FTC Press Release Details COPA Shortcomings

The FTC issued a press release on Monday detailing the findings of their policy paper and fact sheet regarding COPA (Certificates of Public Advantage) agreements and their negative effects on both patient care and healthcare workers.

The press release describes the intent of COPAs to “shield hospital mergers from antitrust laws in favor of state oversight.” The press release emphasized COPAs’ potential shortcomings, which allegedly work against favorable patient costs, care, and healthcare worker wages. States often issue COPAs in attempts to substitute marketplace competition for state oversight.

The press release further notes that hospitals claim that COPAs help lower costs and improve population health, but evidence demonstrates otherwise. Although hospitals make regulatory commitments designed to reduce anticompetitive effects, the FTC’s policy paper outlines evidence that hospital mergers subject to COPAs have resulted in higher prices and reduced quality of care.

The policy paper further notes that mergers that focus on promoting hospital concentration, including mergers where COPAs exist, can “slow wage growth for nurses, pharmacy workers, and certain other non-medical skilled workers.” Most often, the paper notes, COPAs have resulted in a single hospital monopoly, effectively concentrating the healthcare market and increasing costs while reducing quality. COPAs allegedly permit hospitals to gain substantial negotiation leverage, which often leads to consumers’ higher costs.

The press release asserts a common finding across studies: The “net effect on quality when competing hospitals merge is often negative, and that increased competition is associated with better quality.” This release argues that the finding is reinforced by studies showing that competition, not consolidation, is the most-effective factor in improving quality benefits and price constraints for patients in health systems.

The FTC Director of Policy Planning, Elizabeth Wilkins, said of the findings, “Despite hospital claims that COPAs will result in lower costs and improved population health outcomes, we are not aware of any proven benefits of COPAs.” Wilkens went on to “urge state lawmakers to consult local health insurers, employers, and workers regarding the potential impact of COPA legislation.”