Antitrust and Nonprofit Hospital Mergers: A Return to Basics
31 Pages Posted: 26 Mar 2007 Last revised: 30 Jan 2014
Courts reviewing proposed mergers of nonprofit hospitals have been abandoning the bedrock principles of antitrust law, failing to pay heed to the most elemental hallmarks of socially beneficial competition - maximizing allocative efficiency and total surplus. This article suggests that courts' inability to recognize antitrust concerns in these cases reflects a failure to understand the structural details of the American health care market. After reviewing recent cases in which courts have denied challenges to proposed mergers between nonprofit hospitals, it documents how courts have engaged in a faulty analysis that ultimately protect nonprofit hospitals from the rigors of standard antitrust scrutiny. It then identifies the bedrock principles of antitrust law - preventing supracompetitive prices, optimizing output, and maximizing allocative efficiency - that have been absent from, if not violated by, the rulings in these merger cases.
Keywords: nonprofits, hospital mergers, health care competition
JEL Classification: L44, K21, L31
Suggested Citation: Suggested Citation