The Importance Of Anti-Trust Laws In Health Care

Baylor Scott & White Health, formerly Baylor Healthcare Systems and Scott & White Health, respectively, merged in October 2013 to become one of the largest healthcare systems in the United States. With a new-shared vision, mission, and values statement, this paper examines the strengths, weaknesses, opportunities and threats present in light of this new merger. A carefully considered execution plan is imperative to ensure continuity of exemplary healthcare and a seamless merger of two similar cultures. As stated by Joel Allison, CEO of Baylor Scott & White, “of mergers that fail, probably seventy five percent fail because of culture.” The execution plan presented in the following pages will help this new entity avoid the risk of losing the trust of their patients and the communities they serve, while creating a new culture acceptable by all that provide and receive the healthcare services of Baylor Scott & White Health.

On paper, the merger between these two institutions made sense – both institutions were close to one another and competing for diminishing resources. Together they could reduce administrative costs and join forces to negotiate with large insurance companies. The need to create a new culture and dissolve historically existent power struggles were two large tasks that needed to be addressed in order to ensure a successful merger. However, the way in which the merger was organized did not lead to a successful merger. UCSF Health Care did not spend adequate time creating a shared culture in which the two organizations would see one joint organization with shared power (resources).

From a strategic perspective, in order to address its organizational needs, EMC stands a better chance if anchored to a larger, more financially and structurally sound medical entity through the option of a merger. Benefits would include gaining increased bargaining power, the improved ability to retain its best and brightest, a “longer reach” in attracting quality personnel from all around the state or the country at large and a better position from which to compete for customers.

This could improve the competitive strength by showing power within the community. With a merger, this creates an opportunity for collaboration and innovation; this is caused by new parties coming together to deliver the best possible service. Here is the opportunity for expanded revenues from VBP, trying to increase it 1.5%. This also offers the opportunity to focus on innovating new ways to increase patient satisfaction and to improve on the relatively small 30% of payments in this sector. This sets Creekside Community Hospital apart from its highly competitive market by giving way to a better overall service through improved organization and more streamlined revenues within the

It is necessary for a firm to expand in order to gain profits or leverage in a market place. One of the ways firms can do this is by executing a merger. There are two types of mergers, horizontal and vertical mergers. There are many incentives for companies to perform either type of merger; however, both types of mergers will always raise suspicion when being executed because they are usually perceived as anticompetitive. In order to prevent an anticompetitive environment, our government established a federal agency called the Federal Trade Commission. Their job is to review the activity of any given firm and decide whether or not to allow them to continue. Presently, CVS and Etna are currently undergoing a vertical merger to gain profits and

Mergers have become normal practice in the health care industry by creating a larger hospital system that provides broader services with the focus on lowering healthcare cost and being economically profitable with keeping in line with regulatory guidance. A merger happens when two or more organizations agree to join together and become one organization. One or more organizations essentially must dissolve for this to happen. Sometimes both organizations dissolve and take on a completely new name as in this case of the merging of the two competing hospitals. (McClure, n.d.) Hospitals along with health systems are following the same trend to merge with other hospitals, this movement has continue to gain momentum and appears to be the future trend in the health care industry due to high operating hospital cost. In a survey done in 2012 regarding hospital maintaining independence only 13% plan not to align with other hospitals or health care systems, while the other 87% plan some type of merger with another hospital or health care system. (Hospital Mergers and Acquisitions, 2013)

Generally, an industry consolidation can generate concerns regarding monopolistic tendencies and negative affects on market trends. In a monopoly, companies maximize profits, control prices, place prohibitive barriers to entry, and minimize competition. As expected, this PBM consolidation did raise similar concerns by the NCPA (2011) and encouraged the FTC to block the consolidation based on monopoly power and market domination. However, the NCPA is incorrect when describing this merger as a monopoly. Monopolies typically occur in a supply chain market. PBM’s are sellers of goods and services. As such, this consolidation is in fact an oligopsony, describing a market with many sellers and few buyers. An oligopsony market allows for competition and compliments consumers. The anti-trust concern, however, may be whether competition will remain strong enough to pass any cost savings to the PBM’s customers, i.e. employer plans, health plans, and other client markets.

Consumers in the health care field value competition in many circumstances due to the fact that it assist that it can decrease costs, improve quality of health care delivered and promotes latest technology and innovation. Therefore, it is the Federal Trade Commission’s (FTC) duty as a law enforcer to thwart firms from engaging in anticompetitive behaviors that could potentially prevent the above described from happening and ultimately harm consumer. Additionally, the FTC provides proper guidance to physicians, health professionals, hospitals and providers to assist in obeying the nation’s antitrust laws (Gamble, 2014).

As a consumer, we all get frustrated when we think a listed price is “too high” whether it is a necessity, and we have to buy it, or we just really want it. Some of the largest complaints by consumers today are directed towards the cost of goods. Marketing research has shown us that the costs of some items are being intentionally raised based on aspects of the individual who is making the purchase. The manipulation of prices can be broken down into three main issues: price fixing, price gouging, and price discrimination. Are there any positive or beneficial reasons to do this? Yes and no, the following paragraphs provide information about each practice individually.

Dranove, D., & Sfekas, A. (2009). The Revolution in Health Care Antitrust: New Methods and Provocative Implications. Milbank Quarterly, 87(3), 607-632. doi:10.1111/j.1468-0009.2009.00573.x

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

The hospital has two primary external factors that it must appease. First is government needs and regulations. This contributed largely to why ‘A’ wanted the merger to begin with. The government was looking to reduce chronic care facilities and by merging with their larger cousin, their survival was more certain. The second external aspect is the business aspect, the reason that ‘B’ agreed to the merger. Despite their strong customer care, they were not business minded and as a result were facing potential bankruptcy. For the purposes of this analysis, the external environment is assumed to be outside the control of the hospital and is mentioned here due to its importance to the internal environment, which can be controlled.

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

According to Rusli, the merger would create more in-store traffic for CVS and increase both companies’ consumer base. This merger gave CVS the opportunity to expand both its own small pharmacy benefits manager business and mail order business. CVS’s opportunity to take advantage of Caremark’s pharmacy benefits manager business allowed it to take advantage of the mail order business as well that had begun cutting into drug stores’ revenue (Rusli, 2013). By providing its customers with a unique set of services and gaining the market power to control costs, CVS Caremark gained a competitive advantage. Unless competitors like Walgreens and Rite Aid find a way to respond to CVS Caremark’s strategy, it will be difficult to remain competitive with this firm for long. Overall, the merger was a great strategic move on behalf of both organizations, which helped ensure the current success of CVS Caremark.

Therefore, this could be a major problem with staff’s seniority. What happens if John Doe has 15 years at King Memorial Hospital and Jane Doe has 15 years at Johnson Pike Hospital and they perform the same job? Johnson Pike Hospital has a contract for 5 years with King Memorial to provide quality of care without duplication. This scenario will cause dissension to occur between staff members which will affect the quality of care being provided. Consequently, the only option is for layoffs to occur to correct the overstaffing that resulted in the merger. However, if the two hospitals merge for profit only and maintain both hospitals, each hospital would maintain their staff. Consequently, the plan to increase the profits may take a little longer and could be risky financially of the viability of the two facility co-existing separately. Consequently, for all of these possible scenarios of the effects of mergers, it is so important to analyze all the parameters thoroughly before undertaking a business