[00:00:00] Stacey Richter: Summer short. How come there aren't more hospital antitrust cases? Today I speak with Brennan Bilberry
[00:00:15] Brennan Bilberry: American Healthcare Entrepreneurs and Executives You Want To Know, Talking. Relentlessly Seeking Value.
To listen to this episode or read the show notes with mentioned links, visit the episode page.
[00:00:23] Stacey Richter: May I just take a moment and thank the Healthy Economist for leaving a super nice review on iTunes. The title of the review is Best Podcast on the Healthcare Industry, and The Healthy Economist writes, "There's no one simple fix for the healthcare industry, but relentless health value contains valuable insights on what actions can be taken to make things better for consumers and patients".
Thank you, Healthy Economist.
In this summer short, I am talking with Brennan Bilberry. And we're talking about why everybody isn't suing health systems for behaving badly in sometimes pretty egregious ways. Why isn't anybody stepping in to prevent all of this consolidation that we all know at this point is pretty bad news. FTC, where are you?
Brennan Bilberry cites three reasons for the way fewer antitrust lawsuits than you'd think would be going on.
Number one reason, a continuing lack of transparency. It's tough to sue someone when you aren't really sure what they're up to. And even if you do, it's hard to prove because you can't get the data you need to prove it. So that is number one reason that diminishes the number of potential lawsuits.
Here's number two. Political power of hospitals means legislatures have a hard time telling their major donors to kiss off and pass laws that actually enable legal recourse. Here's number three. Turns out the FTC is a little toothless when it comes to those with tax exempt i.e. nonprofit status.
Nobody expected nonprofits to act the way that some nonprofits are acting and the laws haven't caught up with the reality of the situation.
My guest today in this healthcare podcast as aforementioned is Brennan Bilberry, who is a founding partner over at Fairmark Partners, which is a law firm litigating some of these antitrust lawsuits against some of these hospital chains.
In the show notes on the website, you will find links to the original pod with Brennan entitled, "Consolidated Health Systems and Cunning Anti-competitive Contracts". You will also find articles written by and or podcasts with Daran Gaus, Blake Madden, Cora Opsahl, Dale Folwell, and also Dr. Scott Conard. My name is Stacey Richter and this podcast is sponsored by Aventria Health Group.
And here's Brennan Bilberry.
[00:02:36] Brennan Bilberry: One of the challenges of our work is that there's, there's not very many hospital antitrust cases taking place despite the fact that there is an awful lot of, in our view, a lot of anti-competitive action taking place across the country by dominant hospital systems. And there's a couple reasons for that.
One, which is I think well discussed is the lack of transparency that up until a few years ago. It was very hard for people, including law firms like us, to understand the prices that were being paid by payers. Hospitals fought back against not just the price transparency rule, but against efforts by employers to gain information to the prices that they were paying.
The second is that the political power of hospitals has meant that it's very hard to build political will. For, or it has been hard to build political will for blocking mergers or really aggressively and enforcing antitrust laws at the state or federal level when this is just such a powerful political force.
And when hospitals have really convinced a lot of regulators, particularly at the state level, that consolidation would lead to efficiencies and lower prices. And when that hasn't been borne out over the last several decades, but there have been a lot of regulators and legislators that have been convinced by the hospital industry that that's the case.
The third is that there's a quirk in the law, which is the Federal Trade Commission, which is the agency that's generally tasked with overseeing healthcare. Competition is barred from pursuing cases of anti-competitive conduct against nonprofits, and as most hospitals are, at least on paper and at least in the way that they're registered nonprofits.
And that creates a huge impediment where you have the agency that would probably be the best equipped from a knowledge perspective to taking these on. That's barred, that's barred from doing so. And then the last is that in, in a number of states, state legislators and regulators who you know, have been incredibly cozy with the hospital industry passed laws that said that a number of systems were exempt from antitrust laws effectively.
And these laws were, they're often called certificates of public advantage. And they basically give hospitals a get out of jail free card from merger laws and antitrust laws in exchange for regulation. And the idea is that you'll have a regulated monopoly. This could be a good thing in rural areas particularly, but as you can imagine, an entity is powerful as a dominant hospital system in a state often finds a way to not really comply with those regulations and you end up.
Back in the back in the situation where a state has sanctioned a unregulated monopoly and that leads to pretty bad outcomes for consumers. All of those factors are the reason that we think that private antitrust litigation is a really important way to both highlight the problems in the system and highlight the issues that are coming up, but also to to actually kinda reduce prices and bring better choices for consumers and.
Without those factors, it may, our work might not be as necessary and the work that other great firms are doing in this area might not be as necessary. But I think for now, as long as we're confronting those challenges, as it is.
[00:05:29] Stacey Richter: The three reasons, just recapping what you just said there, why antitrust litigation is so vital.
In this country right now is the the first one that you'd mentioned. There's that Harry Truman quote, "If you can't convince them, confuse them". And it sounds like that's been the plan here. If you have this lack of transparency, which is what you were talking about, then it's really difficult if you create all these kind of opaqueness.
That is going on with these backroom deals, then it makes it very difficult for regulators to do much because they don't really understand or can't really see what's going on. So the first thing that you mentioned is this lack of transparency. The second thing is shockingly. The FTC is banned from taking on anti-competitive practices if the entity is nonprofit, so that is a huge loophole.
That kind of goes back to the, what a physician leader said, which is that nonprofit is a strategy, a tax position more than it is a philosophy, which is really sad because you become nonprofit and it gives you access to all kinds of monopolistic opportunities that potentially wouldn't happen have otherwise.
Then number three, you mentioned that some of these state legislators can get pretty cozy with some of their main donors, which happen to be health systems, and then gain some sweetheart legislation that exempts them from some of this anti-competitive stuff that state legislators might be willing to pass.
So all of this adds up to a really, an imperative. It sounds like, to hold some of these health systems, and we're not talking about everybody for absolutely sure, but some of these consolidated entities that are quite wealthy organizations and are quite willing to use every trick in the book, it sounds like, in order to deepen their ability to maximize their revenues.
[00:07:22] Brennan Bilberry: That's exactly right, and that's why we think that private litigation is playing an important role and will continue to play an important role while we're waiting on that broader change. That will come hopefully at the, at the regulatory and legislative level.
[00:07:35] Stacey Richter: Hey, could I ask you to do me a favor?
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