CERTIFICATES OF PUBLIC ADVANTAGE: BYPASSING THE FTC IN HEALTHCARE MERGERS?
By Lisl Dunlop1
Over the past several years, faced with rising costs, pressures to improve quality, changes to insurance reimbursements, and other regulatory developments, the healthcare field has witnessed increasing consolidation. This is particularly true for physician practice groups and hospitals. But, this consolidation also has been subject to increased scrutiny from federal antitrust regulators. Whether it is a merger between the two leading providers of general acute care inpatient hospital services near Chicago, Illinois2 or the acquisition of a clinic employing 60 physicians in North Dakota,3 healthcare entities in regions with few competitors face significant antitrust obstacles in their efforts to merge.
At the same time, state policymakers have recognized that collaboration among healthcare providers, including mergers, can lead to better public health outcomes while reducing costs. To promote such collaborations, some states have stepped in and enacted laws that permit competing hospitals or healthcare systems to apply for a Certificate of Public Advantage ("COPA") under which they can engage in joint activities, including merger transactions, that otherwise may be prohibited by the federal antitrust laws.4 According to the states, the benefits of these arrangements to state healthcare goals outweigh the potential harms resulting from lost competition.