The Problem:
Today, 18 states have “certificate of public advantage” (COPA) laws, which allow merging hospitals to apply for a COPA, which exempts them from state and federal antitrust laws, in exchange for more direct state regulatory oversight. While advocates often argue that this removes a regulatory barrier to creating a more efficient, merged hospital system that will improve the quality of care and patient experience, the track record indicates the opposite. Hospital mergers, including those approved under a COPA, tend to increase prices, limit access to care, and decrease competition between healthcare providers. Of the COPAs that have been approved thus far in the United States, a majority have created a single-hospital monopoly.[1] The Federal Trade Commission, barred from enforcing the antitrust laws against hospitals granted this exemption, has criticized COPA laws for almost as long as they have existed.[2]
State oversight of COPA hospitals also tends to be weak. As the FTC has said, “Experience and research demonstrate that COPA oversight is an inadequate substitute for competition among hospitals, and a burden on the states that must conduct it.”[3]
The Solution:
By repealing COPA laws, state legislators would enable state and federal antitrust regulators to review proposed mergers for anti-competitive effects and take remedial action to protect patients and workers.[4]
However, given that many harmful hospital mergers have already been approved and carried out under COPA laws, COPA oversight is the only remaining mechanism to require public accountability from these monopoly hospitals. As a result, any repeal of COPA laws should grandfather in the COPA regimes for already-consummated hospital mergers.
Notes
[1] Federal Trade Commission, “FTC Policy Perspectives on Certificates of Public Advantage,” Staff Policy Paper, August 15, 2022, https://www.ftc.gov/system/files/ftc_gov/pdf/COPA_Policy_Paper.pdf.
[2] Ibid.; FTC Press Release, “FTC to Study the Impact of COPAs,” Federal Trade Commission, October 21, 2019, https://www.ftc.gov/news-events/news/press-releases/2019/10/ftc-study-impact-copas; Federal Trade Commission, “A Health Check on COPAs: Assessing the Impact of Certificates of Public Advantage in Healthcare Markets,” June 18, 2019, https://www.ftc.gov/news-events/events/2019/06/health-check-copas-assessing-impact-certificates-public-advantage-healthcare-markets.
[3] Federal Trade Commission, “FTC Policy Perspectives on Certificates of Public Advantage.”
[4] Ibid.