Highlights
- 2024 has been an eventful year for federal and state antitrust enforcement in healthcare, with many in the industry wondering where do we go from here in 2025.
- A panel discussion at the recent Nashville Healthcare Sessions affirmed much of the guidance that Holland & Knight has provided in written publications and interviews throughout the year.
- The panel's message: There is a positive outlook ahead for the healthcare industry in 2025 and that businesses need to be proactive in addressing these new antitrust developments. This Holland & Knight alert provides five key takeaways from the discussion.
2024 has been an eventful year for federal and state antitrust enforcement in healthcare with many in the industry wondering where do we go from here in 2025. Holland & Knight sponsored a breakout panel discussion at the recent Nashville Healthcare Sessions to bring down the temperature and provide an opportunity for the industry to learn about the latest developments directly from current and former federal officials and antitrust professionals.
Holland & Knight Partner Brent Hill, leader of the firm's Healthcare Section, led the panel discussion that included Holland & Knight Partners Bill Katz and Henry Leventis – a former U.S. Attorney for the Middle District of Tennessee – and Rohan Pai, Acting Assistant Director, Mergers IV Division of the Federal Trade Commission's (FTC) Bureau of Competition. The room was at capacity and witnessed an engaging discussion that included audience participation, panelists providing practical advice and a figurative "microphone drop."
The panel's message affirmed much of the guidance that Holland & Knight has provided in written publications and interviews throughout the year – mainly, that there is a positive outlook ahead for the healthcare industry in 2025 and that businesses need to be proactive in addressing these new antitrust developments.
Key Takeaways
If you missed the discussion, here are five key takeaways:
- There Is Not a Target on Private Equity: The
FTC focuses on anti-competitive behavior by any business in the
healthcare industry and looks at private equity-backed businesses
the same as it does nonprofit organizations, health systems and
other strategic companies. The U.S. Department of Justice (DOJ)
handles payer integration and other qui tams that might
involve private equity-backed businesses. While federal prosecutors
are aware of public discourse when exercising their prosecutorial
discretion, there is not a concerted, behind-the-scenes effort
targeting private equity-backed businesses. Prosecutors are looking
for bad actors, whomever they are and in whatever industry that may
be doing business.
From the FTC's perspective, the only unique attribute about private equity-backed businesses is that they are clearly profit-maximizing and do not try to justify their conduct based on charitable or other goals. The information-gathering requests by the FTC and other agencies earlier this year also were not intended to gather evidence for future investigations. They were meant to be exactly what they are: efforts to gather information from the public to make informed decisions about future policy issues. The FTC already has at its disposal a variety of tools, such as subpoena power and customer complaints, to obtain whatever information it might need to open or pursue an investigation of alleged anti-competitive activity by private equity-backed or other businesses within the FTC's purview.
- But Private Equity Should Take Proactive Antitrust
Measures: There is no grand plan to remove private equity
from the healthcare industry, but the FTC will scrutinize the
actions of private equity investors related to their portfolio
companies (PortCos) and the investment theses for their deals. Even
though Welsh Carson was dismissed from the U.S. Anesthesia Partners
case, that dismissal was largely on procedural grounds, so the door
remains open for future cases against private equity investors if
the FTC has concerns about anti-competitive conduct. See Holland
& Knight's previous alert for a proactive plan to
mitigate these concerns. One of the recommended measures involves
building out an investment thesis that showcases a
transaction's positive effects on access to and quality of
care, electronic health record connectivity, the labor market and
compliance investment. The thesis should be supported with
organizational documentation showing a historical narrative and, if
possible, white papers and other research and data, since the FTC
will investigate and test the claims made in the thesis.
- Read the 2023 Merger Guidelines and New HSR
Rules: Along with the DOJ, the FTC invested a considerable
amount of time updating the Merger Guidelines (Guidelines) that were
issued in late 2023. The Guidelines reflect the current thinking of
the FTC and DOJ regarding merger enforcement and explain the steps
taken by the agencies when analyzing mergers. Along with more
detailed legal and economic analyses, the Guidelines also include a
section targeted at non-lawyers to help them understand what the
FTC and DOJ do when analyzing mergers. The agencies' current
thinking is therefore public and allows merging parties to
understand where the regulatory goalposts are located when trying
to get a deal done. Additionally, following the panel discussion,
the FTC and DOJ announced the issuance of revised premerger notification rules
implementing the Hart-Scott-Rodino (HSR) Act. As with the
Guidelines, merging parties should read these new rules and look
for additional guidance that Holland & Knight will be providing
in a future alert.
- Respond to FTC Requests and Ask Questions:
Less than 1 percent of transactions reportable to the FTC and DOJ
under the HSR Act are challenged. The agencies just don't have
the resources to challenge every deal. Having said that, parties
who receive requests for information after making a HSR filing
should answer those questions in a timely and comprehensive manner.
Parties should also ask questions of the FTC to better understand
the agency's concerns and why certain information is being
requested. Good communication will help the FTC obtain the
information, clarify any misunderstandings and ultimately lead to a
faster resolution of the FTC's investigation.
- Pay Attention to the States: Holland &
Knight has extensively covered the proliferation of the state laws
applicable to healthcare transactions, including the effect of
California Gov. Gavin Newsom's veto of Assembly Bill (AB) 3129 and other
stalled bills on future legislation. (See Holland &
Knight's previous alert, "Healthcare Private Equity Transactions Under
Scrutiny: Midyear Review," Aug. 1. 2024.) Those effects
played out on Oct. 7, 2024, when the Pennsylvania Senate reviewed a
revised version of House Bill (HB) 2344, which
narrowed the bill's scope to the reporting of transactions
between healthcare facilities and reduced the waiting period for
transactions from 90 days to 45 days. The revised bill would also
sunset in four years and includes a requirement for a detailed
report on the statute's effectiveness after three years.
Finally, the revised bill confirms that materials submitted for
review cannot be used for other prosecutions by the Pennsylvania
Attorney General. This change is likely to address fears in the
industry that the statute will be used for fishing expeditions to
initiate other investigations.
Industry participants should monitor and be prepared for new state developments in 2025 and should not hesitate to join any discussions or lobbying efforts to help ensure that any proposed legislation is appropriately balanced. To that end, the National Academy for State Health Policy (NASHP) released this summer an amended model act for state healthcare transaction laws and has recently reengaged in an advocacy campaign. For context, NASHP last released a draft model act in 2021 and many of the states that implemented laws thereafter appeared to have incorporated elements from it.
Conclusion
It is expected that there will be additional developments in federal and state antitrust scrutiny and a similar reaction to this year's release from NASHP and encourage you to contact us to discuss how to respond to expected developments for 2025.
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.
