Several mergers between health systems in different states closed in the last year, with more “megamergers” anticipated to come as large systems pursue further economies of scale amid challenging financial headwinds, according to McDermott Will and Emery’s “Hospitals and Health Systems 2023 Outlook.“
If a proposed merger does not have traditional horizontal consolidation concerns because the systems operate in different states or regions, stakeholders should consider whether antitrust enforcement agencies may assert a “cross-market” theory of competitive harm, according to the international law firm’s report
“Cross-market” mergers are between health systems that operate in separate geographic areas and do not eliminate competition to attract patients since the systems provide services to distinct patient populations, notes Becker’s.
However, these types of deals can lead to competitive effects when the merging systems have common payer and employer customers and are competing to be in the same payer and employer networks.
The Federal Trade Commission has added cross-market theory questions to second requests in merger investigations, but it has not formally challenged a hospital or health system transaction based on a cross-market theory of competitive harm, according to McDermott Will and Emery. Read more.
