The Corner Newsletter: June 4, 2021
Image credit: Total Shape.
Welcome to The Corner. In this issue, we discuss the dangers of health care monopolies — and how the VA hospital system can help to combat them.
To read previous editions of The Corner, click here.
Longman Testifies About How the VA Helps Fight Hospital Monopolies
Open Markets’ policy director Phillip Longman (above) testified before the House Veterans Affairs Committee last week. Longman spoke about the vital role played by the Department of Veterans Affairs’ 1,700 hospitals, clinics, and other health care facilities in preserving competition in increasingly monopolized medical markets. In many metropolitan areas, the VA is the only remaining health provider that has not been absorbed by large corporate chains. The hearing took place in anticipation of a Biden administration proposal to spend $18 billion on rebuilding aging VA infrastructure, and amid fears that a soon-to-be appointed federal commission might recommend closing many VA facilities and privatizing more VA services.
As Covid Leads to More Hospital Mergers, Officials May Be Waking Up to the Problem of Health Care Monopolies
On Wednesday, a giant health care merger made headlines because it didn’t happen. Facing the threat of a lawsuit from North Carolina’s attorney general, Sentara Healthcare and Cone Health nixed their plan to become a vertically integrated $11.5 billion hospital/health insurance combine that would have dominated health care markets in Virginia and North Carolina.
As with any man-bites-dog story, this nonmerger was newsworthy precisely because of its exceeding rarity. The trend toward concentration in hospitals is so strong that not even the coronavirus has been able to reverse it. Last year saw 79 hospital deals, down only slightly from 92 in 2019. Indeed, as The New York Times recently reported, much of the $178 billion in emergency Provider Relief Package money that the federal government spent during the early months of the pandemic wound up being used by the richest, most powerful hospitals to go on acquisition binges.
At the time, Rep. Katie Porter (D-Calif.) was among a small group of lawmakers who called on then-Health and Human Services Secretary Alex Azar to ensure that the funds be awarded only to hospitals serving community interests and not to private equity-backed hospital systems. Now, Porter is calling on the Federal Trade Commission to hold hearings on the dispersal of the Provider Relief Package. “We are concerned, based on our review of mergers and acquisitions in 2020 and early 2021, that hospitals and health systems used these COVID-19 funds to finance mergers, rather than to care for patients or to maintain operations,” Porter and Rep. Rosa DeLauro (D-Conn.) wrote in a letter to FTC Acting Chairwoman Rebecca Kelly Slaughter and Health Secretary Xavier Becerra.
The pair go on to express fear over the harm to consumers that hospital consolidation poses. U.S. consumers pay higher costs for poorer quality care than other developed countries. Although overuse is routinely cast as the culprit for this imbalance, an Open Markets’ 2019 report shows that consolidation is overwhelmingly at fault.
Hospital markets in 90% of metro areas are highly concentrated. And extensive research evidence shows that such consolidation leads to substantial price increases for hospitals, insurers, and physicians, without offsetting gains in improved quality or enhanced efficiency. Consolidation has also led to massive numbers of hospital closures, particularly in rural and low-income urban neighborhoods.
We may, however, finally be approaching an inflection point. Not only do we see state attorneys general like North Carolina’s Josh Stein beginning to use their broad statutory powers to block hospital mergers in their own backyards, but there are signs of a broad bipartisan consensus emerging at the national level. As Washington Monthly’s Eric Cortellessa recently wrote, Missouri Republican Sen. Josh Hawley and Connecticut Democrat Sen. Richard Blumenthal are rarely political allies, but at a recent Senate hearing, they were “practically finishing each other’s sentences” as they questioned a panel of witnesses on the negative effects of concentration in the hospital market. Democrats and Republicans might not agree on much these days, but at least they increasingly agree that something needs to be done about the problem of monopoly in health care.
🔊 ANTI-MONOPOLY RISING:
Last week, the European Commission announced an impending investigation into Facebook’s anti-competitive conduct in the classified advertising market. Officials are investigating whether the company has distorted the market by promoting its Marketplace services for free to users of the company’s social media services. This promotion could come at the expense of other companies using the website to sell products. (Financial Times)
Last week, Germany’s Federal Cartel Office, the Bundeskartellamt, launched an investigation into Google over the company’s handling of user data. The office will investigate whether users of Google’s services have a choice in how their data is used across the company’s array of product offerings. (Reuters)
The UK Competition and Markets Authority (CMA) and the UK Information Commissioner’s Office (ICO) recently issued a joint statement titled “Competition and data protection in digital markets.” The report marks a pioneering effort to begin to bring competition and privacy regulation into better alignment. CMA head Andrea Coscelli and ICO head Elizabeth Denham said, “There are strong synergies between the interests of data protection and competition… This paper sets out how we will enhance the synergies between our policy agendas and, where we do identify the potential for tensions, explains how we will seek to address them.”
