COPA Policy Paper

FTC Policy Perspectives

on Certificates of

Public Advantage

Staff Policy Paper

August 15, 2022

FEDERAL TRADE COMMISSION

Lina M. Khan, Chair

Noah Joshua Phillips, Commissioner

Rebecca Kelly Slaughter, Commissioner

Christine S. Wilson, Commissioner

Alvaro M. Bedoya, Commissioner

Contents

Introduction ................................................................................................................ 1

What is a COPA and why do hospitals seek them? ....................................................... 1

Why should state lawmakers be concerned about hospital consolidation? .................. 2

Competition results in better outcomes than consolidation subject to COPAs ............. 3

Hospital arguments in favor of consolidation subject to COPAs are flawed .................. 4

FTC efforts to prevent harmful hospital consolidation are undermined by COPAs ....... 6

Case studies: COPAs do not prevent hospitals from exploiting market power.............. 7

Mission Health System (North Carolina) ........................................................................................... 8

Benefis Health System (Montana) .................................................................................................... 8

Palmetto Health System (South Carolina) ......................................................................................... 9

MaineHealth (Maine) ...................................................................................................................... 10

Recent COPAs and Developments ............................................................................... 11

Ballad Health System (Tennessee/Virginia) and Cabell Huntington Hospital (West Virginia) ........ 11

Hendrick Health System and Shannon Health System (Texas) ....................................................... 12

Conclusion .................................................................................................................. 12

Endnote References .................................................................................................... 13

Questions may be directed to FTC staff at CopaAssessment@ftc.gov.

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Introduction

This paper by Federal Trade Commission staff presents information for state lawmakers considering

proposed legislation regarding Certificate of Public Advantage (“COPA”) laws.

The FTC routinely

challenges hospital mergers that would substantially lessen competition, and therefore would raise

healthcare prices for patients, reduce quality of care, limit access to healthcare services, and depress

wage growth for hospital employees. COPA laws attempt to immunize such hospital mergers from the

antitrust laws by replacing competition with state oversight and limiting the FTC’s ability to challenge

them. COPAs thus allow for hospital consolidation that is likely to harm patients and employees. The

existing research shows that COPAs’ purported benefits are simply unproven, so there are many

reasons to be skeptical of their use. Experience and research demonstrate that COPA oversight is an

inadequate substitute for competition among hospitals, and a burden on the states that must conduct

it. Hospital competition, on the other hand, has proven to result in lower prices and improvements in

quality of care, expanded access to healthcare services, and even higher wages for some hospital

employees. For these reasons, the FTC advocates against the use of COPAs to shield otherwise illegal

hospital mergers.

Indeed, both Democratic and Republican administrations and several leading

academics have raised concerns about COPAs, cautioning states not to rely on them in the absence of

evidence that COPAs produce better results than market-based competition.

FTC staff invites state lawmakers to work collaboratively with competition policy experts to minimize

the negative effects of further anticompetitive hospital consolidation and avoid using COPAs. We also

urge states that have existing COPA laws to consider repealing those laws if they do not have an active

COPA in place. We welcome the opportunity to speak with any state lawmakers who wish to better

understand the FTC’s hospital merger review process or the COPA studies described in this paper.

What is a COPA and why do hospitals seek them?

COPA laws are enacted to replace competition among healthcare providers with regulatory oversight

by state agencies. In states with COPA laws, officials allow hospitals to merge if they determine the

likely benefits from a particular merger outweigh any disadvantages from reduced competition and

increased consolidation. States often impose various terms and conditions on COPA recipients

intended to mitigate harms from a loss of competition, including price controls and rate regulations,

mechanisms for sharing cost savings and efficiencies, and commitments about certain contractual

provisions between hospitals and commercial health insurers. Once granted, COPAs purport to shield

provider mergers and other types of collaborations from federal antitrust enforcement under the state

action doctrine.

State departments of health – often in consultation with state attorneys general

offices – are responsible for implementing COPA regulations, evaluating COPA applications submitted

by hospitals, and actively supervising any approved COPAs in perpetuity.

Hospitals that wish to merge seek COPAs when a specific merger would otherwise violate antitrust

laws. Indeed, most COPAs that have been approved so far resulted in a single hospital monopoly.

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Mergers that lead to lower prices or better health outcomes for patients are unlikely to violate

antitrust laws and thus would not require COPAs to mitigate anticompetitive harms.

Why should state lawmakers be concerned about hospital

consolidation?

Healthcare experts consistently find that highly concentrated healthcare markets are more likely to

have higher prices for consumers (e.g., patients and employers who fund employee health plans),

reduced quality of care and patient health outcomes, and reduced access to healthcare services. Most

studies show that competition among health systems – not consolidation – results in the lowest prices

and optimal quality benefits for patients,

as well as optimal wages and benefits for employees.

Hospitals compete for inclusion in insurance plans, and insurers rely on that competition to negotiate

better prices and higher quality of care commitments for plan members. When hospitals have

substantial market power, their negotiating leverage with health insurers increases and they often are

able to demand higher rates (i.e., prices), which are then passed on to consumers in the form of higher

premiums, copayments, deductibles, and other out-of-pocket expenses.

Notably, this finding holds

true with both for-profit and not-for-profit merging hospitals.

By eliminating competition among

hospitals, a merger can create or exacerbate this market power. When considering a request for a

COPA to permit a merger that will eliminate competition, we urge state lawmakers to consult local

health insurers regarding the impact that COPA legislation could have on their ability to negotiate

competitive rates or implement value-based delivery and payment models, as this could have a big

impact on patients and employers. Also, employers facing higher costs may limit insurance coverage

for their employees or eliminate insurance coverage altogether. Studies show that rising healthcare

costs caused by hospital consolidation are often passed through to employees in the form of lower

wages and less generous benefits.

In addition to raising consumer prices, eliminating competition may reduce hospital incentives to

maintain or improve quality and patient access to care.

Studies demonstrate the net effect of

mergers of competing hospitals on quality is often negative, and increased competition is associated

with better quality.

Based on the available evidence, we cannot presume that any given hospital

merger is likely to improve quality or reduce costs by enough to offset a price increase.

Finally, a recent study found that mergers that significantly increase hospital concentration in local

labor markets, reducing the number of hospital employers, result in slowed wage growth for workers

whose employment prospects are closely linked to hospitals. This study showed that four years after

such high-impact mergers occurred, nominal wages were 6.8% lower for nurses and pharmacy workers

and 4.0% lower for non-medical skilled workers than they would have been without the merger.

State lawmakers and health departments must evaluate whether COPAs are in the best interest of the

public and the impact on labor markets is highly relevant to this analysis. This type of wage depression

could dissuade qualified hospital employees (already in short supply in many parts of the country) from

seeking employment, which could undermine the quality of patient care and access to services.

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Lower income levels for hospital employees may also worsen population health in local communities

where hospitals are leading employers.

FTC staff are not aware of any COPA that has attempted to

address a merger’s impact on hospital employee wages.

