Tag Archives: Competition

Antitrust trial over $37B Aetna-Humana merger nearing an end

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http://www.healthcaredive.com/news/antitrust-trial-over-37b-aetna-humana-merger-nearing-an-end/433206/

A decision on the $37 billion merger between Aetna and Humana will be made soon. The payers and the federal government have been an engaged in a legal standoff since the U.S. Department of Justice and several states filed an antitrust lawsuit in July 2016 to block the merger, citing reduced competition, hindered innovation, and increased prices to consumers. The federal government also alleges the deal would give Aetna too much of a stake in the Medicare Advantage market.

Representatives for both Aetna and the federal government have been exchanging barbs for the past several months. The government accused Aetna of scaling back its participation in ACA marketplaces as a result of the lawsuit. Aetna claimed that these accusations were unfounded and said the deal would be a pro-competitive move that would benefit millions.

Health insurance giant Anthem has also proposed a $54 billion merger with Cigna. If both mergers occur, it would combine four of the five largest insurers in the country.

There is no timeline set for a decision in the case. Yet Judge Bates said he would issue his decision in a “timely manner,” according to Bloomberg.

Aetna/Humana-DOJ trial: Prosecutors battle over Medicare Advantage plans

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http://www.healthcaredive.com/news/aetnahumana-doj-trial-prosecutors-battle-over-medicare-advantage-plans/432142/

Dive Brief:

  • The Department of Justice (DOJ) argued against the viability of Aetna’s plans to sell off assets to counter concerns over its proposed $34 billion merger with Humana, The Wall Street Journal reports.
  • Aetna had agreed to sell $117 million in assets, representing nearly 30,000 Medicare Advantage enrollees in 21 states, to Molina Healthcare.
  • Federal prosecutors questioned whether Molina’s purchase of those assets be enough to sustain competition in the market for private Medicare plans in the markets where Aetna and Humana operate.

Nixed Hershey-PinnacleHealth marriage could send them into arms of someone else

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http://www.pennlive.com/news/2016/11/nixed_hershey-pinnaclehealth_m.html

PinnacleHealth System and Penn State Milton S. Hershey Medical Center said a marriage made sense for many reasons.

Not the least of which was to gain size and strength needed to fend off megasystems from outside their traditional service area. Those systems, they said, are positioning to siphon away patients needing the most advanced care, thereby eroding revenues needed to support those services in Harrisburg-area counties.

But the Federal Trade Commission opposed the merger on the grounds it would create a local hospital monopoly, and Hershey and Pinnacle subsequently called off their engagement.

 Still, experts say the forces that pulled the one-time rivals together are real and won’t go away. Those forces have triggered a wave of health system consolidation all over the country. In the Harrisburg region, they have prompted players such as Geisinger Health System, WellSpan Health and the newly-merged Lancaster General Health-University of Pennsylvania Health System to eye the territory traditionally served by Pinnacle and Hershey.

Those systems now surround Pinnacle and Hershey. At the same time, health care has entered an era where health systems are forever trying to attract more patients. That often requires expanding their footprint.

“It’s going to be hard for them to maintain what they’re doing as stand-alones,” said David Sarcone, an associate professor of business management and health studies at Dickinson College.

Stephen Foreman, an associate professor of health care administration at Robert Morris University in Pittsburgh said, “I can’t say I think their positions are all that great right now.”

 

The Future of Health Care Mergers Under Trump

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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.

CVS Health to cut 600 corporate jobs

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http://www.healthcaredive.com/news/cvs-health-to-cut-600-corporate-jobs-1/429798/

CVS Health employs more than 240,000 people in the U.S., many of whom work in retail positions or as pharmacists at its 9,600 pharmacies. But with increased competition in the drugstore retail space, CVS Health is starting to let some of those positions go.

Recently, the retailer has been buffeted by the likes of Walgreens, Rite Aid, and Wal-Mart Stores jockeying for sales of medications and health care services. Today’s drugstores compete with doctors and healthcare clinics as well as with retailers like Sephora and Ulta in beauty, and of course, general merchandisers like Target and, increasingly, Amazon, in consumer goods. The retailer may also be wary of the proposed merger between rivals Walgreens and Rite Aid.

An uptick in lower-priced generic pharmacy sales and a decline in store traffic muted CVS Health in its previous quarter. Sales grew 2.1% in Q2, missing analyst expectations for a 2.5% rise and trailing well behind the 4.2% increase that CVS posted in the first quarter of this year. Non-pharmacy same-store sales fell 2.5% in Q2, the company added. The drugstore retailer is due to release its third quarter results next week.

While the Affordable Care Act has expanded some opportunities for drugstore retailers to offer more medical services, the law has also helped lower some healthcare costs, as it was intended to do, which could hit retail sales. CVS also left a lot of money on the table when it ceased sales of tobacco products two years ago.

Is antitrust the answer to hospital consolidation?

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Is antitrust the answer to hospital consolidation?

Image result for Is antitrust the answer to hospital consolidation?

A 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.

FTC puts an end to Penn State-PinnacleHealth deal

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

FTC logo

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.

Are Blues’ Plans Benefitting Unfairly From Program To Offset Cost Of Sicker Patients?

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Are Blues’ Plans Benefiting Unfairly From Program To Offset Cost Of Sicker Patients?

(Photo by Steve Rhodes via Flickr)

Some health insurers say they’re paying too much to rival Blue Cross Blue Shield plans under a key pillar of the federal health law designed to compensate insurers that take on sicker and more expensive patients.

The critics’ chief complaint is that the Affordable Care Act’s risk-adjustment program unfairly rewards health plans — including Blue Shield of California — that have excess administrative costs and higher premiums. That comes at the expense of more efficient, lower-priced plans in the individual market, they say.

DOJ says Aetna, Humana are trying to derail antitrust case

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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

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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.