The Corner Newsletter: July 9, 2020
Welcome to The Corner. In this issue, we introduce a groundbreaking study that details how U.S. hospitals fail their communities, as Open Markets’ scholars helped lead the research that produced these surprising and disturbing findings.
To read previous editions of The Corner, click here.
America’s Hospital Monopolists Fail Their Communities at a Time of Crisis, Groundbreaking Report Shows
Latino and African-Americans living in the United States are twice as likely as their white counterparts to die from the coronavirus, according to federal data published by The New York Times this week. Experts point to factors such as the disproportionate risk of infection borne by people who work in service and production jobs that cannot be done from the safety of one’s home.
Yet it isn’t just differences in living or working conditions that make some demographic groups far more vulnerable to COVID-19 and other illnesses. A very large role is also played by the spread of corporate medical monopolies that put the pursuit of fatter margins – and fatter executive paychecks – above commitment to serving their broader communities.
Those are the conclusions of a special issue of the Washington Monthlypublished on Tuesday, with a strong contribution from the Open Markets Institute. The issue contains a Best Hospitals for America ranking that, for the first time, measures the nation’s hospitals not just according to how effectively they treat patients, but also according to how many people they serve in their surrounding communities. And it turns out that, by this measure, many of America’s richest, most powerful hospitals are performing terribly. Though chartered as tax-exempt, nonprofit charitable institutions, they today barely serve low-income and minority populations within their communities, having morphed into monopolistic corporations focused on lucrative luxury care for the well-the-do.
The report features key contributions by Open Markets Institute Policy Director Phillip Longman and Research Associate Udit Thakur. The two co-authored a case study on the University of Pittsburgh Medical Center, showing how it grew from an academic institution renowned for inventing the polio vaccine into a predatory monopolist that bought out rival hospitals and denied care to those who refused to buy its health insurance products. UPMC’s culture is now so driven to maximize revenue that when the pandemic first hit western Pennsylvania, UPMC risked spreading the coronavirus throughout its facilities by defying orders from public health officials to stop performing lucrative elective surgeries. UPMC President and CEO Jeffrey Romoff, who has said he seeks to make UPMC “the Amazon of health care,” took home $8.54 million in 2018, while 33 other executives each took home more than $1 million.
Longman also contributed an article that shows how hospitals use their increasing monopoly power to engage in price discrimination, charging different, secret prices for treating different patients according to their relative market power. Making prices transparent, as the Trump administration has ordered, will help, says Longman, but not so much as long as hospitals remain local monopolies. The ultimate answer, he argues, is to outlaw price discrimination in health and make all prices uniform, as all other advanced nations do.
🔊 ANTI-MONOPOLY RISING:
The Department of Justice (DOJ) announced on June 26 that it plans to expand its antitrust investigation into Apple by looking at the corporation’s App Store policies. DOJ lawyers have been investigating Apple’s practice of forcing apps to use the App Store’s in-app payment system and taking a 30% cut of developers’ revenues. The DOJ’s original investigation focused on Apple’s role in the digital advertising market. (Bloomberg)
Rep. Jan Schakowsky (D-IL) on July 1 proposed a bill that would amend the FTC’s enforcement authority by allowing the agency to classify as unfair or deceptive acts or practices whenever platforms fail to remove content that violates their terms of service and community standards. (Bloomberg)
The European Union announced on Sunday that it plans to draft new laws to regulate U.S. tech giants. These laws would address platform liability issues for user content, would force platforms to become European business entities, and would create a list of prohibited practices, such as giving preferential treatment or placement to platforms’ own products or services. European Commissioner for Competition Margrethe Vestager discussed the plans after acknowledging that the union needed to take measures against Big Tech beyond a more rigorous enforcement of competition laws. (The Wall Street Journal)
The latest draft of India’s e-commerce policy proposal aims to reduce the dominance of global tech giants and to help local startups. The government has been working on the proposal for at least two years, though it remains unclear when the government might implement the policies. The policy proposal would give the government access to source codes and algorithms to prevent “digitally induced bias” and ensure a more competitive e-commerce marketplace. (Bloomberg)
📝 WHAT WE'VE BEEN UP TO:
Sandeep Vaheesan published an article in CNN Business Perspectivesexplaining how noncompete clauses harm the ability of health care professionals to deal with the COVID-19 pandemic. Noncompete clauses make these professionals far less likely to speak out about problems with treatment, testing, protective equipment, or an array of other issues, Vaheesan wrote.