Competition results in better outcomes than consolidation

subject to COPAs

Competition has proven to be more reliable and effective than COPAs for controlling healthcare costs

while preserving quality of care, including in rural areas facing economic challenges. Competition

between hospitals benefits area employers and residents. It enables health insurers to negotiate lower

hospital reimbursement rates (i.e., prices) on behalf of customers, which reduces the prices that area

employers and residents must pay in premiums, copayments, deductibles, and other out-of-pocket

expenses. That competition also incentivizes hospitals to improve healthcare quality and the

availability of services and new healthcare technologies, as the hospitals compete to attract patients to

their respective systems. As a result, area employers and residents – commercially insured, those

covered by Medicare and Medicaid, and the uninsured – have benefited from this competition.

Research demonstrates that COPAs have resulted in significant price increases and contributed to

declines in quality of care. Sometimes these adverse effects may occur after the COPAs have expired

(often at the hospitals’ urging), but they may also manifest while the COPAs are in effect, due to the

difficulties inherent in implementation and monitoring. In 2017, the FTC announced a policy project to

assess the impact of COPAs on prices, quality, access, and innovation for health care services.

This

project has included research of past COPAs, a public workshop highlighting practical experiences with

COPAs and related policy considerations, and an ongoing study of recently approved COPAs.

discussed in more detail beginning on page 7 below, key findings from specific COPA case studies are:

• Mission Health COPA Studies: The first study found substantial increases in commercial

inpatient prices during early COPA years (at least 20%). The second study found substantial

price increases during later COPA years (an average of 25%) and even greater price increases

after the COPA was repealed (at least 38%). Both studies demonstrate that price regulations

during the COPA were ineffective, and the second study demonstrates the risk of eventually

having an unregulated monopolist.

• Benefis Health COPA Study: Substantial increases in commercial inpatient prices after the

COPA was repealed (at least 20%), demonstrating the risk of eventually having an unregulated

monopolist.

• MaineHealth COPA Study: Substantial increases in commercial inpatient prices at an

unregulated hospital during the COPA (at least 38%), as well as after the COPA expired at both

hospitals – for a total price increase of at least 50% during the COPA and post-COPA period. The

study demonstrates the risk of selectively regulating hospitals within a larger system –

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MaineHealth exercised its market power by raising prices at the unregulated hospital. It also

demonstrates the risk of eventually having an unregulated monopolist. Perhaps more

importantly, there was a measurable decline in quality at the acquired hospital after the COPA

expired.

The next section describes some of the purported benefits that hospitals often claim as justification for

COPAs. We are not aware of any studies showing that these purported benefits are ever actually

achieved.

In addition, COPAs can be extremely difficult to implement and monitor, requiring significant state

resources over many years, sometimes decades. Regulatory fatigue, staff turnover, and changes in

funding priorities at state agencies can lead to less vigorous supervision over time. Also, the hospitals

subject to COPAs often lobby for repeal of COPA oversight or fewer COPA conditions, citing costs and

difficulties of compliance. When this happens, the practical effect is that the merged healthcare system

that was previously subject to state COPA oversight is then able to exercise increased market power (in

most cases, monopoly power) unconstrained by either state regulation or antitrust enforcement

against merger-related harms.

Hospital arguments in favor of consolidation subject to

COPAs are flawed

Hospitals offer a variety of justifications when lobbying state lawmakers to enact COPA laws, but there

are many reasons for lawmakers to be skeptical. Hospitals seeking COPAs commonly claim their

proposed mergers would result in cost savings and efficiencies that would allow for improvements in

clinical quality outcomes. Experience and evidence demonstrate, however, that many hospital mergers

do not result in significant efficiencies, despite hospital projections that they will.

“My bottom line is that COPA regulation is fraught with

difficulties. Regulations can become obsolete and less effective

over time. State regulators became referees to resolve

competitive battles, and the political pressure is considerable.

And most significantly, the end game or exit strategy can be a

problem and might leave you with a concentrated, but

unregulated market power.”

Mark Callister, Monitor for Benefis Health COPA

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Hospitals seeking COPAs have also cited concerns about low reimbursement rates or future reductions

in reimbursement that may occur as a result of declining admissions and healthcare reform efforts.

They argue their proposed mergers would improve their financial condition and enable them to meet

such challenges. In each of the last four hospital mergers the FTC investigated that received a COPA,

and in our experience more broadly, hospitals seeking COPAs have had adequate financial resources to

continue operating independently and to maintain quality and access to healthcare services without

requiring a merger – contrary to the claims often made by the hospitals. Indeed, if a hospital is truly

failing financially and the proposed merger is the only way for it to remain viable, the FTC is unlikely to

challenge such a merger and the hospital does not need COPA protection against antitrust

enforcement.

Hospitals often claim their proposed mergers would create jobs and ensure local access to healthcare

facilities and services. In the FTC’s experience, though, hospitals frequently project cost savings

premised on facility consolidation, the elimination of services, and job reductions. Therefore,

lawmakers should examine these claims carefully and consider how they align with post-merger plans

for integration and operations, as cost savings projections may indicate that a merger would reduce

employment and patient access to healthcare services in local communities.

Hospitals frequently argue that proposed mergers should proceed subject to COPAs because they

would create a larger combined patient base, allowing them to improve population health efforts.

Merging hospitals also claim that increasing their patient base would facilitate cost-saving, value-based

payment models with health insurers. However, population health initiatives can be (and usually are)

pursued by the hospitals independently, so mergers are generally not necessary to gain these benefits.

And recent empirical research suggests that consolidation among healthcare providers has not

facilitated the increased use of value-based payment models. Instead, providers in concentrated

markets may be better positioned to resist such initiatives.

Related research suggests that health

systems with increased scale are not more likely to engage in or be more successful at value-based

contracting.

Indeed, the shift to value-based initiatives is already occurring among many hospital

systems and insurers nationwide, and is mandated by Centers for Medicare & Medicaid Services in

some circumstances.

Hospitals also claim their proposed mergers would eliminate unnecessary and duplicative costs

associated with competition, sometimes referred to as “wasteful duplication,” allowing them to save

money by avoiding capital expenditures. But again, it is unclear whether hospitals are really interested

in avoiding unnecessary or duplicative expenditures or simply want to avoid the pressures of

competition. Many hospital mergers do not result in significant cost savings,

and some studies have

found that hospital competition leads to improved patient health outcomes with more effective

resource utilization, as compared to highly concentrated markets with less competition.

Competition

can incentivize hospitals to invest in facilities, technology, and equipment that improve access and

quality.

For example, these types of investments can result in shorter wait times, more convenient

service options for physicians and patients, and the continued availability of services when a piece of

equipment fails. In this regard, competition is good for patients, not unnecessary or wasteful.

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Finally, hospitals argue lawmakers should not be concerned about the negative effects of their

proposed merger, because the states can impose various types of regulatory conditions on COPA

recipients that would mitigate the harms resulting from consolidation. Common examples include price

controls and rate regulation, mechanisms for sharing cost savings and efficiencies with local residents,

public reporting of quality metrics, and commitments regarding certain contractual provisions between

the hospitals and commercial health insurers. But such conditions do not replicate the benefits of

competition; rather, they distort competition. They are also challenging and costly to implement,

requiring considerable supervision, as hospitals subject to COPAs often have strong financial incentives

to evade the regulatory conditions, thus undermining their efficacy.

