjournals.com/louisville/news/2016/10/11/doj-says-aetna-humana-are-trying-to-derail.html

Lawyers for the U.S. Department of Justice say Aetna Inc. and Humana Inc are trying to derail the government's antitrust challenge of Aetna's proposed $37 billion acquisition of Humana.

Lawyers for the U.S. Department of Justice say Aetna Inc. and Humana Inc are trying to derail the government’s antitrust challenge of Aetna’s proposed $37 billion acquisition of Louisville-based Humana.

This comes after lawyers for the companies accused the DOJ with “serious delay and misconduct” last week. The companies requested sanctions, claiming that the government withheld about 1 million documents and that this had “gravely undermined” the companies’ ability to mount a defense against claims that the acquisition would hurt competition.

The National Law Journal reports that the government’s response came Saturday in a court filing, in which it said the DOJ has tried to accommodate the “broad and extremely burdensome discovery demand” from Aetna (NYSE: AET) and Humana (NYSE: HUM) on the U.S. Department of Health and Human Services.

The government called the request for sanctions “a transparent attempt to derail the United States’ merger challenge before the district court ever hears from a single witness or reviews any evidence,” the law journal reported.

At issue is how much market share the combined company would control in Medicare Advantage, a type of Medicare plan offered by a private insurer. A court date is set for Dec. 5, 2016, and the judge says a decision isn’t likely until mid-January 2017 — past the companies’ end-of-year deadline to close the deal.

Appeals court blocks Penn State Hershey Medical Center-PinnacleHealth merger

http://www.healthcarefinancenews.com/news/appeals-court-blocks-penn-state-hershey-medical-center-pinnaclehealth-merger?mkt_tok=eyJpIjoiTmpFeVkyVmtOekV4T1RsaiIsInQiOiJ1OTFiZkM3OTFlK2J6OU02Umg1anFrQWRWWlAwOU9PUEtDZUNDbjJPVTl1U2xkemFSMVEwcWVPVm8yS0x6RnV6NDBJV2NndGZUU3lxZjdyRnllbEJZVXJYcE1TTDlZdzlrbEREK2RWNHNlbz0ifQ%3D%3D

A federal appeals court has reversed a lower court ruling and ordered a preliminary injunction against the proposed Penn State Hershey Medical Center-PinnacleHealth System system merger.

The 3rd U.S. Circuit Court of Appeals in Philadelphia voted in favor of the injunction, which reversed a May decision by a federal judge, saying the U.S. Federal Trade Commission and Pennsylvania officials would likely be successful in showing the merger could cause price hikes for patients and would harm competition, according to the decision.

The injunction will allow the FTC to further review the proposed merger, would mean the combined system would garner support 76 percent of the population around Harrisburg.

AMA: Insurance megamergers ‘threaten healthcare access, quality and affordability’

http://www.healthcaredive.com/news/ama-insurance-megamergers-threaten-healthcare-access-quality-and-afforda/426745/

  • The merger of health insurance giants “would significantly compromise market competition in the health insurance industry and threaten health care access, quality and affordability,” the president of the AMA said as the group released new analyses of the mergers.
  • In the analysis, the AMA claims the Anthem-Cigna merger would diminish competition in 121 metro areas across 14 states, and that the Aetna-Humana merger would diminish it in 51 metro areas across 15 states.
  • The studies also note an “unprecedented lack of competition” that already exists in many states, the AMA says.

http://www.ama-assn.org/ama/pub/news/news/2016/2016-09-21-ama-analyses-support-blocking-mergers.page

 

The Missing Debate Over Rising Health-Care Deductibles

http://blogs.wsj.com/washwire/2016/09/18/the-missing-debate-over-rising-health-care-deductibles/?utm_campaign=KHN%3A+Daily+Health+Policy+Report&utm_source=hs_email&utm_medium=email&utm_content=34504530&_hsenc=p2ANqtz–cbQhbJAJ2j-K8I_jQv3kzC6RJuMdvGplQjAJSD–Kc6wYpIZ2CPkYbSLYxHgIpMaHkl9CnoCCH3BO8Sf-cUroX2PTig&_hsmi=34504530

 

Progressives push for ‘public option’ health plan

http://www.usatoday.com/story/news/2016/09/15/progressives-push-public-option-health-plan/90375964/

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Progressive senators and activists are launching a campaign Thursday calling for every American to have the choice of a public health insurance option.

Aetna faces probe over ‘politically motivated’ Obamacare exit

http://www.healthcaredive.com/news/aetna-faces-probe-over-politically-motivated-obamacare-exit/426035/

  • A group of senators is seeking answers from Aetna about its abrupt decision to leave the ACA marketplaces following the DOJ’s challenge to the company’s proposed $37 billion merger with Humana.
  • The letter came Thursday from Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Edward J. Markey (D-Mass.), Sherrod Brown (D-Ohio), and Bill Nelson (D-Fla.).
  • While other insurers have also scaled back their ACA participation, the probe into Aetna comes in response to a letter from Aetna CEO Mark Bertolini in which the company is perceived to have directly threatened the government that it would leave the exchanges if the merger was not approved.