With the election of GOP candidate Donald Trump to the presidency, every long-stalled Republican healthcare proposal has vaulted into the realm of possibility.

The incoming Trump administration and the Republican-controlled Congress are set to shake up the healthcare industry yet again, as the mantra “Repeal and Replace the Affordable Care Act” may become a reality. Though Trump’s thoughts on the ACA and other aspects of healthcare are widely known, he has remained mum on his thoughts of the recent boom in healthcare consolidation, which sprang from the ACA. So what, if any, effect will the Trump administration have on consolidation deals in the coming next four years?

To begin, the US Department of Justice and the Federal Trade Commission are responsible for reviewing consolidation deals, and ultimately decide whether deals should be approved or blocked. Presidents nominate a US Attorney General, an Assistant Attorney General for antitrust enforcement, and a FTC Chairperson. Alabama Senator Jeff Sessions has been nominated as Attorney General and the other appointments are expected to be announced soon.

The president-elect chose former FTC commissioner Joshua Wright to lead the FTC transition team. In an op-ed in the New York Times, Wright says not all mergers are bad for consumers. However, he singles out the hospital sector as an area where the FTC has successfully blocked mergers that threatened consumer interests. He points to data proving highly consolidated markets can lead to price increases.

This is especially important considering the continued consolidation efforts in the hospitals and health systems sector. Advocate and NorthShore health systems in Chicago continue to fight the FTC’s decision to block their proposed merger. And it was recently announced that Lahey Clinic and Beth Israel Deaconess Medical Center would try merging for the fourth time, perhaps viewing the incoming administration as a supporter of the free market society. However, this may not be the case.

The FTC largely acts on its own and without intervention of the presidents, Trump will not have a direct say in what healthcare deals are passed. While there may be a push towards a free-market society, the FTC is expected to maintain its stringent review of healthcare consolidation deals. The FTC has also cracked down on creation of integrated delivery networks with high concentration of power. This resulted in the rise of affiliation agreements that stop just short of mergers. These initiatives have formed in many states, including Ohio, Washington state, and Wisconsin. Affiliation agreements will continue means of large health systems working together to form innovative programs and skirting FTC review.

Then there is the question of whether the proposed mega-mergers of Aetna-Humana and Anthem-Cigna will be approved. President Obama’s DOJ has filed lawsuits blocking both health insurer mergers. Anthem-Cigna trial is already kicking off, discussing the national implications of the merger. It remains unclear if a decision will be handed down in December or if another trial to examine the market-level impacts will be needed. Aetna-Humana trial will begin in December, and will follow the same format. There is no guarantee a decision will be made before the next administration takes office, but there are indications of how the Trump administration would react.

If past words indicate future actions, then Trump will likely oppose the consolidated entities formed by Aetna-Humana and Anthem-Cigna. On the campaign trail, Trump promised to break up monopolies, citing the AT&T-Time Warner Cable deal as a combined entity with too much power. Senator Sessions likely has similar views on monopolies and mega-mergers, which places serious doubt on the closure of such deals. Even if the judges side with the current DOJ and block the mega-mergers, it appears likely the Trump DOJ would not overturn such rulings.  However, Trump may change his tune once in office as Republicans have historically been less opposed to consolidation as Democrats.

Indications from the media and healthcare analysts point towards the continued enforcement of antitrust laws and protection of market competitiveness and consumers. This may be a negative for many healthcare entities, as consolidate or die mentality may prevail in light of Republicans renewed push to replace the ACA with their own plan. Consolidation may occur among smaller players in markets, allowing them to remain competitive with a market’s dominant players. It can also be expected that health systems may try expanding into different markets, similar to the Seattle’s MultiCare proposed purchase of Community Health System’s Spokane operations. However, everything is hypothetical at this point in time as we wait to see what happens come Jan. 20, 2017.

For more market access insights, follow Sarah Wilson on Twitter: @SarahWilsonDRG


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