A Health Check on COPAs: Assessing the Impact of Certificates of Public Advantage in Healthcare Markets

On June 18, 2019, the Federal Trade Commission hosted a public workshop to assess the impact of certificates of public advantage (“COPAs”) on prices, quality, access, and innovation for healthcare services. This workshop is part of a broader COPA Assessment Project announced in November 2017.

COPAs are regulatory regimes adopted by state governments intended to displace competition among healthcare providers, and immunize mergers and collaborations from antitrust scrutiny. States are increasingly using COPAs to allow certain hospital mergers to proceed despite clear antitrust concerns, with the assumption that state regulatory oversight will mitigate the effects resulting from the elimination of competition and allow the hospitals to achieve certain efficiencies. The FTC is interested in developing a better understanding of the actual benefits and harms associated with COPAs, and the information obtained through this workshop may help advance the agency’s policy and enforcement strategies.

Academics, health policy experts, healthcare industry stakeholders, state regulators and law enforcers, and staff from the FTC’s Bureau of Economics discussed research regarding the effects of COPAs, as well as practical experiences with these regulatory regimes. A study of price and quality effects following Phoebe Putney’s acquisition of Palmyra Memorial Hospital, which involved an otherwise anticompetitive hospital merger that was consummated due to state regulations, was also presented.

Topics for discussion included the following:

• General conclusions, if any, that may be drawn from existing research on the effects of COPAs, as well as suggestions for additional research that may be useful.
• Observations and practical experiences with COPAs, including the resources and expertise required at the state level to implement and monitor these regulatory regimes.
• The ability of competition versus regulation to generate optimal levels of price, quality, access, and innovation in healthcare markets.

To aid our analysis of these issues, the staff of the Federal Trade Commission sought public comment from interested parties. In particular, we invited comment on the following questions:

1. What are the effects of COPAs in terms of price, cost, and quality of healthcare services; access to healthcare services; innovations in healthcare delivery models; or other dimensions of healthcare competition? How are these effects measured?
2. How much time, and what commitment of resources and expertise, is required to implement and monitor the effectiveness of COPAs?
3. What is the long-term viability of COPAs and likelihood that states will oversee COPAs in perpetuity?
4. What is the impact to healthcare markets following the expiration or repeal of COPAs, when the state is no longer monitoring the behavior of the healthcare providers, and price and quality commitments are no longer in effect or enforceable?
5. What is the public reaction to COPAs, and is this incorporated into state oversight?
6. With respect to healthcare services, is competition more or less effective than regulation in lowering prices, costs, and expenditures; improving quality and access; promoting efficient resource allocation; and fostering innovation in delivery models?
7. What relevant information, if any, can we learn about conduct remedies imposed by state law enforcers on certain healthcare provider mergers and collaborations (i.e., as part of a consent decree) that may inform our assessment of COPAs? Such remedies – including rate regulation, prohibitions on certain contracting practices, and commitments to return cost savings to the local community – are reminiscent of the types of regulatory commitments that states often require of COPA recipients. Are these situations similar enough for us to draw meaningful analogies?

FTC staff welcomes comment on these and related questions and issues. The process for submitting comments is explained below.

Attending the Workshop:

The workshop was free and open to the public.

Questions?

If you have a question about the workshop or public comment process, please email copaassessment@ftc.gov.