FTC efforts to prevent harmful hospital consolidation are

undermined by COPAs

The FTC is an independent, bipartisan agency with a dual mission of promoting competition and

protecting consumers. Under its statutory mandate, the FTC challenges mergers and acquisitions that

are likely to substantially lessen competition and harm consumers.

Anticompetitive mergers and

conduct in healthcare markets have long been a focus of FTC law enforcement, research, and

advocacy.

The FTC has considerable experience in evaluating mergers involving hospitals, outpatient

facilities, and physician groups to determine whether they are, on balance, likely to benefit or harm

consumers.

At the heart of FTC investigations is how healthcare mergers impact patients, employers, and

employees in local communities. FTC staff considers a wide range of factors, including the impact on

prices charged to patients, wages paid to hospital employees following greater employer

concentration, patient health outcomes and quality of care, patient access to healthcare services, and

the potential for the merger to result in innovative healthcare delivery and payment models. We often

consult physician experts with experience in both clinical and academic research settings, to help us

evaluate the hospitals’ quality of care and health improvement claims. Staff also speaks to local

business and community members, including other healthcare providers, public and private employers,

and health insurers, to understand how mergers will impact them. We examine a significant amount of

public and non-public information, including business documents and data from the merging hospitals

and other market participants. Staff also performs an economic analysis of hospital discharge data, as

well as a financial analysis of the merging hospitals. Notably, these factors are similar to those that

state health departments are required to consider when evaluating COPAs. However, the FTC has

spent several decades and substantial resources to develop expertise evaluating mergers, and state

health departments often have different areas of expertise.

There are certainly circumstances where a bona fide regulatory approach that has the side effect of

limiting competition may be an appropriate way to implement important public policy goals. Yet, the

available evidence shows COPAs do not achieve the purported policy goals of reducing healthcare costs

and improving quality. Instead, COPAs shield specific hospital transactions from vigorous antitrust

enforcement, to the detriment of those very goals. Antitrust authorities are better positioned to

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challenge anticompetitive mergers that are likely to result in higher prices and reduced quality of care

for patients when we do not face the litigation obstacles presented by COPAs. We invite state

lawmakers to engage with us in addressing the problems associated with anticompetitive hospital

consolidation and avoid the use of COPAs.

Case studies: COPAs do not prevent hospitals from

exploiting market power

Many states have enacted COPA legislation since the 1990s. FTC staff are aware of nine states that

have approved hospital mergers pursuant to such legislation: North Carolina, South Carolina, Montana,

Maine, Minnesota, and most recently, West Virginia, Tennessee, Virginia, and Texas.

But some of

these states have decided to do away with COPAs. North Carolina, Montana, and Minnesota have

repealed the underlying legislation so that hospitals in these states are no longer allowed to obtain

COPAs. Unfortunately, these legislative changes also eliminated state regulatory oversight of the

hospital systems that were allowed to merge under COPAs. Furthermore, antitrust enforcement was

no longer practical since the mergers had long been consummated. As a result, these systems can now

exercise their substantial market power unconstrained by state oversight or antitrust enforcement

against merger-related harms.

FTC staff has evaluated several of these COPAs, and the findings illustrate the significant challenges of

trying to regulate a hospital with substantial market power in perpetuity. COPAs can be difficult to

implement and monitor over time, and are often unsuccessful in mitigating merger-related price and

quality harms. Furthermore, when COPA oversight is removed, which happens frequently, the risk of

price and quality harms increases significantly because of the absence either of the preexisting

competition or regulation. For these reasons, FTC staff recommends that state lawmakers not enact

COPA laws. In states where COPA laws already exist, FTC staff recommends repealing these laws

provided there is not an active COPA currently in place. If there is already an active COPA in place,

states should not approve any new COPA applications.

“Almost all of the COPAs established prior to 2015 have

expired or were repealed, leaving the affected communities

with unregulated hospital monopolists, higher prices, and likely

reduced quality. States considering the use of a COPA to grant

antitrust immunity to merging hospitals should carefully weigh

this risk of harm against the possibly short-run and limited

benefits of the merger.”

Christopher Garmon & Kishan Bhatt

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Mission Health System (North Carolina)

In December 1995, Memorial Mission Hospital and St. Joseph’s Hospital, the only two general acute

care hospitals in Asheville, North Carolina, entered into an agreement under the state’s COPA law for

certain collaborative activities. In 1998, the two hospitals merged and amended their agreement with

the state to approve the merger subject to certain terms and conditions – including margin, cost, and

physician employment caps, as well as quality and contracting commitments. The merged hospital,

renamed Mission Health System, operated under these terms for nearly 20 years. In 2015, the North

Carolina legislature repealed the state’s COPA law after lobbying by Mission Health, and the Mission

Health COPA ended in September 2016 – leaving no competitive or regulatory constraint on Mission

Health’s monopoly power in Asheville. In February 2019, Mission Health was acquired by the for-profit

healthcare system HCA Healthcare – despite the fact that the COPA was originally approved, in part, to

prevent out-of-state for-profit healthcare systems from acquiring the local hospitals.

Empirical research on the price effects of the Mission Health COPA for inpatient hospital services from

1996 to 2008 shows that Mission Health increased its prices by at least 20% more than peer hospitals

during the COPA period, suggesting that despite the margin and cost regulations, state COPA oversight

did not prevent Mission Health from raising prices more than similar hospitals.

A second study found

an average price increase of 25% through 2015, driven by large increases several years into the COPA

period. It also found prices increased by another 38% after the COPA was repealed in 2015 and before

Mission Health was acquired by HCA Healthcare – indicating the post-COPA price increase likely

reflects the removal of the COPA oversight rather than the conversion to a for-profit hospital system.

In addition, an attorney from the North Carolina Attorney General’s office, responsible for overseeing

the Mission Health COPA for nearly 20 years, stated that he does not recommend using COPAs due to

the potential for regulatory evasion during the COPA period, and the ability of hospitals to eventually

be freed of COPA oversight, which leaves the community with an unregulated monopoly.

And a

healthcare economist hired to evaluate the Mission Health COPA in 2011 discussed the difficulty of

designing a regulatory scheme that prevents evasion and is flexible enough to allow for industry

changes over the full COPA duration.

Benefis Health System (Montana)

In July 1996, the Montana Department of Justice allowed Columbus Hospital and Montana Deaconess

Medical Center – the only two general acute care hospitals in Great Falls, Montana – to merge

pursuant to a COPA and form Benefis Health System. COPA conditions included revenue caps, quality

commitments, and other cost-saving commitments. In 2007, at Benefis Health’s urging, the Montana

state legislature passed a bill that effectively terminated the COPA agreement, despite the Montana

Attorney General’s objections. As a result, Benefis Health has been able to freely exercise its market

power in Great Falls with no regulatory or antitrust oversight for merger-related harms since 2009,

when the legislation took effect.

