Hospital Consolidation

Editor’s Note: We call the forthcoming CRE release of a White Paper to the FTC on Hospital Consolidation to Mr. Gaynor’s attention which will be published on this page on Monday, September 16.

Joe Carlson

ModernHealthcare.com

With the Federal Trade Commission showing renewed interest in policing mergers among healthcare providers, the agency’s new chairwoman has appointed a noted Pittsburgh healthcare economist who studies hospital consolidation to lead the commission’s Economics Bureau.

Martin Gaynor will join the FTC from Carnegie Mellon University, where he holds a chair in health systems management at Heinz College. Gaynor will head a division of the FTC that produces economic analyses to support antitrust and consumer-protection investigations.

“It’s an honor to have the opportunity to serve the country in this capacity,” Gaynor said in an e-mailed statement. “I look forward to working with Chairwoman Ramirez and everyone at the FTC.”

Gaynor’s biography on the webpage of the Health Care Cost Institute, where he serves as chairman, says he has also worked on healthcare policy issues with the FTC and U.S. Justice Department in the past.Edith Ramirez, who became FTC chairwoman in March, has publicly praised the commission for taking a renewed stand in blocking hospital mergers that the agency says would raise consumer healthcare prices. In particular, she told a crowd of New York attorneys in January that the FTC’s Economics Bureau had successfully reinvigorated the commission’s approach to hospital mergers, resulting in a string of successful agency actions to block provider consolidations.

“These victories are a perfect fit for consumers already burdened with staggering health care costs,” Ramirez told the New York State Bar Association Law Section members in her Jan. 24 keynote address (PDF).

Since 2011, Gaynor has been chairman of the not-for-profit Health Care Cost Institute in Washington, which maintains a vast database of de-identified healthcare utilization and cost information studied by academics and policymakers.

When the institute was launched, Gaynor recorded a YouTube video that talked about the organization’s mission, including his argument that Americans’ standard of living has been held flat for 20 years by the rapid rise of healthcare costs. He discussed his interest in physician services, which he said remain opaque to economists in terms of price, quality of care and competitiveness.

Editor’s Note:

See the August 11 post on this IPD from Time Magazine:

“It’s very common that mergers between large entities, even in large urban areas, can have substantial anticompetitive effects,” says Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University.

Carnegie Mellon’s Gaynor says there have been more than 1,000 hospital mergers since the 1990s. A report issued by the AHA in June says 551 hospitals were acquired by other health systems between 2007 and 2012, but says in most markets, there were still plenty of hospitals competing with one another afterward. (This will be true in New York City even after the Mount Sinai merger.) An AHA briefing paper points out that the ratings agency Moody’s said in 2012 that the financial outlook for hospitals was negative. AHA also argues that the fact that health-care-spending growth is relatively low right now proves that consolidation among hospitals is not driving prices upward.”

FTC appoints Gaynor to head Economics Bureau

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