On the heels of a scuttled hospital merger between rivals in Terre Haute, Indiana, a state senator introduced a bill that would forbid similar mergers in the future.
Last year, nonprofit Union Health tried to acquire the only other acute care hospital in Vigo County by leveraging a state law it helped create that allows hospital monopolies. Now, Sen. Ed Charbonneau, a key architect of the 2021 law, which allows what is known as a “Certificate of Public Advantage,” or COPA, wants to repeal it.
“I didn’t think I was doing 100% the right thing last time,” the Republican, who chairs the Senate health committee, said of co-authoring Indiana’s 2021 COPA law. “I do think I am this time.”
Indiana is one of 19 states that have COPA laws, which allow hospital mergers that the Federal Trade Commission otherwise considers illegal because they reduce competition and often create monopolies.
In exchange for allowing these deals, the merging hospitals typically agree to meet a number of conditions imposed by the state to mitigate the harms of a monopoly. But health care economists and the FTC have said that state oversight cannot replace competition and that these mergers ultimately harm patients.
The public and the FTC pressured Indiana health regulators to block Union’s merger with its rival, Terre Haute Regional Hospital. Just days before a December deadline for the state to issue a decision on whether to approve the deal, Union Health and Terre Haute Regional Hospital pulled their application.
Union Health and Tennessee-based HCA Healthcare, which owns Terre Haute Regional, declined to answer questions about what prompted the decision to scuttle the deal. In a November statement, Union said it planned to submit a new application.
In 2021, Union Health leaders were instrumental in the passage of Indiana’s COPA law. They supplied draft language for the bill, according to legislative testimony, and Union Health CEO Steve Holman testified before lawmakers that the merger would improve Vigo County’s poor public health rankings.
But Charbonneau’s bill would prevent such deals and make Indiana the sixth state to repeal its COPA law.
In 2023, Maine ended its COPA after heeding warnings from the FTC about the harmful effects of such mergers. Minnesota, Montana, North Carolina, and North Dakota have also repealed such laws.
In comments to Indiana regulators, the FTC referenced KFF Health News’ reporting on Ballad Health, a 20-hospital monopoly in Tennessee and Virginia, as a cautionary tale against such mergers.
COPAs, such as the one under which Ballad operates, “have proven unwieldy,” are “difficult to manage,” and “have failed to protect local communities from the harmful effects of anticompetitive hospital mergers,” the FTC said in its comments on the proposed Union-Regional merger.
Ballad declined to respond to KFF Health News inquiries regarding the FTC’s comments.
Since Ballad launched in 2018 and became the nation’s largest state-approved hospital monopoly, it has not lived up to some of its promises, KFF Health News has reported. It has fallen short of quality and charity care goals, according to annual reports from Ballad and the Tennessee Department of Health. After years of problems and complaints from patients, the state is now trying to hold Ballad more accountable for its quality of care.
In a November interview with KFF Health News, Ballad Health CEO Alan Levine attributed the quality-of-care slump to covid-19 and workforce challenges. He said these issues are unrelated to the COPA merger and the monopoly it created.
In Indiana, Republican Gov.-elect Mike Braun has said tackling health care issues will be a top policy priority. Braun’s policy agenda to “protect Hoosiers from consolidation” calls for rooting out regulations that “promote consolidation” and pose a “barrier” to competition.
Republicans control the state legislature. Charbonneau, a high-ranking senator, has co-authored several bills to combat consolidation, including through restricting noncompete agreements for primary care physicians and requiring hospitals and other health care businesses to notify Indiana’s attorney general of pending mergers and acquisitions.
If Charbonneau’s bill to repeal Indiana’s COPA law passes during the legislative session beginning Jan. 8, it may prevent Union from acquiring Regional. Union would need to submit a new application and get it approved before Charbonneau’s bill would take effect July 1. Both Union and HCA declined to comment on the proposed bill and their future application plans.
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
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