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Experts back FTC in Phoebe court case

ALBANY, Ga. — An amici curiae brief filed by a group of economics professors in the U.S. Supreme Court backs the Federal Trade Commission’s case regarding the acquisition of Palmyra Medical Center — now known as Phoebe North — by the Hospital Authority of Albany-Dougherty County, also the owners of Phoebe Putney Memorial Hospital.

The brief, filed shortly after the FTC filed its brief on the case, was compiled by more than 20 experts from institutions including Northwestern University, University of Pennsylvania, Harvard University, Stanford Graduate School of Business, Columbia University and the University of Illinois at Chicago.

“In our view, the economists’ brief entirely misses what this case is about: the issue in this case is not whether non-profits generally are subject to the antitrust laws, but whether federal antitrust law governs the actions or decisions of state-created public bodies such as the Authority,” said Jackie Ryan, vice president of corporate strategy at Phoebe. “The brief also ignores the fundamental policy issue of how to provide high-quality and low-cost hospital care to those in need. We will respond more fully when we file our own brief in the Court.”

The first thing the brief addresses is whether non-profit hospitals such as Phoebe Putney Memorial Hospital should be shielded from federal antitrust scrutiny — stating that competition among hospitals is a central element of the nation’s health care system, and that there is no compelling basis for an antitrust exemption for non-profit hospitals.

“Nonprofits control approximately 69 percent of all general acute care hospitals and 78 percent of all hospital beds in the United States,” the brief states. “If the Court accepts Phoebe Putney’s claims and shields nonprofits from federal antitrust scrutiny then most hospitals would be free to engage in anticompetitive conduct that would not be tolerated from for-profit firms, posing a threat to the success of our market-based healthcare system.”

The brief goes on to make the case that patients may be harmed, specifically in terms of pricing, if nonprofit entities obtain such an amount of market power. In so doing, it cites three studies to back that point up.

“There is a great deal of empirical evidence showing that hospital prices are substantially higher in concentrated markets,” the brief states. “Moreover, nearly all studies that account for ownership form find that nonprofit hospitals exercise market power by raising prices...

“All three studies find no difference in the extent to which nonprofits and for-profits exploit their ability to raise prices.”

The brief further addresses Phoebe’s claim that the merger will lead to efficiencies by saying that empirical evidence on whether such a consolidation leads to cost savings is mixed at best. It also indicated there was an opinion of those compiling the brief that claims that the acquisition will ultimately allow Phoebe to provide more uncompensated care are also weak.

“Even if it were the case that nonprofit hospitals with more market power both receive higher prices and provide greater levels of uncompensated care, that care would still come at the expense of other consumers who pay the higher prices directly and through reduced pay or benefits, including the possibility of losing insurance coverage entirely,” the brief reads. “Moreover, in the wake of the Court’s decision upholding key elements of the Patient Protection and Affordable Care Act, the number of uninsured persons is likely to shrink substantially in the relatively near future. Given this, funding the provision of uncompensated care, already a questionable rationale, is an even less compelling justification for lax antitrust scrutiny of nonprofit hospitals.”

This all led to the conclusion that an economic analysis of Phoebe’s contentions offers no theoretical or empirical basis for antitrust exemption or lax treatment for non-profit hospitals, and that a merger giving a non-profit hospital a significant market power is likely to harm consumers.

Phoebe’s brief is expected to be filed on or before Oct. 1.

Comments

Terry.Lewis 1 year, 11 months ago

It appears to me what they are saying is that if Phoebe were a for-profit hospital the acquisition would have not be allowed to move forward.

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FryarTuk 1 year, 11 months ago

What compelled the compiling of these experts opinions? It appears the amicus brief was filed very quickly after the FTC submission. Interesting. These briefs are traded among lawyers and legal associations like S&H Green stamps. Much ado about nothing.

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Trustbuster 1 year, 11 months ago

These economists understand more about the market structure than Jackie Ryan.