Michael Bluhm published an article on LinkedIn examining the wave of mergers and acquisitions this year involving Big Tech, as many independent businesses struggle during the economic upheaval caused by the COVID-19 pandemic. Bluhm presented evidence that consolidation causes substantial job losses, reduced salaries and wages, lower independence for workers, higher consumer prices, and increased economic inequality – all of which provide a compelling argument for a merger moratorium during the pandemic.
Claire Kelloway published an article on Civil Eats explaining how delivery applications such as Grubhub and Doordash are trying to exploit the pandemic to monopolize the industry by scraping restaurant data, imposing coercive terms on partners, and squeezing extra money from restaurants to get top placement on the apps.
Open Markets fellow Nikki Usher published the inaugural article on the Medium channel of Open Markets’ Center for Journalism and Liberty, arguing against the potential consolidation of the four largest U.S. newspaper chains into two. Usher provides a detailed account of how the private equity owner of one of four largest chains might be preparing to scoop up Tribune Publishing, at the same time that the bankruptcy proceedings of the McClatchy chain might wind up with the sale of that large corporation to one of the remaining groups.
Open Markets fellow Nikki Usher co-authored an article in Social Media + Society examining interactions among different groups of political journalists in Washington. The study found that DC journalists are highly insular – nearly all can be categorized as belonging to one of nine groups – and have a hard time understanding how people in other regions of the country, and outside their race and class, actually live.
Open Markets fellow Beth Baltzan on June 30 testified before the Senate Finance Committee on International Trade, Customs, and Global Competitiveness. Baltzan testified about the impact of Chinese censorship on the U.S. economic interests, particularly Chinese restrictions on visits to or content about Tibet. Baltzan said that China’s leverage over Americans’ freedom of expression derived from China’s economic leverage over the United States. So, to reduce China’s ability to constrain American citizens’ exercise of their constitutional rights, America must reduce China’s economic leverage over the United States. Baltzan’s testimony was covered by Phayul and the International Campaign for Tibet.
Barry Lynn spoke about the threat that Google, Facebook, and Amazon pose to democracy, at the Aix-en-Seine conference hosted by the Circle des Economistes of France. The conference featured presentations by European Central Bank President Christine Lagarde, French Finance Minister Bruno Le Maire, European Competition Commissioner Margrethe Vestager, Nobel Peace Prize laureate Mohamed ElBaradei, and European Commission President Ursula von der Leyen.
Open Markets was cited in dissenting statements by Federal Trade Commissioners Rebecca Kelly Slaughter and Rohit Chopra, who both roundly criticized the new Vertical Merger Guidelines released on June 30 by the Federal Trade Commission and the DOJ.
Barry Lynn was quoted in The Deal explaining the role Open Markets has had in shaping the modern antitrust debate and how the Chicago School’s approach to antitrust enforcement abandons traditional antitrust enforcement. The weakening of antitrust enforcement is the “radical overthrow of the traditional approach to market making,” Lynn said.
CNET and Fortune mentioned Open Markets’ call to block Google’s acquisition of Fitbit. Our letter to the DOJ and FTC was signed by a group of 20 advocacy organizations and NGOs.
Barry Lynn’s argument about the need for a new antitrust model in an open globalized system was mentioned in a Foreign Policy essay by Henry Farrell and Abraham Newman. The essay proposes a new system of international trade regulation that that does not drive corporations to pursue market dominance and economic efficiencies at the expense of resiliency or workers’ well-being.
Open Markets’ statement on Section 230 detailing the the conflict between President Donald Trump and Twitter fact-checking the president’s tweets was republished in La Mesa Courier.
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📈 VITAL STAT: 98%
The market share for third-party restaurant delivery services of Uber, DoorDash, Grubhub, and Postmates.
📚 WHAT WE'RE READING:
“The Curse of Bigness: New Deal Supplement” (Tim Wu): Wu details the role of Neo-Brandesians in shaping anti-monopoly policy during the Second New Deal.
“Hospital Repair Restrictions” (U.S. PIRG, Nathan Proctor & Kevin O’Reilly): The authors describe how the COVID-19 pandemic has made it essential that technicians be able to repair ventilators, even as dominant manufacturers attempt to limit the right to repair by claiming unfounded safety concerns.
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