Controlling costs, enhancing access, promoting equity, and ensuring quality are paramount objectives for an effective and efficient healthcare system. Across the nation, healthcare market consolidation has significantly reshaped the landscape, often hindering the achievement of these critical goals. Research consistently demonstrates that such consolidation leads to inflated prices and diminished access to essential healthcare services.
Oregon, like many other states, has witnessed considerable consolidation within its healthcare industry. Since 2020, concerns have grown that the financial strain on providers, intensified by the COVID-19 pandemic, could further accelerate this trend. A recent report by the Oregon Health Authority (OHA) revealed a concerning 49% surge in per-person healthcare costs in Oregon between 2013 and 2019. This growth rate surpasses the national average and outpaces both income and inflation increases. Outpatient services, professional services, pharmacy, and emergency services experienced the most rapid cost escalations. Consequently, Oregonians are allocating a larger portion of their income to healthcare, depleting savings, accumulating debt, facing medical bankruptcy, delaying necessary medical attention, or forgoing care altogether. While various factors contribute to rising costs, proactive oversight of future consolidation is crucial to shield Oregon residents from escalating expenses that threaten their health and financial well-being.
Recognizing these alarming trends, the Oregon legislature enacted legislation in 2021, establishing the Oregon Health Care Market Oversight Program. This program empowers the OHA to address the unchecked growth of consolidation and its detrimental effects on cost, access, equity, and quality within the healthcare market. While federal and state antitrust enforcement remains a vital tool to combat healthcare market consolidation, the lengthy processes and substantial resources required for litigation often limit its application to exceptionally large and severe cases. State-level healthcare market oversight programs, such as Oregon’s, serve as crucial complements to antitrust efforts. These programs can scrutinize transactions of varying sizes, assess the cumulative impact of smaller transactions on market dynamics, and evaluate transactions based on a broader range of factors extending beyond antitrust implications alone.
In developing the Health Care Market Oversight Program (HCMO), Oregon lawmakers drew inspiration from Massachusetts’s pioneering Health Policy Commission (HPC), while also expanding OHA’s authority to not only review but also block transactions entirely or impose conditions to mitigate potential adverse consequences. OHA receives notifications for a wide array of healthcare entity transactions and conducts pre-transaction reviews. These reviews involve in-depth analyses of potential transaction effects on cost, competition, access, equity, and service quality. The program’s scope is broad, encompassing numerous types of healthcare entities that meet specific financial thresholds.
OHA’s review process operates in two phases: a preliminary review followed by a comprehensive review, if necessary. Upon receiving notice of a proposed transaction, OHA has 30 days to complete the preliminary review. During this initial phase, OHA utilizes readily available data to assess whether the transaction is critical for an entity’s financial stability and to make an initial determination regarding the potential impacts on cost, access, equity, and the quality of health services. Following the preliminary review, OHA may approve the transaction, approve it with conditions, or, if the preliminary review indicates potential significant adverse effects, proceed to a comprehensive review. The comprehensive review, which must be completed within 180 days of the initial notice, delves deeper into the factors examined during the preliminary phase. This phase may involve analyzing additional data and, at OHA’s discretion, incorporate community input through a Community Review Board.
OHA is also mandated to conduct post-transaction monitoring and oversight, including reviews one, two, and five years after a transaction occurs. Demonstrating a commitment to transparency, OHA makes information regarding potential transactions readily accessible to the public on its website. This includes notices, public comments, review reports, and final decisions. Furthermore, OHA is required to undertake a statewide study every four years to assess the impact of healthcare consolidation, monitor Oregon’s evolving healthcare landscape, and address concerning consolidation trends.
Although the HCMO program is relatively new and has completed only a limited number of reviews to date, Oregon has established one of the most robust merger oversight programs in the nation. While it is premature to draw definitive conclusions about its long-term effectiveness and overall impact, the initial implementation of the law offers valuable insights into both the benefits and challenges of establishing a healthcare market oversight program. The decisions made during the HCMO program’s implementation provide important considerations for other states seeking to address the harmful effects of consolidation in their healthcare markets. Key considerations for implementing an effective market oversight program include:
- Detailed Understanding of Cost Drivers: State policymakers require a thorough understanding of the factors driving healthcare costs within their state.
- Maximize Program Authority: State legislators should aim to grant a healthcare market oversight program as much authority as possible to ensure flexibility and effectiveness.
- Balance Breadth of Review: States need to strike a balance in determining the breadth of review to effectively utilize state resources.
- Prioritize Transparency and Public Participation: Transparency and public involvement are crucial for effective transaction reviews and minimizing the risk of regulatory shortcomings.
- Enforceable and Targeted Conditions: Any conditions imposed on transactions should be enforceable and specifically targeted to address identified concerns.
This report provides a comprehensive overview of the HCMO program, including the types of transactions subject to review, the review process itself, and post-transaction monitoring and compliance measures. It also presents the program’s work to date and discusses the current legal challenge it faces. Finally, the report offers broad considerations for other states contemplating the implementation or strengthening of policies to oversee and address healthcare consolidation, ensuring a more equitable and efficient healthcare market.
Notes
- MedPAC. March 2020 report to the Congress: Medicare payment policy. Published March 13,2020. Accessed December 14, 2022. https://www.medpac.gov/document/http-www-medpac-gov-docs-default-source-reports-mar20_entirereport_sec-pdf/.
- Schwartz K, Lopez E, Rae M, et al. What we know about provider consolidation. Kaiser Family Foundation. Published September 2, 2020. Accessed December 14, 2022. https://www.kff.org/health-costs/issue-brief/what-we-know-about-provider-consolidation/.
- Gustafsson L, Blumenthal D. The pandemic will fuel consolidation in U.S. healthcare.Harv Business Rev. Published March 9, 2021. Accessed December 14, 2022. https://hbr.org/2021/03/the-pandemic-will-fuel-consolidation-in-u-s-health-care.
- Oregon Health Authority. Health care cost trends: state and market-level cost growth in Oregon, 2013-2019. Published July 2022. Accessed December 14, 2022. https://www.oregon.gov/oha/HPA/HP/Cost%20Growth%20Target%20documents/Oregon-Health-Care-CostTrends-Report-2013-2019FINAL.pdfutm_medium=email&utm_source=govdelivery.
- Oregon Health Authority. Impact of health care costs on people in Oregon, 2019. Published April 2022. Accessed December 14, 2022. https://www.oregon.gov/oha/HPA/HP/Cost%20Growth%20Target%20documents/Impact-of-Health-Care-Costs-on-Oregonians.pdf.
Citation:
Davison R, Gudiksen K, Montague A, King J. A Step Forward for Health Care Market Oversight: Oregon Health Authority’s Health Care Market Oversight Program, The Milbank Memorial Fund. March 2023.
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