President Joe Biden’s commitment to combat anti-competitive integration laid the foundation for stricter supervision of the vertical integration of the entire healthcare industry.

The Biden administration has Vow to stop the proposed merger This will, to a certain extent, hinder competition by increasing the budgets of the Federal Trade Commission and the Department of Justice, adjusting the standards for allowing mergers, prohibiting the use of non-compete clauses, and supporting retrospective merger analysis. M&A experts say that splitting up healthcare groups and restricting proposed anti-competitive vertical mergers will be a key part of the regulatory strategy of regulators.

“They are heading in the right direction,” said Glenn Melnick, a health economist at the University of Southern California, who pointed to the data collected by the FTC on the practice of acquiring doctors by hospitals. “I don’t know what powers they have. Many of these transactions are structured below the Hart-Scott-Rodino threshold, so we may need new legislation-who knows.”

The FTC has asked several major insurance companies to provide data on doctors hired by hospitals.It’s also redesigning it Vertical merger guidelinesIt is expected that this will strengthen the areas of law enforcement where regulators have historically limited success.

Companies like UnitedHealthcare Group have become healthcare groups because they Get more doctors, In-depth study of hospital operations and control of more entities throughout the continuous care process. For example, an insurance company has merged with a pharmacy and a pharmacy welfare management company, which has formed its own group buying organization. Industry observers say that as these corporate groups develop, transparency tends to diminish.

As PBM joined insurance companies and pharmacies, their profits increased. According to data from the PBM Accountability Project, the gross profit of PBM’s mail-order and specialty pharmacies increased to 10.1 billion U.S. dollars in 2019, an increase of 13% from 2017’s 8.9 billion U.S. dollars analyze Financial records, government reports, research and investigations.

“This reflects vertical integration,” said Mark Bloom, executive director of American Agenda.

Some people believe that vertical integration can improve quality and reduce healthcare costs by improving economies of scale. Others claim that large integrated healthcare companies can avoid competitors, which will increase costs and reduce quality.

Catherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, said: “There is definitely more and more concern about vertical integration,” she pointed out that health plans are increasingly involved in the delivery of medical services. “You have to consider the shortcomings of owning a small number of vertically integrated companies and the impact on competition.”

But after the transaction is completed, it is always more difficult to cancel the transaction. M&A experts say that even if certain regulatory standards are strengthened, this is still an area that is difficult to enforce.

When the government challenges horizontal mergers, such as hospital mergers, it uses standards such as the Herfindahl-Hirschman index to measure market concentration and estimate the consequences of competition. But there is no clear method for vertical transactions, which means that most mergers are challenged on a horizontal basis. Generally speaking, vertical integration is considered to be conducive to competition.

“The (Herfindahl-Hirschman index) provides the court with some tangible assurance; there is no such thing as vertical case law,” said Katherine Fink, Baker Donaldson’s antitrust lawyer. “I can’t imagine what they will be like.”

In terms of hospital integration, the number has slowed in the past two years due to the COVID-19 pandemic.

The hospital transaction volume is expected to pick up in 2021, but the quarterly transaction volume in the third quarter is still slow.There are fewer transactions involving small and medium-sized hospitals, while Multi-billion dollar proposals fail By 2021, in the midst of more regulatory review and “scale is the solution” suspicion.

“We haven’t seen the end of the merger,” said Michael Abrams, managing partner of Numerof & Associates, a healthcare consulting firm. “People still marry without proper due diligence, and the impression of getting bigger can solve their problems. The truth is that more people will relax when they realize that this is not the case.”

In the past three years, due to the protests of doctors and the increasing vigilance of regulatory agencies about mergers, there are about a dozen proposed mergers among relatively healthy non-profit systems that have not yet ended. The M&A consultant pointed out a series of reasons for the failure of the transaction, including cultural differences, antitrust influence, geographical barriers, half-baked integration plans, infighting and power struggles.

But they said that health system executives will continue to turn to mergers and acquisitions in an attempt to increase revenue and protect their organizations from competitors, national emergencies and changes in reimbursement.

Dr. Harry Greenspun, chief medical officer of the consulting firm Guidehouse, said: “A lot of integrations are not really cost-effective, nor have they fulfilled their promises in many areas.” “When the organization explores ways to integrate and does not integrate properly, it will start a step further. Review.”