Empirical research on the price effects of the Benefis Health COPA for inpatient hospital services from

1992 to 2013 shows that Benefis’s prices closely tracked the prices of peer hospitals in duopoly

markets during the COPA period, but then increased by at least 20% following the repeal of the COPA.

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This suggests that the COPA was effective in constraining prices to the level of peer hospitals, but that

the COPA removal led to higher prices consistent with the exercise of market power by an

unconstrained hospital monopoly.

The CEO of Benefis has stated that, although he did not observe

the post-COPA price increases found in this study, he does not believe COPAs adequately address the

rising costs of healthcare.

An attorney hired by the Montana Department of Justice to oversee the Benefis Health COPA stated:

My bottom line is that COPA regulation is fraught with difficulties. Regulations can become

obsolete and less effective over time. State regulators become referees to resolve competitive

battles, and the political pressure is considerable. And most significantly, the end game or exit

strategy can be a problem and might leave you with a concentrated, but unregulated market

power.

Also, a policy advisor for the Montana Insurance Commissioner explained that his office proposed

legislation in 2019 to repeal Montana’s COPA law to enhance competition in provider and insurance

markets. His office viewed COPAs as a “regulatory incentive for consolidation” at a time when the

research has clearly shown “that hospital consolidation leads to poor outcomes for both quality and

costs.”

He claimed that since the Benefis Health COPA expired, “their market power has played out

in several different high-profile circumstances,” including dramatic cost increases and most recently,

“Benefis was able to be the last holdout of the Montana employee state health plans reference pricing

initiative to lower health costs.”

Palmetto Health System (South Carolina)

In May 1997, Baptist Healthcare System and Richland Memorial Hospital, two general acute care

hospitals in Columbia, South Carolina, merged to form Palmetto Health System. The South Carolina

Department of Health and Environmental Control (“DHEC”) approved the transaction, subject to terms

and conditions of a COPA. During the initial five-year period of the COPA, Palmetto Health was subject

to rate and revenue controls, as well as commitments to achieve cost savings and to provide a portion

of its revenues to fund public health initiatives and community outreach programs. Several conditions

were changed or eliminated in November 2003, although Palmetto Health continued to report

annually to DHEC. In November 2017, Palmetto Health merged with Greenville Health System to create

the largest health system in South Carolina, now known as Prisma Health System.

Empirical research on the price effects of the Palmetto Health COPA for inpatient hospital services

from 1992 to 2008 shows that prices at Palmetto Health did not increase more than prices at other

comparable hospitals. This may be due to COPA oversight, but it may also be the result of hospital

competition that remained in the area after the merger.

Unlike the other COPAs studied that

involved mergers to monopolies, Palmetto Health continued to face competition from other hospitals

serving the Columbia area, including most notably Providence Health (later acquired by LifePoint

Health) and Lexington Medical Center.

Indeed, in its COPA application submitted to DHEC, Palmetto

Health highlighted this competition as a constraint on its ability to exercise post-merger market power.

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In 2020, Prisma Health persuaded DHEC to expand the original COPA to include LifePoint’s hospital and

emergency room assets in the greater Columbia area. This maneuver potentially would have allowed

Prisma Health to acquire these facilities without facing an antitrust challenge.

The FTC had significant

concerns about this proposed acquisition, as it would have eliminated much of the remaining hospital

competition in the area. After a legal challenge from rival hospital Lexington Medical Center, a South

Carolina Administrative Court held that DHEC’s incorporation of the LifePoint facilities into the original

COPA was “outside the scope of the COPA law’s purposes.”

Prisma and LifePoint then announced

that they would no longer pursue the proposed acquisition.

Since then, the LifePoint assets were

acquired by another health system that did not raise anticompetitive concerns. The court’s decision is

the first known holding that a COPA modification did not pass muster under the state action doctrine,

and underscores that there are important and meaningful limitations to using COPAs to shield hospital

mergers from antitrust scrutiny.

MaineHealth (Maine)

In March 2009, MaineHealth acquired Southern Maine Medical Center (“SMMC”) under a COPA issued

by the Maine Department of Health and Human Services. SMMC is located about 20 miles from

MaineHealth’s flagship general acute care hospital in Portland, Maine Medical Center (“MMC”), and

the combined organization has a dominant share of patient discharges in the SMMC service area. The

COPA terms required MaineHealth to limit SMMC’s operating profit margin and reduce expenses, as

well as expand access and maintain quality. But the COPA did not impose any conditions on the other

hospitals operated by MaineHealth, including MMC. In accordance with the state COPA law, the

MaineHealth COPA expired after six years in May 2015.

Empirical research on the price and quality effects of the MaineHealth COPA for inpatient hospital

services from 2003 to 2018 showed varying results for the regulated SMMC hospital and the

unregulated MMC hospital. During the COPA period, SMMC’s prices increased by about 8% to 13%

compared to peer hospitals, but this increase was not statistically significant and the conclusion is that

the COPA was largely effective at constraining SMMC’s prices during the COPA period. However,

SMMC’s prices increased by almost 50% following the expiration of the COPA in 2015. At MMC, prices

increased by 38% during the COPA period, and by 62% following the expiration of the COPA (for an

average of 50% during the entire post-merger period). Furthermore, SMMC’s quality declined across

most measures following the expiration of the COPA.

The study summarizes as follows:

These results highlight the deficiencies of the MaineHealth COPA, which only placed restrictions

on SMMC’s price, not that of MMC or any other MaineHealth hospital. The evidence suggests

that MaineHealth was able to exercise the market power gained in the SMMC acquisition (and

possibly other acquisitions) through a price increase at the unregulated MMC.

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Recent COPAs and Developments

Ballad Health System (Tennessee/Virginia) and Cabell Huntington

Hospital (West Virginia)

In January 2018, Mountain States Health Alliance and Wellmont Health System – competitors in the

geographic region that straddles the border of southwestern Virginia and northeastern Tennessee –

merged to form Ballad Health System under COPA approvals from the Tennessee and Virginia

Departments of Health.

Both states imposed terms and conditions, including a price increase cap,

quality of care commitments, a prohibition of certain contractual provisions, and a commitment to

return cost savings to the local community. The Tennessee Department of Health has already agreed to

amend these conditions on three separate occasions, on July 31, 2019, April 27, 2021, and July 1,

2022.

On March 31, 2020, the Tennessee Department of Health and Tennessee Attorney General’s

Office temporarily suspended several COPA conditions due to the COVID-19 pandemic.

Approximately two years later, some of these conditions were resumed on January 1, 2022, and the

remaining conditions were set to resume on July 1, 2022.

Some concerns have been raised about

recent modifications to these conditions, however, most notably Ballad Health resuming the ability to

oppose certificate of need applications filed by providers seeking to enter the market.

In May 2018, Cabell Huntington Hospital and St. Mary’s Medical Center – both located in Huntington,

West Virginia – merged after receiving a COPA approval in 2016 from the West Virginia Health Care

Authority (“Authority”).

