A new DOJ task force is the latest example of intensified federal oversight of healthcare antitrust issues

A new task force at the U.S. Department of Justice (DOJ) is likely to bring additional scrutiny on whether healthcare transactions adversely affect competition.

The department’s Antitrust Division announced the formation of a group to “consider widespread competition concerns shared by patients, healthcare professionals, businesses and entrepreneurs, including issues regarding payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, healthcare IT services, access to and misuse of healthcare data and more,” according to a May news release.

In addition to “facilitating policy advocacy,” the Task Force on Health Care Monopolies and Collusion (HCMC) will conduct “investigations and, where warranted, civil and criminal enforcement in healthcare markets,” the release states.

The group will include civil and criminal prosecutors, economists, healthcare industry experts, technologists, data scientists, investigators and policy advisors from across the Antitrust Division.

“The task force will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the healthcare industry,” Jonathan Kanter, assistant attorney general for the DOJ’s Antitrust Division, said in the release.

In an interview posted this month by the Washington Post, Kanter added that the announcement of the task force “essentially explains that we are upping our game. We’re going to elevate the importance of healthcare antitrust enforcement.”

An increased line of sight

The task force appears to be a complementary effort to the recently announced online portal for employers, consumers and other stakeholders “to report healthcare practices that may harm competition,” per messaging from the DOJ, HHS and the Federal Trade Commission (FTC). Information received through the portal will be funneled to the new task force, as necessary.

Broad categories that can be reported include:

• Consolidation, joint ventures and roll-ups of healthcare providers or companies
• Limiting choice and fair wages for healthcare employees
• Collusion or price fixing among competitors
• Preventing transparency
• Healthcare contract language and other practices that restrict competition
• Anticompetitive uses of healthcare data

A point of emphasis

The task force and portal join a list of Biden administration programs intended to promote competition in the industry.

For example, in late 2022, the DOJ and the HHS Office of Inspector General announced a joint initiative to enhance their oversight of potentially anticompetitive transactions and practices.

In March, the DOJ, FTC and HHS issued a request for information (with comments due by June 5) on the effects of consolidation in healthcare, starting with private-equity transactions.

From a policy standpoint, arguably the biggest development under the current administration was the issuance late last year of new merger guidelines. Among other shifts, the guidelines have reduced the thresholds that determine whether a transaction merits scrutiny based on market concentration. They also take a more expansive view of vertical consolidation that warrants investigation.

Another noteworthy policy change was the 2023 withdrawal of three sets of nonbinding guidelines that had allowed for specified “safety zones” from antitrust enforcement. Those safe harbors allowed providers to engage in information sharing and group purchasing organizations, among other arrangements, while being reasonably assured they would not run afoul of antitrust law.

On the labor front, the FTC in April published non-compete regulations that will have a big impact on for-profit hospitals and also appear likely to affect clinical staffing arrangements at not-for-profit hospitals, unless a lawsuit filed by the business community succeeds in halting implementation.

Evolving to meet new dynamics

In the Post interview, Kanter said the increased emphasis on ensuring competition in healthcare stems from ongoing changes in the industry.

“We’re seeing healthcare insurance companies buying up, at an extraordinary clip, actual healthcare providers — doctors’ groups, physicians’ groups, emergency room physicians, nursing groups,” he said. “This is changing the landscape of healthcare, and all of this is being done against the backdrop of a rich ecosystem of data that is used to increasingly make algorithmic decisions about the course of care and billing.”

By calling out payer-provider consolidation in the news release, the DOJ is signaling a focus on the payvider trend. The task force represents an expansion of the DOJ’s historical purview over the healthcare industry, wherein the department examined moves by insurers while generally leaving concerns over provider consolidation to the FTC.

In a blog post, attorneys with Epstein Becker Green note that to succeed in value-based payment models, participating providers generally need to attain some type of scale.

“It remains to be seen how investment in and pursuit of value-based care models will impact the new HCMC task force’s work, or whether this new task force will even take these developments and market conditions into consideration,” the analysis states.

Similarly, in a 2023 fact sheet, the American Hospital Association cites “financial pressures” that may prompt M&A activity.

Such pressures “can result from the costs of complying with a complex web of local, state and federal regulations; excessive commercial payer administrative requirements; and efforts to reorient care delivery and payment to value-based models,” the fact sheet states.

Political questions loom

A wild card potentially affecting the task force and similar initiatives is the November presidential election, which could result in new leadership at the DOJ.

Seeking to counter the notion that entities in any industry can consider running out the clock until a more business-friendly administration potentially takes office, Kanter told the Post that “the movement toward stronger, more effective antitrust enforcement is not something that neatly sits in any one area of the political continuum. … I think we have a reached a turning point in antitrust enforcement, not just because we as enforcers believe it’s important but because the public is demanding it.”