The American Hospital Association (AHA) is among those pushing back against the Federal Trade Commission’s (FTC's) plans to update pre-merger notification requirements, calling the proposal “a substantial burden” that’s “largely unnecessary” for effective antitrust review of the hospital industry.
The commission had unveiled in late June its proposed changes to the Hart-Scott-Rodino (HSR) Form and accompanying instructions, which outline requirements for merger hopefuls during the initial waiting period.
The update would increase the information companies are required to prepare and provide to the regulator, which the FTC said was necessary in light of the increasing volume and complexity of deals made in recent years.
The agency also acknowledged at the time that its proposal would roughly quadruple the per-hour filing burden on merging organizations, as the current estimated average of 37 hours per filing would balloon to an average of 144 hours.
In a comment letter submitted Tuesday, the major hospital lobby said it shared many of the concerns already floated by stakeholders from other sectors of the economy.
The increased paperwork would comprise “more information than the agencies could feasibly review in 30 days” and would “function as little more than a tax on mergers,” AHA General Counsel and Secretary Melinda Reid Hatton wrote in the comment letter.
The filing requirements would also require merging parties to make “subjective judgments” in their narrative responses or when discussing issues like future competition, which can be second-guessed or nitpicked by regulators in a way that pulls focus from the objective measures of a merger’s impact, Hatton wrote.
Beyond those industry-agnostic concerns, the AHA said that the FTC’s proposal looked to be written with tech companies or private equity firms front of mind. Hospital mergers, the lobbying group wrote, have faced plenty of regulator scrutiny over the past few decades—increasingly so within the past 10 years—and rarely involve the “nascent technology or complex investment vehicles” the FTC’s update is purportedly targeting.
“In short, there is nothing broken about the FTC’s ability to screen hospital transactions for further review,” Hatton wrote. “Accordingly, there is no need to subject hospitals to burdensome rules aimed at other sectors of the economy.”
The AHA highlighted four of the proposed changes that would be “the most problematic” for its hospital and health system membership: a requirement to report all prior acquisitions during the previous decade when the merging parties have horizontal overlaps; a requirement to provide a narrative description of horizontal overlaps and supply relationships; the requirement to provide information about labor markets; and the requirement to produce drafts of Item 4 materials and ordinary course reports, which would require additional assistance from counsel.
“[The proposed changes] will function for most as an arbitrary and capricious tax on pro-competitive behavior,” Hatton wrote. “The FTC should withdraw the proposed amendments except to the extent they are required to implement the Merger Filing Fee Modernization Act of 2022.”
The FTC’s public comment deadline for the HSR Form amendments is Sept. 27.
The AHA’s objections come about a week after National Nurses United penned its broad support (PDF) on the proposed updates.
The organization, which represents nearly a quarter-million registered nurses, said its membership is “deeply concerned” about the harm vertical and horizontal integration has brought to the healthcare services and labor markets. It called for the regulator to go even further with its data collection proposals—for instance, by collecting information on the impact a deal would have beyond an individual commuting zone or on any unionization and anti-union activities by either of the deal’s parties.
The pre-merger requirements update isn’t the only M&A overhaul on regulators’ docket. Less than a month after the HSR Form amendment news, the FTC and the Department of Justice outlined a slew of new updates to their broader guidelines for antitrust enforcement that are also up for public review and comment.