COPA conditions include annual reporting, regulatory rate review, the

prohibition of certain contracting practices, quality of care and population health commitments, and

the maintenance of St. Mary’s Medical Center as a free-standing general acute care hospital for a

minimum of seven years. The COPA is set to terminate in 2024. Soon after the COPA was approved, the

West Virginia legislature made significant changes to the Authority, including eliminating the salaried

board of directors (including those who approved the COPA), a 50% reduction in funding, and large

staffing reductions (including those who evaluated the COPA). In addition, the Authority’s autonomy

was eliminated, and it was placed under the direction of the West Virginia Department of Health and

Human Resources.

The Authority is still responsible for continued oversight of the Cabell COPA,

although with substantially fewer resources and a lack of independent authority.

In October 2019, the FTC announced that it would study the Ballad Health and Cabell Huntington COPA

effects on prices, quality, access, and innovation of healthcare services, as well as the impact of

hospital consolidation on employee wages. The FTC intends to collect information over several years

that will help FTC staff to conduct retrospective analyses of the Ballad Health and Cabell COPAs, and

we will report these findings publicly when the study is complete.

During a panel discussion on early observations of the Ballad Health COPA, staff from the Tennessee

Attorney General’s office and the Virginia Department of Health described the lengthy process by the

states to approve and monitor the COPAs.

A representative for Ballad Health described the COPA

implementation as successful.

However, representatives from an independent physician group and

health insurer raised concerns about the early COPA performance, including reduced access and

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 12

pricing issues relating to the rapid closure of outpatient surgical facilities, trauma centers, and NICUs,

as well as difficult payer negotiations that they claim have hindered the transition to value-based

contracting.

And a former member of the Tennessee COPA Local Advisory Council described the

significant public concerns with the COPA, primarily relating to facility closures and staffing

shortages.

Hendrick Health System and Shannon Health System (Texas)

In October 2020, Hendrick Health System and Shannon Health System – both located in Texas –

received COPA approvals from the Texas Health and Human Services Commission for their respective

mergers.

FTC staff conducted preliminary investigations of these mergers and determined that they

were likely to lessen competition substantially and lead to price increases and quality reductions for

patients, as well as depressed wages for nurses.

In an attempt to mitigate any merger-related harms,

the state imposed limited terms and conditions as part of the COPA approvals, primarily consisting of

regulatory rate review and reporting requirements. Although it is too early to assess the price and

quality effects of these COPAs, we will continue to monitor developments.

Conclusion

To summarize, the weight of the empirical evidence indicates that “[i]n the long run, hospital mergers

shielded with COPAs often lead to higher prices and reduced quality from unconstrained provider

market power.”

Despite hospital claims that COPAs will result in lower costs and improved

population health outcomes, we are not aware of any proven benefits of COPAs. For these reasons,

FTC staff urges state lawmakers to avoid using COPAs to shield otherwise anticompetitive hospital

mergers.

Questions may be directed to FTC staff at CopaAssessment@ftc.gov.

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 13

Endnote References

This policy paper represents the views of the staff of the Federal Trade Commission. It does not necessarily represent the

views of the Commission or of any individual Commissioner. The Commission, however, has voted to authorize staff to issue

this policy paper.

See, e.g., FTC Staff Submissions Regarding the Proposed Merger and COPA Applications of Mountain States Health Alliance

and Wellmont Health System,

https://www.ftc.gov/enforcement/cases-proceedings/151-0115/wellmont-healthmountain-

states-health; FTC Staff Comment to Texas Health and Human Services Commission Regarding Certificate of Public

Advantage Applications (Sept. 11, 2020), https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-

comment-texas-health-human-services-commission-regarding-certificate-public-

advantage/20100902010119texashhsccopacomment.pdf.

See. e.g., U.S. DEP’T OF THE TREASURY, THE STATE OF LABOR MARKET COMPETITION 48 (Mar. 7, 2022),

https://home.treasury.gov/system/files/136/State-of-Labor-Market-Competition-2022.pdf

; U.S. DEP’T OF HEALTH & HUMAN

SERVICES, U.S. DEP’T OF THE TREASURY, & U.S. DEP’T OF LABOR, REFORMING AMERICA’S HEALTHCARE SYSTEM THROUGH CHOICE AND

COMPETITION 57-59 (Dec. 2018), https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-

Choice-and-Competition.pdf; Martin Gaynor, WHAT TO DO ABOUT HEALTH-CARE MARKETS? POLICIES TO MAKE HEALTH-CARE MARKETS

WORK 22 (Brookings Institution, The Hamilton Project Policy Proposal 2020-10, Mar. 2020), https://www.brookings.edu/wp-

content/uploads/2020/03/Gaynor_PP_FINAL.pdf; Liam Bendicksen & Christopher Koller, The Risk of Repeal: Examining the

Use of State-Action Immunity for Hospital Mergers, HEALTH AFFAIRS FOREFRONT (Aug. 10, 2021),

https://www.healthaffairs.org/do/10.1377/forefront.20210806.481073/full/. See also Executive Order on Promoting

Competition in the American Economy (Jul. 9, 2021), https://www.whitehouse.gov/briefing-room/presidential-

actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/ (discussing the importance of

hospital competition).

To obtain antitrust immunity for conduct by private actors that might otherwise violate the federal antitrust laws, the

state action doctrine requires both a clear articulation of the state’s intent to displace competition in favor of regulation

and that the state provide active supervision over the regulatory scheme or body. See N.C. State Bd. of Dental Exam’rs v.

FTC, 135 S. Ct. 1101, 1114 (2015); FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003, 1013 (2013).

Of the ten COPAs that have been approved, seven of them involved mergers between the only two general acute care

hospitals serving a local region. Only three COPAs involved situations where any significant competition remained in the

local region post-merger, but even these mergers created hospitals with dominant market shares. See Case Studies section,

infra page 7, for further discussion of previously approved COPAs.

U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES § 10 (2010). Antitrust laws are not an impediment

to legitimate, procompetitive collaboration that would benefit consumers. Antitrust agencies have provided extensive

guidance to healthcare providers seeking ways to collaborate without running afoul of the antitrust laws. See, e.g., U.S.

DEP’T OF JUSTICE & FED. TRADE COMM’N, STATEMENTS OF ANTITRUST ENFORCEMENT POLICY IN HEALTH CARE (1996),

https://www.ftc.gov/sites/default/files/documents/reports/revised-federal-trade-commission-justice-department-policy-

statements-health-care-antritrust/hlth3s.pdf; Statement of Antitrust Enforcement Policy Regarding Accountable Care

Organizations Participating in the Medicare Shared Savings Program, 76 Fed. Reg. 67026 (Fed. Trade Comm’n & U.S. Dep’t

of Justice Oct. 28, 2011),

http://www.gpo.gov/fdsys/pkg/FR-2011-10-28/pdf/2011-27944.pdf.

See, e.g., Zack Cooper, Stuart Craig, Martin Gaynor & John Van Reenen, The Price Ain’t Right? Hospital Prices and Health

Spending on the Privately Insured, 134 Q.J.

