AHA Urges Congress to Uphold Current Merger and Acquisition Guidelines
AHA and other organizations asked Congress not to alter the current merger and acquisition guidelines, as more government control could create additional roadblocks for businesses and hurt the market.
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- The American Hospital Association (AHA), the US Chamber of Commerce, and 20 other organizations have written a letter to Congress asking them to maintain the legal and regulatory structures for evaluating merger and acquisition deals.
The organizations said that Congress should address any antitrust concerns by providing enforcement agencies with additional funding that will allow the agencies to continue monitoring potential mergers and acquisitions.
Instead of changing the evaluation framework and adopting proposals that could potentially hurt consumers and markets, Congress should work to ensure the review process prioritizes consumers and innovation and remains impartial, the organizations wrote.
AHA and its fellow authors noted that the government already has the authority to challenge any mergers and acquisitions that may threaten market competition, without altering the framework.
Federal antitrust agencies have a positive track record when it comes to intervening in order to keep the market fair. Among the 780 mergers that the agencies have challenged in the last 20 years, they have seen a 98.5 percent success rate. Only eleven merging parties won, highlighting the capability of the government to know when and how to protect the market.
The current legal structure allows the government to regulate mergers and acquisitions without exerting majority control over the market. However, some critics want to change the review process in a way that could stunt economic growth, market competitiveness, and merger and acquisition activity, the organizations wrote.
The organizations are concerned that if Congress changes the process, the government will have to grant permission to companies in order for them to participate in a merger.
“We oppose efforts to shift the burden of proof on mergers, or to throw up additional roadblocks that limit or prohibit the ability for a company to merge or sell itself to an acquiring firm,” they wrote in the letter.
“In reviewing the current state of merger law and policy, we respectfully remind Congress that, during the past few decades, America’s dynamic and innovative economy has far outstripped that of Europe, which has imposed a far more burdensome regime on its private sector.”
Limiting a company’s ability to participate in a merger or acquisition may hurt the economy, AHA and the other groups asserted. When companies merge, it can lead to lower prices, and new products and services without threatening competition. They noted that mergers can also help companies that are struggling financially remain open and gain new resources if another company acquires them.
Healthcare mergers in particular may reduce annual operating expenses for hospitals and improve patient care quality, according to a past analysis by AHA. Acquired hospitals saw a reduction in inpatient readmission rates and decreased mortality rates.
However, reports have shown that healthcare mergers and acquisitions may also be linked to physician burnout due to workflow disruptions and organizational changes.
Nevertheless, there were still 79 merger and acquisition transactions in 2020, and experts predicted that the COVID-19 pandemic may be a catalyst for more going forward. Mergers may help hospitals get a handle on financial struggles and staff and supply shortages brought on by the pandemic.
AHA, the US Chamber of Commerce, and the other organizations believe Congress has several responsibilities when it comes to mergers and acquisitions. Congress should ensure that merger reviews remain focused on consumer welfare and that enforcement agencies treat all merging parties with fairness.
Congress should also preserve the government’s current role of intervening in merger deals only when necessary.
“Finally, Congress should reject calls for legislation to overhaul the process and legal standards by which mergers and acquisitions are evaluated,” the groups concluded. “Such calls are unfounded and, if heeded, could do lasting damage to our economy and to consumers.”
