Models for Enhanced Health Care Market Oversight — State Attorneys General, Health Departments, and Independent Oversight Entities

Focus Area:
Sustainable Health Care Costs
Topic:
Health Care Consolidation Health Care Affordability

Executive Summary

State policymakers are urgently seeking tools to address rampant health care market consolidation, which drives health care costs higher and can threaten health care access and quality for patients. Traditional antitrust tools are often inadequate to address novel forms of health care consolidation, including vertical consolidation of health systems and physician practices, cross-market acquisitions across state lines, and the rapid entry of private equity, retail giants, and health insurers into health care provider markets. In response, some states have strengthened and expanded the authority of their attorney general, along with the health department or an independent state entity, to provide greater oversight over health care transactions. This report describes how states have expanded oversight over health care transactions in two primary ways:

(1) Expanding the Review Authority of the Attorney General or Other State Agency: by requiring prior notice of a broader scope of transactions and/or establishing the ability to block or impose conditions upon the transaction without a court order; and

(2) Giving Authority to Review Transactions to Additional Oversight Entities: by vesting another state entity (in addition to the state attorney general) with the authority to review and report on a proposed transaction’s broader health care market impact.

To assist state policymakers seeking to increase health care market oversight, we reviewed state statutes and regulations regarding health care transactions and interviewed state officials and staff members in eight states with expanded authority to review health care transactions. This report synthesizes this legal analysis and lessons from state conversations to present recommendations and policy considerations for state policymakers to strengthen oversight authority of health care transactions.

State Actions to Strengthen Oversight of Health Care Transactions

RecommendationsConsiderations
1. Require prior notice to state officials of proposed health care transactions.What data should be made public?

What threshold level, if any, should exempt transactions from notice?

Which health care entities and which transactions should be covered?
2. Require concurrent notification and review by both the attorney general and the health department or other health care market oversight body.What are best practices for collaboration between the agency and the attorney general?

What is the risk of the attorney general and other reviewing agency reaching different conclusions?
3. Authorize the attorney general or state agency to block or impose conditions upon harmful transactions without a court order.Which agency or agencies should have the authority to block a transaction?
4. Establish health care transaction review criteria to assess whether the transaction is in the public interest.How should a state define what it means for a transaction to be “in the public interest”?
5. Have robust mechanisms for monitoring compliance with conditions, including significant penalties for noncompliance.Can the conditions be imposed, monitored, and enforced, for the entire length of time of concern?

Should the attorney general or market oversight program monitor transactions and their impact on market conditions after closing?
6. Allocate sufficient time and resources for implementation of health care market oversight programs.How long should states have to review a transaction?
7. Authorize the health department or health care market oversight entity to review and approve or place conditions upon significant health facility or service line closures.