ECON. 51 (2019),

https://healthcarepricingproject.org/sites/default/files/Updated_the_price_aint_right_qje.pdf

; Nancy Beaulieu, Leemore

Dafny, Bruce Landon, Jesse Dalton, Ifedayo Kuye & J. Michael McWilliams, Changes in Quality of Care after Hospital Mergers

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 14

and Acquisitions, 382 NEW ENG. J. MED. 51 (Jan. 2, 2020),

https://www.nejm.org/doi/pdf/10.1056/NEJMsa1901383?articleTools=true

. For surveys of the research literature, see, e.g.,

Martin Gaynor & Robert Town, THE IMPACT OF HOSPITAL CONSOLIDATION – UPDATE (Robert Wood Johnson Found., The Synthesis

Project, Policy Brief No. 9, 2012),

http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2012/rwjf73261; Martin

Gaynor, Kate Ho & Robert Town, The Industrial Organization of Health-Care Markets, 53 J. ECON. LITERATURE 235 (2015),

https://www.researchgate.net/publication/278676719_The_Industrial_Organization_of_Health-Care_Markets.

See, e.g., Elena Prager & Matt Schmitt, Employer Consolidation and Wages: Evidence from Hospitals, 111 AM. ECON. REV.

397 (2021), https://www.aeaweb.org/articles?id=10.1257/aer.20190690

[hereinafter Prager & Schmitt Study]; Daniel

Arnold & Christopher Whaley, Who Pays for Health Care Costs? The Effects of Health Care Prices on Wages, (2021 working

paper),

https://www.ehealthecon.org/pdfs/Whaley.pdf.

See Erin E. Trish & Bradley J. Herring, How Do Health Insurer Market Concentration and Bargaining Power With Hospitals

Affect Health Insurance Premiums?, 42 J.

HEALTH ECON. 104 (2015),

http://www.sciencedirect.com/science/article/pii/S0167629615000375

See, e.g., Robert Town, The Economists’ Supreme Court Amicus Brief in the Phoebe Putney Hospital Acquisition Case, 1

EALTH MGMT. POL’Y & INNOVATION 60 (2012), http://www.hmpi.org/pdf/HMPI-%20Town,%20Phoebe%20Putney.pdf; Gaynor,

Ho & Town, supra note 7.

See, e.g., Arnold & Whaley, supra note 8; Katherine Baicker & Amitabh Chandra, The Labor Market Effects of Rising

Health Insurance Premiums, 24 J.

LAB. ECON. 609 (2006),

https://www.hks.harvard.edu/fs/achandr/JLE_LaborMktEffectsRisingHealthInsurancePremiums_2006.pdf

; Priyanka Anand,

Health Insurance Costs and Employee Compensation: Evidence from the National Compensation Survey, 26 HEALTH ECON.

1601 (2017),

https://onlinelibrary.wiley.com/doi/10.1002/hec.3452; Gaynor, Ho & Town, supra note 7, at 236; Gaynor &

Town, supra note 7, at 1.

See Gaynor, Ho & Town, supra note 7; Gaynor & Town, supra note 7; Beaulieu, Dafny, Landon, Dalton, Kuye &

McWilliams, supra note 7, at 56; Marah Noel Short & Vivian Ho, Weighing the Effects of Vertical Integration Versus Market

Concentration on Hospital Quality, M

ED. CARE RES. REV. 1-18, at 14 (2019),

https://journals.sagepub.com/doi/pdf/10.1177/1077558719828938

; Patrick Romano & David Balan, A Retrospective

Analysis of the Clinical Quality Effects of the Acquisition of Highland Park Hospital by Evanston Northwestern Hospital, 18

NT’L J. ECON. BUS. 45 (2011), http://www.tandfonline.com/doi/abs/10.1080/13571516.2011.542955.

See Gaynor, Ho & Town, supra note 7, at 249; Gaynor & Town, supra note 7, at 4.

See Prager & Schmitt, supra note 8.

See, e.g., David Card, Who Set Your Wage?, Annual Meeting of the American Economic Association (Jan. 2022),

https://davidcard.berkeley.edu/papers/Card-presidential-address.pdf

; Vicky Lovell, SOLVING THE NURSING SHORTAGE THROUGH

HIGHER WAGES, Institute for Women’s Policy Research (2006), http://people.umass.edu/econ340/rn_shortage_iwpr.pdf.

See FTC COPA Workshop Transcript: Session 2 (Afternoon) at 30-31 (Jun. 18, 2019),

https://www.ftc.gov/system/files/documents/public_events/1508753/session2_transcript_copa.pdf

[hereinafter FTC COPA

Workshop Transcript: Session 2] (statement by Christopher Garmon on the impact of the Prager & Schmitt Study as applied

to COPAs). See also Mikael Lindahl, Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as an

Exogenous Source of Variation in Income, 40 J.

HUM. RESOUR. 144 (2005), http://jhr.uwpress.org/content/XL/1/144 (finding

higher income generates better health); J. Paul Leigh & Juan Du, Effects of Minimum Wages on Population Health, HEALTH

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 15

AFFAIRS HEALTH POLICY BRIEF (Oct. 4, 2018), https://www.healthaffairs.org/do/10.1377/hpb20180622.107025/ (suggesting

higher income is correlated to improved population health).

See FTC Staff Notice of COPA Assessment: Request for Empirical Research and Public Comments (Nov. 1, 2017),

https://www.ftc.gov/system/files/attachments/press-releases/ftc-staff-seeks-empirical-research-public-comments-

regarding-impact-certificates-public-advantage/copa_assessment_public_notice_11-1-17_revised_3-27-19.pdf.

See FTC Public Workshop, A Health Check on COPAs: Assessing the Impact of Certificates of Public Advantage in

Healthcare Markets (Jun. 18, 2019),

https://www.ftc.gov/news-events/events/2019/06/health-check-copas-assessing-

impact-certificates-public-advantage-healthcare-markets [hereinafter FTC COPA Workshop]; FTC Press Release, FTC to

Study the Impact of COPAs (Oct. 21, 2019), https://www.ftc.gov/news-events/press-releases/2019/10/ftc-study-impact-

copas [hereinafter FTC COPA Study].

See, e.g., Hannah Neprash & J. Michael McWilliams, Provider Consolidation and Potential Efficiency Gains: A Review of

Theory and Evidence, 82 A

NTITRUST L.J. 551, 553 (2019), https://www.americanbar.org/digital-asset-

abstract.html/content/dam/aba/publishing/antitrust_law_journal/alj-82-2/neprash-mcwilliams-alj-82-2.pdf; Anil Kaul, K.R.

Prabha & Suman Katragadda, Size Should Matter: Five Ways to Help Healthcare Systems Realize the Benefits of Scale, PwC

Strategy& (2016),

http://www.strategyand.pwc.com/reports/size-should-matter. Furthermore, in some hospital merger

cases courts have found that efficiency claims do not rebut a presumption of anticompetitive effects. See e.g., Fed. Trade

Comm’n v. ProMedica, No. 3:11 CV 47, 2011 WL 1219281, at *57 (N.D. Ohio Mar. 29, 2011).

