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FTC Opposes North Carolina Bill, Says It Will Shield Health System from Antitrust Enforcement

Analysis  |  By Melanie Blackman  
   June 08, 2023

'The FTC is concerned about the increasing use of state legislation to exempt hospital consolidation that harms patients and workers from law enforcement.'

FTC staff penned a letter to the North Carolina House Health Committee this week, sharing their opposition to Senate Bill 743, stating it would provide North Carolina Health Care System (UNC Health), and other entities it collaborates with, defense against antitrust enforcement action.

On May 1, the bill unanimously passed in a vote by the North Carolina State Senate and is now pending before the North Carolina House.

According to the FTC's Office of Policy Planning Bureau of Competition and Bureau of Economics' comments, Bill 743 "would authorize the kinds of acquisitions, marketing allocation, information sharing, and joint contract negotiations that reduce competition among healthcare providers and lead to patient harm in the form of higher healthcare costs, lower quality, reduced innovation, and reduced access to care, as well as depressed wages for hospital employees."

According to the FTC, the Bill includes a provision that "purports to extend state action "immunity" from antitrust liability to UNC Health, as well as any private and public entities with which it collaborates." The FTC staff also states they take no position at this time whether UNC Health legally qualifies as an arm of the state, or whether Bill 743 satisfies the requirements of the state action doctrine, and that both are fact-intensive inquiries that would require investigation.

"UNC Health, which was formed by a state law in 1998, operates under a mission of improving the health and wellbeing of all North Carolinians. That statue has not been updated in 25 years. In order for UNC Health to continue fulfilling its mission as the state's health system, especially in terms of serving rural areas, the statute needs to be modernized to ensure that UNC Health has the ability to adapt to today's rapidly evolving healthcare world," Alan Wolf, a UNC Health spokesperson, told HealthLeaders in an emailed statement.

"We appreciate the support of our state leaders in recognizing the need to update the law that created UNC Health. The changes will allow UNC Health to continue providing excellent care for future generations of our state’s residents. Sometimes, we are asked by the State to help a struggling hospital. In those instances, UNC Health is acting in the State’s interest to ensure care is available and delivered to all parts of North Carolina when partnering with community hospitals and health systems," he said.

According to the FTC, the agency is "concerned about the increasing use of state legislation to exempt hospital consolidation that harms patients and workers from law enforcement."

The FTC has been actively cracking down on healthcare deals that they believe do not promote competition. Among the numerous health system merger and acquisition deals that the FTC has sued to block in recent months, the FTC is also focusing on drug mergers and industry middlemen.

Recently, the FTC went after LCMC's purchase of three Tulane University Medical Center Hospitals, which they said should have gone through a federal review process, resulting in LCMC Health filing suit against the DOC and FTC, as well as the Louisiana attorney general's office accusing the FTC of unlawfully intruding on state power.

This story was updated on Thursday, June 8, 2023.

Melanie Blackman is a contributing editor for strategy, marketing, and human resources at HealthLeaders, an HCPro brand.

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