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rightasrain 1 year, 11 months ago

Jackie Ryan, we the citizens know what the "corporate strategy" of Phoebe is...$$$.

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WeAreThey 1 year, 11 months ago

Maybe the point in filing the brief was to demonstrate that just because something meets a legal requirement doesn't mean that it is good for We, The People. We criticize large corporations for the harm that they do while hiding behind their attorneys and legal loopholes, all the while proclaiming "It might be legal but it ain't right !". If this were BP, Cooper or HCA, for that matter, we'd be screaming all the way to Washington. Yet again, Washington has come to us with information the taxpayers of Dougherty County were totally unaware of. How many more 'friends' do we need to tell us that 'It might be legal but it ain't right' before we get it?

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ObjectiveEyes 1 year, 11 months ago

I stopped listening at “...In our view..." Unfortunately, "our view" is not in the best interest of Albany / DOCO. I guess Wernick and his minions are smarter than Northwestern University, University of Pennsylvania, Harvard University, Stanford Graduate School of Business, Columbia University and the University of Illinois at Chicago?

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unclebug 1 year, 11 months ago

It's about time the robber barons who run "non-profits" under the shield of medical authorities are exposed. Their goal is to eliminate as many competitors as possible, then set prices where they want. Watch how quickly and how many new entities crop up under the authority, each with its own CEO and other administrative overhead. Spread the wealth within the authority.

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Jimboob 1 year, 11 months ago

Isn't it too late? There is a new sign on the door and Dr. Bagnato is set up across town. How much money would this cost if it were reversed? Who would pay? How much are the lawyers making? Inquiring minds want to know...

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FryarTuk 1 year, 11 months ago

That's an interesting question for an attorney with appellate experience to answer. When it gets to SCOTUS there may not be any local barrister who knows a great deal.

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Cartman 1 year, 11 months ago

Quit thinking local. Once SCOTUS takes a case, the focus is no longer as much on the causes of the immediate parties as it is on the implications of precedent to the nation as a whole. The amicus brief addresses that "non-profits" aren't helpless little charity hospitals. "Non-profits" control a majority of care, beds, and $$$. Therefore if anyone needs to be regulated from creating monopolies so they can spike up prices, then non-profits need to be regulated just as much as "for-profits". If Phoebe is allowed to side-step this oversight by using a puppet county hospital board; then any other non-profit can do the same. The amicus brief addresses the issue in its nation policy context. It's about more than just Phoebe. It's about more than whether the genie can be put back in the bottle here in Albany. It is about making sure that other communities in America will not be financially raped by their "non-profit" hospitals.

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FryarTuk 1 year, 11 months ago

Most folks understand the purpose of SCOTUS review being a national precedent. Forget the amicus brief. The question remains about a remedy for PPMHB merging with Palmyra possibly in violation of the law. I infer from your comments that SCOTUS' review simply begs the question of local remedy. Or did you just ignore the issue because you didn't know how to answer it?

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Trustbuster 1 year, 11 months ago

“Nonprofits control approximately 69 percent of all general acute care hospitals and 78 percent of all hospital beds in the United States,” the brief states. “If the Court accepts Phoebe Putney’s claims and shields nonprofits from federal antitrust scrutiny then most hospitals would be free to engage in anticompetitive conduct that would not be tolerated from for-profit firms, posing a threat to the success of our market-based healthcare system.” This statement is the heart of their argument against Phoebe. If our current federal regulations don't allow this conduct among for profit businesses then why should these so called charitable hospitals that hide their funds off-shore be exempt either? What allows Phoebe to engage in such practices that many consider above the law? Even more worse is that the local hospital board entrusted by the taxpayers is protecting Phoebe's assets at their expense. I agree with the economic professors that competition serves everybody's interests. Phoebe needs to be limited in aggrandizing its power as quasi political entity.

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FryarTuk 1 year, 11 months ago

Let's assume SCOTUS agrees with your position. Is there a remedy for Phoebe's violating the law/rule since annexing Palmyra is a fait accompli?

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