See David Arnold, Mergers and Acquisitions, Local Labor Market Concentration, and Worker Outcomes (2021 working

paper), https://darnold199.github.io/jmp.pdf

See, e.g., Hannah Neprash, Michael Chernew & J. Michael McWilliams, Little Evidence Exists to Support the Expectation

that Providers Would Consolidate to Enter New Payment Models, 36 H

EALTH AFFAIRS 346, 353 (2017),

https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2016.0840; Cooper, Craig, Gaynor & Reenen, supra note 7

, at 104.

See, e.g., David Muhlestein, Robert Saunders & Mark McClellan, Medical Accountable Care Organization Results for 2015:

The Journey to Better Quality and Lower Costs Continues, H

EALTH AFFAIRS BLOG (Sept. 9, 2016),

http://healthaffairs.org/blog/2016/09/09/medicare-accountable-care-organization-results-for-2015-the-journey-to-better-

quality-and-lower-costs-continues/.

See Centers for Medicare & Medicaid Services, Value-Based Programs, https://www.cms.gov/Medicare/Quality-

Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs (last accessed Aug. 4, 2022).

See, e.g., Neprash & McWilliams, supra note 19; Kaul, Prabha & Katragadda, supra note 19.

See Dan P. Kessler & Mark B. McClellan, Is Hospital Competition Socially Wasteful?, 115 Q. J. ECON. 577 (2000),

http://qje.oxfordjournals.org/content/115/2/577.full.pdf+html

; Martin Gaynor, Rodrigo Moreno-Serra & Carol Propper,

Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service, 5 AM. ECON. J.: ECON.

POL’Y 134 (2013), https://www.aeaweb.org/atypon.php?doi=10.1257/pol.5.4.134.

See David M. Cutler & Mark McClellan, Is Technological Change in Medicine Worth It?, 20 HEALTH AFFAIRS 11 (Sept. 2001),

http://content.healthaffairs.org/content/20/5/11.full.pdf+html

See, e.g., Gregory S. Vistnes, An Economic Analysis of the Certificate of Public Advantage (COPA) Agreement Between the

State of North Carolina and Mission Health 11 (Feb. 10, 2011), http://www.mountainx.com/files/copareport.pdf

; Cory S.

Capps, Revisiting the Certificate of Public Advantage Agreement Between the State of North Carolina and Mission Health

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 16

System 32 (May 2, 2011). See also FTC COPA Workshop Transcript: Session 2, supra note 16, Erin Fuse Brown remarks at 18-

20; Erin C. Fuse Brown, Hospital Mergers and Public Accountability: Tennessee and Virginia Employ a Certificate of Public

Advantage (Milbank Memorial Fund 2018),

https://www.milbank.org/publications/hospital-mergers-and-public-

accountability-tennessee-and-virginia-employ-a-certificate-of-public-advantage/; Erin C. Fuse Brown, To Oversee or Not to

Oversee? Lessons from the Repeal of North Carolina’s Certificate of Public Advantage Law (Milbank Memorial Fund 2019),

https://www.milbank.org/publications/to-oversee-or-not-to-oversee-lessons-from-the-repeal-of-north-carolinas-

certificate-of-public-advantage-law/.

See Clayton Act, 15 U.S.C. § 18; Federal Trade Commission Act, 15 U.S.C. § 45.

See, e.g., Competition in the Health Care Marketplace, FED. TRADE COMM’N, https://www.ftc.gov/tips-advice/competition-

guidance/industry-guidance/health-care; FED. TRADE COMM’N, OVERVIEW OF FTC ACTIONS IN HEALTH CARE SERVICES AND PRODUCTS

(2022), https://www.ftc.gov/system/files/ftc_gov/pdf/2022.04.08%20Overview%20Healthcare%20%28final%29.pdf.

See FED. TRADE COMM’N, OVERVIEW OF FTC ACTIONS IN HEALTH CARE SERVICES AND PRODUCTS, supra note 29, at Section III.

Hospital systems that have been awarded COPAs include: HealthSpan Hospital System (Minnesota, 1994); Mission Health

System (North Carolina, 1995); Benefis Health System (Montana, 1996); Palmetto Health System (South Carolina, 1998);

MaineHealth (Maine, 2009); Cabell Huntington Hospital (West Virginia, 2016); Ballad Health System (Tennessee and

Virginia, 2018); Hendrick Health System (Texas, 2020); Shannon Health System (Texas, 2020). In April 2021, a COPA law was

enacted in Indiana to allow for a possible merger between Union Health and Terre Haute Regional Hospital. See Howard

Greninger, Talks Focus on Terre Haute Hospitals' Future: New State Law Opens Door to 'Merger' of Trauma Hospitals,

Requires Certificate Approval, T

RIBUNE-STAR (Dec. 2, 2021), https://www.tribstar.com/news/indiana_news/talks-focus-on-

terre-haute-hospitals-future/article_685467e6-3bba-58c7-bf1b-4966091383b1.html. And in July 2022, State University of

New York Upstate Medical University and Crouse Health System announced they would seek a COPA for their proposed

merger. See Anna Langlois, Syracuse Hospitals Seek Antitrust Immunity, G

LOBAL COMPETITION REVIEW (Jul. 28, 2022),

https://globalcompetitionreview.com/gcr-usa/article/syracuse-hospitals-seek-antitrust-immunity.

Lien Tran & Rena Schwarz Presentation at FTC COPA Workshop, The Mission Health COPA: Evidence on Price Effects from

CMS HCRIS Data (Jun. 18, 2019),

https://www.ftc.gov/system/files/documents/public_events/1508753/slides-copa-

jun_19.pdf at 37.

Christopher Garmon & Kishan Bhatt, Certificates of Public Advantage and Hospital Mergers at 19 (Feb. 2022, paper

forthcoming in J. Law Econ.).

FTC COPA Workshop Transcript: Session 1 (Morning), Kip Sturgis remarks at 43 (Jun. 18, 2019),

https://www.ftc.gov/system/files/documents/public_events/1508753/session1_transcript_copa.pdf

[hereinafter FTC COPA

Workshop Transcript: Session 1].

FTC COPA Workshop Transcript: Session 1, supra note 34 Cory Capps remarks at 34-35. See also Randall R. Bovbjerg &

Robert A. Berenson, U

RBAN INSTITUTE, CERTIFICATES OF PUBLIC ADVANTAGE: CAN THEY ADDRESS PROVIDER MARKET POWER? (2015),

http://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000111-Certificates-of-Public-Advantage.pdf

; Vistnes

COPA Study, supra note 27; Capps COPA Study, supra note 27. In this prior research, health policy experts and economists

evaluated certain aspects of the Mission Health COPA, but they were unable to reach conclusions about whether the COPA

successfully constrained prices, reduced healthcare costs, or improved quality.

Garmon & Bhatt, supra note 33, at 20.

FTC COPA Workshop Transcript: Session 1, supra note 34, John Goodnow remarks at 40, 43-44.

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 17

FTC COPA Workshop Transcript: Session 1, supra note 34, Mark Callister remarks at 38. Mark Callister informed us that

the Benefis Health COPA was opposed by medical professionals and citizens of Great Falls, and was supported by the

payers. Id. at 37.

