Hospitals that merge under state regulations that shield them from federal scrutiny tend to eventually break free of those controls and raise prices substantially, new research finds.
A forthcoming study in the Journal of Law and Economics found hospitals hiked prices between 39% and 51% after the repeal or expiration of their state regulated certificates of public advantage, or COPAs. COPAs are laws that allow anticompetitive mergers to proceed under state oversight, thereby avoiding the federal antitrust scrutiny lawsuits they would otherwise have to contend with.
“When the gloves get taken off, they fully exercise their market power,” said Chris Garmon, the study’s lead author and assistant professor of health administration at the University of Missouri-Kansas City.
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