Last week, the District of Columbia’s Office of the Attorney General launched an antitrust lawsuit against Amazon, accusing the retailer of anti-competitive conduct regarding the pricing policy the company imposes on third parties selling products on its marketplace. The lawsuit claims that Amazon’s Fair Pricing Policy, also known as a “most favored nation” clause, prevents third-party sellers from offering products for a lower price on platforms other than Amazon. (Quartz)
In a proposed settlement announced Tuesday, the Department of Justice will require Zen-Noh Grain Corp. to divest nine of its grain elevators located in five states along the Mississippi River. The mandated divestiture follows on the heels of the corporation’s proposed $300 million acquisition of nearly 50 grain elevators from Bunge North America Inc., which spurred the DOJ to file a civil antitrust lawsuit and block the merger. If approved by the courts, the Justice Department says the settlement will protect U.S. farmers and competition. (Department of Justice)
Google is close to settling an antitrust case in France, which alleges that the tech giant abused its market power in digital advertising by self-preferencing its own ad services and tools. If the settlement is approved by the authority board, Google would likely pay a fine as well as improve the interoperability of its online ad auction house, AdX, while removing other competitive obstacles that rivals face. (The Wall Street Journal)
Earlier this week, AliveCor Inc. filed an antitrust lawsuit, alleging that Apple has monopolized the heart-rate technology market for its Apple Watch. AliveCor previously sold a product called KardiaBand, a feature designed for the Apple Watch that's capable of recording an electrocardiogram. However, the private company says Apple changes the heart-rate algorithm on its watch’s operating system, shutting out competitors by making rival technologies incompatible. (Reuters)
📝 WHAT WE'VE BEEN UP TO:
Open Markets published an interactive map showcasing the latest anti-monopoly work being done in each state: “Using extensive datasets from U.S. PIRG and the National Conference of State Legislatures, the Open Markets Institute has assembled a database of more than 100 significant state anti-monopoly proposals and laws enacted or considered between 2018 and 2021.”
Sally Hubbard was featured on National Public Radio in a piece about Apple’s monopoly power. “If you're a developer of apps or a small business or any business that wants to have an app, you have no choice but to go through Apple because Apple is responsible for two-thirds of all app store revenue worldwide.”
Reporting on Lina Khan’s FTC nomination continued to mention her start as Open Markets’ legal director. Her role was referenced in The Wall Street Journal and WixRoom: “She served as legal director of the Open Markets Institute, a group that favors aggressive trustbusting.”
Sandeep Vaheesan was mentioned in Politico, Politico Morning Tech, Beeion, Newsraiser, and Freeads World News, detailing Big Tech’s dangerous lobbying power on the Hill. “'One reason tech antitrust has attracted so much attention on the Hill is because the victims are not only small and medium-sized enterprises, workers and consumers — but also other large corporations,’ said Sandeep Vaheesan, a legal director with anti-monopoly think tank Open Markets Institute.”
Barry Lynn was quoted in Vice, Common Dreams, S&P Global, and The Defender opposing Amazon’s plan to take over MGM. Open Markets released a statement as well. “The good news is that blocking this merger is easy to do. The takeover of MGM is a dangerous horizontal consolidation of two studios, in an already highly consolidated business,” said Barry Lynn, executive director of Open Markets Institute, in a press statement. “And it is a vertical consolidation of power between one of the primary platforms for the sale and distribution of movies and one of the studios that creates movies, which will only worsen Amazon’s already dangerous conflict of interest in dealing fairly with other studios.”
Sally Hubbard was quoted in Wired and Law 360 emphasizing that because of its inexplicably poor conduct, Amazon might have to settle in the new antitrust suit filed by the District of Columbia attorney general. “As long as it’s actually having the same effect as a most-favored-nation, it’s a loser case for Amazon,” said Sally Hubbard, the director of enforcement strategy at the Open Markets Institute, an anti-monopoly think tank. “It’s quite straightforward that the conduct is eliminating competition and causing higher prices.”
Johnny Ryan was featured in a Market Research Telecast piece about the General Data Protection Regulation. “For Ryan, the GDPR is ultimately a kind of ’collective hallucination’ that must be made tangible by the courts.”
Sally Hubbard was mentioned by ILSR for testifying in favor of New York state's Twenty-First Century Antitrust Act. “ILSR Legal Fellow Shaoul Sussman testified in favor of the bill during a Senate hearing in October, alongside ILSR allies and antimonopoly experts Tim Wu, Sally Hubbard, Harry First, and others. Now, the bill has been amended and is quickly moving through the Senate, with hopes of passage this legislative year.”
📈 VITAL STAT:21%
The percentage of Amazon’s corporate revenue derived only from fees imposed on third-party sellers.
📚 WHAT WE'RE READING:
“Special Delivery” (Institute for Local Self-Reliance, Kennedy Smith): Smith discusses how food delivery apps developed by independent businesses are a much better alternative than traditional food delivery apps like Uber Eats and DoorDash, in part because they charge lower fees to merchants and pay delivery drivers more.
Barry Lynn’s New Book:
Liberty From All Masters
The New American Autocracy vs. The Will of the People
St. Martins Press will publish Open Markets Executive Director Barry Lynn’s new book, Liberty From All Masters, on September 29. The book is Barry’s first since Cornered, in 2010. In it, he details how Google, Amazon, and Facebook developed the ability to manipulate the flow of news, information, and business in America, and are transforming this power into autocratic systems of control. Barry then details how Americans over the course of two centuries built a “System of Liberty,” and shows how we Americans can put this system to work again today. Purchase your copy here.
Open Markets Employment Opportunities
You can find the full job listings here.
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