FTC COPA Workshop Transcript: Session 1, supra note 34, Kendall Cotton remarks at 40.

Id. at 41.

The Palmetto Health hospitals still operate under the COPA that was originally approved in 1997, although the degree of

current active supervision by DHEC is questionable. In 2013, South Carolina cut funding for its Certificate of Need program,

which encompasses the COPA program, thereby reducing the level of state monitoring.

See Garmon & Bhatt, supra note 33, at 20, 42.

At that time, four general acute care hospitals served the Columbia Core-Based Statistical Area in addition to Baptist

Healthcare and Richland Memorial: Providence Health in Columbia (later acquired by LifePoint), Lexington Medical Center

in West Columbia, Kershaw Health in Camden (later acquired by LifePoint), and Fairfield Memorial Hospital in Winnsboro

(closed in 2018). See Garmon & Bhatt, supra note 33, at 42 (“Baptist and Richland together represented 55 percent of the

bed capacity in the Columbia CBSA and treated 66 percent of the commercially insured inpatients.”).

See South Carolina Department of Health and Environmental Control, Final Staff Decision In Re Prisma Health Midlands

COPA (Feb. 28, 2020),

https://www.scdhec.gov/sites/default/files/media/document/FINAL-STAFF-DECISION-IN-RE-PRISMA-

HEALTH-MIDLANDS-COPA_2-28-2020.pdf; Palmetto Health-USC Medical Group, Prisma Health to Acquire KershawHealth

and Providence Health (Mar. 5, 2020), https://phuscmg.org/news/prisma-health-to-acquire-kershawhealth-and-provide.

In the Matter of Lexington County Health Services District Inc. v. South Carolina Department of Health and Environmental

Control, Prisma Health-Midlands, Providence Hospital, LLC, Order Denying Cross-Motions for Summary Judgment, Docket

No. 20-ALJ-07-0108-CC (SC Admin. Law Court, Nov. 2, 2020).

See Dave Muoio, Prisma Health, LifePoint Health Call Off Sale of 3 South Carolina Hospitals, FIERCE HEALTHCARE (Apr. 13,

2021),

https://www.fiercehealthcare.com/hospitals/prisma-health-lifepoint-health-call-off-sale-three-south-carolina-

hospitals.

Garmon & Bhatt, supra note 33, at 21-22, 34.

Id. at 21.

FTC staff investigated the proposed merger of Mountain States and Wellmont for more than two years. FTC staff

submitted public comments and testimony to the Virginia and Tennessee state departments of health and offices of

Attorneys General recommending denial of the COPA. See FTC Staff Submissions Regarding the Proposed Merger and COPA

Applications of Mountain States Health Alliance and Wellmont Health System,

https://www.ftc.gov/enforcement/cases-

proceedings/151-0115/wellmont-healthmountain-states-health.

See Tennessee Dep’t of Health, Certificate of Public Advantage (COPA), https://www.tn.gov/health/health-program-

areas/health-planning/certificate-of-public-advantage.html (last accessed Aug. 4, 2022).

See Letter from Tennessee Office of the Attorney General to Ballad Health CEO (Mar. 31, 2020), 2020-03-31 Temporary

Suspension-Letter -executed.pdf (tn.gov) (last accessed Aug. 4, 2022); Tennessee Dep’t. of Health, List of Suspended

FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV/COPA 18

Provisions, https://www.tn.gov/content/dam/tn/health/documents/copa/copa-emergency-declaration-memo.pdf (last

accessed Aug. 4, 2022).

See Letter from Tennessee Office of the Attorney General to Ballad Health CEO (Dec. 3, 2021), 2021-12-03-AG-and-TDH-

Reasonable-Recovery-Letter-to-Ballad.pdf (tn.gov) (last accessed Aug. 4, 2022).

See Jeff Keeling & Ashley Sharp, Changed Ballad COPA Restrictions Draw Docs’ Criticism, WJHL-TV (Jul. 13, 2022),

https://www.wjhl.com/news/investigations/changed-ballad-copa-restrictions-draw-docs-criticism/

In November 2015, the FTC issued an administrative complaint alleging that the proposed merger of Cabell Huntington

Hospital and St. Mary’s Medical Center violated antitrust laws. In March 2016, while litigation was pending, West Virginia

enacted COPA legislation purporting to extend antitrust immunity to certain hospital mergers under the state action

doctrine. Subsequently, the West Virginia Health Care Authority approved a COPA application submitted by the hospitals.

The FTC opposed the legislation and COPA application. In July 2016, the FTC dismissed its administrative complaint against

the proposed merger in light of the COPA approval. See Statement of the Federal Trade Commission in the Matter of Cabell

Huntington Hospital, Inc., Docket No. 9366 (Jul. 6, 2016),

https://www.ftc.gov/system/files/documents/public_statements/969783/160706cabellcommstmt.pdf

See West Virginia Health Care Authority, About HCA, https://hca.wv.gov/About/Pages/default.aspx (last accessed Aug. 4,

2022).

See FTC COPA Study, supra note 18.

FTC COPA Workshop Transcript: Session 2, supra note 16, Janet Kleinfelter and Joseph Hilbert remarks at 3-6.

FTC COPA Workshop Transcript: Session 2, supra note 16, Richard Cowart remarks at 8-10. See also Richard Cowart

Submission on behalf of Ballad Health to the FTC (Aug. 2, 2019),

https://www.regulations.gov/document?D=FTC-2019-

0016-0174; Ballad Health Submission to the FTC (Aug. 2, 2019), https://www.regulations.gov/document?D=FTC-2019-0016-

0173.

FTC COPA Workshop Transcript: Session 2, supra note 16, Scott Fowler and John Syer remarks at 11-16.

FTC COPA Workshop Transcript: Session 2, supra note 16, Daniel Pohlgeers remarks at 16-17. See also numerous

submissions to the FTC from concerned citizens,

https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=commentDueDate&po=0&dct=PS&D=FTC-2019-0016

See Texas Health and Human Services, Certificate of Public Advantage, https://www.hhs.texas.gov/providers/health-

care-facilities-regulation/certificate-public-advantage (last accessed Aug. 4, 2022).

FTC staff submitted a comment to the Texas Health and Human Services Commission recommending denial of both

COPAs. See FTC Staff Comment to Texas Health and Human Services Commission Regarding Certificate of Public Advantage

Applications (Sept. 11, 2020),

https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-texas-

health-human-services-commission-regarding-certificate-public-advantage/20100902010119texashhsccopacomment.pdf.

Garmon & Bhatt, supra note 33, at 1. “Overall, COPA regulation, if properly designed, may result in hospital prices that

are consistent with the pre-merger market. However, COPA-regulated hospitals have a strong incentive to evade regulation

and pursue the removal of the COPA. Almost all of the COPAs established prior to 2015 have expired or were repealed,

leaving the affected communities with unregulated hospital monopolists, higher prices, and likely reduced quality. States

considering the use of a COPA to grant antitrust immunity to merging hospitals should carefully weigh this risk of harm

against the possibly short-run and limited benefits of the merger.” Id. at 26.