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April 21, 2022

ACEP Responds to FTC and DOJ Request for Information on Mergers and Acquisitions in Health Care

The issue of consolidation in health care has continued to be front and center in emergency medicine (EM). A few months ago, I wrote two blog posts about how the significant increase in consolidation among providers and health plans respectively has affected health care costs and quality of care. Another significant impact of consolidation that we at ACEP have explored is how the acquisition of EM practices has affected EM physicians’ working conditions and overall well-being. Particularly, we have been interested in assessing the labor-related impacts of the acquisitions and mergers and the effect they have had on physician wages, non-wage benefits and other aspects of emergency physicians’ contracts with their employers, and physician autonomy in their medical decision-making.

Recently, we have had a great avenue to share our perspective and findings and advocate on behalf of our members on this important issue. I mentioned in one of my previous blogs that the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) had released a request for information (RFI) on how to modernize their guidelines for enforcing anti-trust laws regarding mergers.

In the RFI, there are a series of questions that focus on the labor-related impacts of mergers. To help inform our responses to these questions, we distributed a questionnaire to our members asking about their experiences with mergers and acquisitions. Specifically, for those members whose practice had undergone a merger recently, we asked questions about the merger and how they were notified about it, along with how that merger impacted their wages, non-cash benefits, right to due process, and autonomy for medical decision-making. We also asked for their general views about the labor-related impacts of mergers or acquisitions in emergency medicine. We received over 110 responses to this questionnaire.

I’m happy to say that ACEP formally responded to the RFI yesterday. In addition to submitting the formal response, ACEP also had the opportunity last week to preview our responses directly with the Chair of the FTC, Lina Khan, and the Assistant Attorney General in the Antitrust Division, Jonathan Kanter, during an FTC and DOJ joint listening session. ACEP President Dr. Gillian Schmitz and ACEP Executive Director Sue Sedory, along with other emergency physicians, spoke during the public comment period. In their comments, Dr. Schmitz and Ms. Sedory noted numerous anti-competitive labor-related effects associated with mergers and acquisitions that respondents to the questionnaire noted, including:

  • Reduced wages and/or non-cash benefits,
  • Infringement of due process rights,
  • Interference with physician autonomy to make independent medical decisions benefiting patients,
  • Inability to find a job or undue imposed restrictions on ability to switch jobs, and
  • A shift to use of a less-skilled health care workforce jeopardizing patient care.

Dr. Schmitz and Ms. Sedory also shared more concrete results from the questionnaire that are echoed in our formal response. More than half of respondents indicated that their medical decision-making autonomy was negatively impacted by a merger or acquisition of their employer. Further, over fifty percent of respondents indicated that their due process rights worsened or were eliminated after the merger, which can result in physicians being left unable to advocate for their patients or for their own mental well-being in fear of employer retaliation. Due process plays a foundational role in ensuring a physician can carry out their promise to patients without fear of retribution or termination by their employer, so further erosion in contracts following acquisition is a significant concern.

When asked how mergers and acquisitions affect competition in the local job market for EM physicians, 63 percent of respondents to our questionnaire indicated that the presence of private equity firms made it more difficult to find and/or keep a job. Many EM physicians noted that larger national groups tended to hire advanced practice providers (APPs) over EM physicians. With respect to wages, 60 percent indicated their compensation had been reduced, with most experiencing a pay cut of more than 20 percent. While 40 percent experienced no change in pay or a pay raise after the merger, many of these respondents noted that their overall hours were cut.

Consolidation in the EM market also has led to increased burnout among EM physicians. Some respondents cited current working conditions at large national groups as reasons for quitting medicine altogether, as they feel that they are trapped in a system that does not respect their autonomy or mental well-being and that there are no other options for them. The potential of a significant exodus of EM physicians from the workforce threatens the maintenance of the healthcare safety net that emergency medicine provides.

Responses to our questionnaire also suggested a pattern of acquisition of many EM groups that were triggered by the hospital first being acquired by another entity. This pattern points towards a growing trend of vertical integration in addition to the ongoing horizontal integration. Further, nearly 27 percent of respondents cited profit as the primary reason for acquisition – and these same individuals were often concerned that this came at the expense of quality of patient care. On the issue of remaining profitable, ten percent of respondents employed by a large national physician group said that the main rationale for their smaller group moving forward with its acquisition was the inability to negotiate with insurers for reasonable contractual agreements. Some independent practices struggle to even have insurance companies respond to exploratory inquiries, much less agree to work with them. The significant consolidation of health insurance companies may be to blame for this, as it has seemingly made contract negotiations increasingly difficult.

Given these findings, ACEP provided the following conclusions and recommendations the FTC and DOJ:

  1. While there are some benefits to acquisitions and mergers. including the ability for EM practices to stay profitable and negotiate fairly with insurance companies, the potential anti-competitive labor-related effects must not be ignored—since they could impact wages, non-cash benefits, right to due process, autonomy for medical decision making, and the ability to serve patients.
  2. The FTC and DOJ must ensure that their guidelines for evaluating mergers include a detailed assessment of these labor-related impacts.
  3. Based on the revised guidelines, the FTC and DOJ must investigate those mergers and acquisitions that have led directly to anti-competitive and harmful practices.

Overall, ACEP’s response to the RFI and statements during the FTC and DOJ joint listening session reflect our strong commitment to supporting you as emergency physicians and ensuring that you are treated fairly by your employer and that you can practice in an environment where you can serve your patients to the best of your abilities. We will continue to work on your behalf towards achieving this important goal! For more information on ACEP’s efforts to protect EM physicians in the face of consolidation and a shifting health care landscape, please click here.

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs!

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