FEDERAL ANTITRUST MERGER ENFORCEMENT STANDARDS - A GOOD FIT FOR THE HOSPITAL INDUSTRY

We examine the implications of the 1992 Horizontal Merger Guidelines f or the hospital industry and subsequent policy statements that were de veloped for health care providers. Application of antitrust policy to hospitals has raised several concerns, mainly because many communities have few hospitals and economic forces in the industry are accelerati ng interest in intramarket mergers and provider network development. W e address several issues, including the standing of hospitals relative to the market concentration thresholds of the merger guidelines, mark et concentration compared among challenged and unchallenged mergers of the 1980s, findings of previous research about the relationship betwe en market concentration and competition in hospital markets, and diffe rences in characteristics other than market concentration that are rel evant to the merger guidelines among challenged and unchallenged merge rs. We found that (1) the specific standards articulated in the merger guidelines do not provide good predictability of when a hospital merg er challenge would occur, and (2) comparisons of challenged and unchal lenged mergers in mergers in similarly structured markets suggest that enforcement actions may deviate in practice from the enforcement prin ciples of the merger guidelines. We consider several options for refin ing antitrust enforcement policy. Refinement of enforcement policies i s important given the industry restructuring that is likely through he alth care reform.