By 2021, healthcare spending is expected to reach a whopping twenty percent of gross domestic product. One of the less-publicized causes of the rapid growth in healthcare costs is hospital consolidation, which has allowed hospitals to use their market power to raise prices for private payors.
Attempts to limit abuses of market power in this sector have been insufficient. From the 1980s until the early 1990s, the Federal Trade Commission and the Department of Justice blocked every anticompetitive merger. However, the tides changed in the mid-1990s when the regulators lost five successive cases that challenged hospital mergers. Economists were astounded by these rulings as the defendants relied on unsuitable models to successfully argue that the regulators' definition of their geographic markets was too limited. Empowered by these rulings, hospitals consolidated rapidly. Only recently have better economic models demonstrated that hospital consolidation causes price increases.
The Federal Trade Commission's case against Evanston Northwestern Healthcare Corporation applied these new economic models. In this case, the health network acquired a nearby hospital to form Northshore University HealthSystem. The FTC won its case, and after the administrative action, a class action was filed against Northshore. The district court denied certification, and the plaintiffs appealed. The Seventh Circuit ultimately certified the class in Messner v. Northshore University HealthSystem.
This Note explores whether the Seventh Circuit's decision in Messner will deter hospitals' anticompetitive conduct in light of the Court's Daubert ruling and trends in antitrust class actions and finds that it will ultimately be in the hands of the regulators to police hospitals' monopolistic practices.
Messner's Effect on Hospital Consolidation and Anticompetitive Behavior,
Seventh Circuit Rev.
Available at: http://scholarship.kentlaw.iit.edu/seventhcircuitreview/vol8/iss1/2