My parents raised me to respect the elderly, so I’m loathed to criticize President Biden’s memory recall. As one ages the old noggin increasingly performs like a late-model GM or Ford vehicle, a prelude to the ultimate and most feared manufacturer recall. That said, it’s usually short-term memory that malfunctions first, so Biden possibly remembers what he said some 20 months ago.
Biden in July 2021 issued a sweeping executive order calling on his federal government appointees to review and revise guidelines for hospital mergers that can lead to higher prices, an official reversal of decades-old policies championed by Hillary Clinton when she was First Lady. Biden’s executive order suggested he meant business, as he called on the Department of Justice (DOJ) and the Federal Trade Commission to “vigorously” enforce antitrust laws and recognize “that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.”
FTC Commissioner Lina Khan clearly didn’t take Biden seriously and has allowed hospital mega mergers to continue unabated. The FTC took no action to block Grand Rapids-based Spectrum Health from acquiring metro Detroit’s Beaumont Health last year, allowing for the creation of Michigan’s biggest hospital system and employer. The combination was allowed despite Spectrum’s former CFO warning the combination could result in a “massive financial loss.”
Studies show that even when hospitals with no overlapping operations merge within the same state, prices can increase by as much as 10 percent because the combined operation has more negotiating power with insurers. Studies also show that when hospitals consolidate, the quality of patient care declines. Meanwhile, the CEOs of acquired hospitals make out like bandits, receiving lucrative golden parachutes. The acquiring CEOs get big bumps in compensation for overseeing bigger enterprises.
The FTC also took no action to block the merger of Chicago-based Advocate Aurora Health and Charlotte-based Atrium Health, creating the fifth-largest nonprofit health system, with 67 hospitals and $27 billion in revenues. The deal sailed through despite a class action lawsuit filed in Wisconsin alleging that Advocate Aurora – created by the merger of Chicago-based Advocate Health and Milwaukee-based Aurora Health – used the market power it achieved from the combination to charge “unreasonably high prices.”
Leemore Dafny, a Harvard professor and an author on the cross-market research, told the publication Healthcare Dive that the FTC’s silence on the Advocate/Atrium deal was “a sign that the merger wave continues and hospitals believe they are in a stronger position to succeed with more scale.”
Bloomberg today reported that the FTC won’t seek to block Amazon’s purchase of One Medical, a McMedicine chain of primary care facilities in about a dozen cities increasingly staffed by inexperienced physician assistants and nurse practitioners. The deal is another major blow to U.S. healthcare, as it will result in more Americans receiving their primary care from pretend doctors and possibly provide a meaningful boost to Amazon’s pharmacy business. My warnings about Amazon’s One Medical acquisition can be found here and here.
Overseeing the FTC is a 33-year-old supposed Ivy League wunderkind named Lina Khan who was hailed by progressives as someone with the drive and the smarts to protect consumers and derail mega-mergers that invariably result in higher prices and lower competition. Khan is a longtime critic of Amazon’s growing market dominance, so much so that the company asked she recuse herself from matters relating to Amazon because of her vociferous criticisms and calls for a breakup of the company.
Amazon should count its corporate lucky stars that Khan is overseeing the FTC, and I have a sneaking suspicion they already knew she was too inexperienced to cause much harm. The FTC also reportedly is looking into Amazon’s $1.7 billion acquisition of iRobot, the maker of Roomba, the robot vacuum cleaner. That deal likely will also get rubber stamped, although European regulators, who are much tougher and make good on their threats, could still derail it.
Khan, an academic who previously taught law at Columbia, is failing miserably in what I believe is her first job with management responsibilities. As reported by the New York Post, the FTC has experienced a massive brain drain, including Office of International Affairs director Randy Tritell, who worked at the agency for more than two decades. The Post said Tritell viewed Khan as a “tyrant” and her management style “abusive.”
Other high-profile figures who have left the FTC since Khan joined include the agency’s former top economist Marta Wosinska, ex-privacy and identity protection chief Maneesha Mithal, and former Bureau of Consumer Protection deputy director Daniel Kaufman.
“People with 15, 25 years of seniority are leaving,” Kaufman, who left in October after 23 years at the agency, told the Post. “That’s fairly unprecedented in the kind of number that I’m seeing.”
The FTC was once among the most desirable federal agencies to work. An internal survey last November revealed that the percentage of staffers across the entire agency who have a “high level of respect” for its senior leaders nosedived to 49% in 2021 when Khan assumed command from 83% in 2020. Christine Wilson, the FTC’s sole remaining Republican commissioner, disclosed last week she plans to resign because of Khan’s “willful disregard of congressionally imposed limits on agency jurisdiction, her defiance of legal precedent and her abuse of power to achieve desired outcomes.”
Khan has set her sights on the tech industry, and she’s so far proven incompetent in that realm as well.
A federal judge earlier this month rejected the FTC’s request to stop Meta, Facebook’s parent company, from buying a small virtual reality start-up, on the grounds it would hinder future competition in an undeveloped market. Even the New York Times acknowledged the ruling was a “stinging defeat.”
Tammy Baldwin Does Oscar Mayer Proud
Wisconsin Senator Tammy Baldwin is making news in her home state with a letter she sent to Joseph Impicciche, CEO of St. Louis-based Ascension, raising concerns about how the nonprofit health care network invests the returns from its sizable investment portfolio back into its Wisconsin hospitals. The concerns stem from a Milwaukee Magazine investigation and a January report in the Journal Sentinel, both of which reported that Ascension’s five facilities in Milwaukee County have led to staff concerns around patient safety.
Here’s excerpts from Baldwin’s letter:
As a nonprofit, tax-exempt, health system, Ascension is required to provide charitable benefits to the community … I am concerned that the opposite is occurring – that by operating like a private equity fund, Ascension is squeezing staff, closing facilities, and extracting cash from its member hospitals for dubious “management fees” all to advance its investment activities and provide compensation to its executives.
At this year’s J.P. Morgan Healthcare Conference, your CFO Elizabeth Foshage highlighted Ascension’s $18 billion of cash and investments. This number raises questions about why Ascension, a mission-driven health system with non-profit status, is not prioritizing reinvestment into serving vulnerable communities and its own operations — which should include increasing pay and improving working conditions for its burned out and overextended health care workforce.
I represent people who go to Ascension for health care. And I represent people who work there. When I have doctors saying that staffing decisions that hospitals have made are putting patients in jeopardy, that’s a big warning sign.
Given Baldwin’s professed concern for Ascension’s five Milwaukee area facilities, I would have thought she would have been front and center trying to block the Advocate/Atrium merger since it resulted in about a dozen or so Wisconsin hospitals being run out of Charlotte. Aurora St Luke’s Medical Centre in Milwaukee is Wisconsin’s biggest hospital, and the Aurora hospital system is the state’s seventh largest employer.
When Illinois-based Advocate and Wisconsin-based Aurora announced their combination in 2017, they committed to maintaining dual headquarters and that the CEOs of both organizations would serve as co-heads of the merged organization. Aurora’s CEO was gone after 16 months. Six years later, Aurora became an outpost of a North Carolina hospital system.
I can find nary a word of protest from Baldwin about the Advocate/Atrium deal, and she knows the folks at Advocate Aurora quite well. According to public filings, individuals connected to Advocate Aurora contributed $30,000 to Baldwin’s 2018 election campaign, making her far and away the biggest recipient of any political candidate.
With regards to improving healthcare, Baldwin strikes me as full of baloney, and when I think baloney, I think Oscar Mayer. Quite fittingly, Oscar Mayer is based in Madison, Wisconsin’s state capital.