United States: FTC Testimony Underscores Agency's Views On Certificate-Of-Need Laws And Competition In Health Care Markets

Staff from the Federal Trade Commission (FTC) appeared before the Alaska Senate Committee on Labor and Commerce on February 6, 2018, to present the FTC's views on certificate-of-need (CON) laws and to support the repeal of such laws in Alaska. CON laws require specific state approval of the need for new facilities before health care providers can open facilities, expand facilities or services or make certain types of expenditures. The FTC staff testified that these laws "raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers."1 The testimony underscores the FTC's increased focus on state laws that it believes pose unnecessary restrictions on competition and harm consumers.

CON laws can be traced back to the National Health Planning and Resources Development Act of 19742, under which federal funds could be withheld from states that did not adopt CON laws to regulate health care facilities. These laws aimed to reduce the cost of health care and improve access to care by regulating services and facilities to align supply with demand.3 Although the mandate for CON laws was repealed in 1986, such laws continue in some form in more than 30 states, including Alaska.4

The FTC and the US Department of Justice (DOJ) previously issued a joint statement regarding the state senate bill to repeal Alaska's CON laws.5

In their April 2017 statement, the agencies discussed their examination of CON laws generally and of Alaska's CON laws specifically, and identified three ways in which they believe CON laws "can prevent the efficient functioning of health care markets" and thereby undermine the laws' goals: (1) they "create barriers to entry and expansion, limit consumer choice, and stifle innovation"; (2) they can be used by "incumbent firms seeking to thwart or delay entry or expansion by new or existing competitors"; and (3) they "can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger."6 The agencies further expressed their view that "the evidence to date does not suggest that CON laws have generally succeeded in controlling costs or improving quality."7 The agencies recommended that Alaska move forward with repeal, noting their historical suggestion that "states consider repeal or retrenchment of their CON laws."8

The FTC staff's testimony reiterated the agencies' view that CON laws pose serious problems, and requested that the committee consider the potential benefits "if new facilities and services could enter the market more easily."9 The FTC went on to state that "[e]ntry and expansion—and often even just the credible threat of entry or expansion—typically restrains health care prices, improves the quality of care, incentivizes innovation, and improves access to care."10 The FTC further expressed the view that an incumbent firm's strategic use of CON laws can thwart or delay entry by a competitor, as well as "divert scarce resources away from health care innovation and delivery" while the parties focus and expend resources on the dispute.11 The FTC also asserted that CON laws can limit antitrust enforcers' ability "to implement effective structural remedies to consummated transactions."12

The FTC has thus concluded that "CON laws have failed to demonstrate success at delivering on their policy goals over the course of 40-plus years" and reiterated the recommendation that Alaska repeal its CON laws.13

The FTC staff's testimony underscores the increased focus on state laws it views as unnecessary restrictions on competition and causing harm to consumers. Further, both the FTC staff's testimony and the April 2017 joint statement were provided at the request of an Alaska state senator, which suggests that the FTC and DOJ are willing to respond to such requests and to speak out against CON laws.

The agencies' position on CON laws may also be considered in the context of Executive Order 13813, titled "Promoting Healthcare Choice and Competition Across the United States," which issued on October 12, 2017.14 In addition to addressing alternatives to the Affordable Care Act, the executive order emphasized that the Trump administration would "continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system."15 To that end, the executive order provided that one objective of government rules and guidelines should be to "re-inject competition into healthcare markets by lowering barriers to entry, limiting excessive consolidation, and preventing abuses of market power."16

The FTC's and DOJ's activities and comments in health care markets will be closely followed to see how and in what ways the administration may seek to pursue its policy goals in this area.

The positions and viewpoints relayed in this alert are those expressed by the federal government sources cited herein and do not reflect those of the author or of Dentons.

Footnotes

1. Statement of the Fed. Trade Comm'n to the Alaska Senate Committee on Labor and Commerce on Certificate-of-Need Laws and SB 62, at 6 (Feb. 6, 2018) [hereinafter, "FTC Statement"].

2. Pub. L. 93-641, 88 Stat. 2225 (1975) (codified at 42 U.S.C. §§ 300k-300n-5), repealed, Pub. L. 99-660, § 701, 100 Stat. 3799 (1986).

3. See, e.g., Nat'l Conference of State Legislatures, CON-Certificate of Need State Laws.

4. Id.; see also FTC Statement 7 n.4.

5. Joint Statement of the Antitrust Div. of the U.S. Dep't Justice and the Fed. Trade Comm'n on Certificate-of-Need Laws and Alaska Senate Bill 62 (2017) [hereinafter, "Joint Statement"]

6. Id. at 1.

7. Id. at 1-2.

8. Id. at 15.

9. FTC Statement 2-3.

10. Id. at 3.

11. Id. at 3-4.

12. Id. at 4.

13. FTC Statement 2, 6.

14. Exec. Order No. 13813, 82 Fed. Reg. 48385 (Oct. 17, 2017).

15. Id. § 1(c).

16. Id. § 1(c)(ii).

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
25 Oct 2018, Other, New York, United States

Once again, Dentons is proud to bring together insurance industry leaders, lawyers and regulators for a full-day examination of the most current issues.

26 Oct 2018, Other, New York, United States

Selling your company may be the most important and complicated transaction of your life. To achieve an optimal outcome, you need to get educated.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions