Federal Trade Commission Staff Submission 

to New York State Health Department 

Regarding the Certificate of Public Advantage Application of 

State University of New York Upstate Medical University and 

Crouse Health System, Inc. 

Pursuant to New York Public Health Law Article 29-F and 

Rules implemented thereunder at 10 NYCRR Subpart 83-2 et seq.

PUBLIC VERSION (REDACTED)

October 7, 2022

Bureau of Competition

Bureau of Economics

Office of Policy Planning
FTC Staff Submission (Public) – October 7, 2022 

i 

Table of Contents

I. Executive Summary ............................................................................................................ 1

II. FTC’s Interest and Experience ............................................................................................ 5

III. FTC Evaluates Healthcare Mergers Similarly to the Approach Outlined in the New York 

COPA Act and Regulations ............................................................................................................ 6

IV. Parties Have Not Adequately Shown the COPA Is Necessary to Prevent a Cessation of 

Operations or Elimination of Services Due to Financial Distress .................................................. 8

V. Competitive Dynamics of the Primary Service Area: The Proposed COPA Is Likely to 

Result in Significant Disadvantages Due to a Reduction in Competition Between SUNY Upstate 

and Crouse .................................................................................................................................... 13

A. Level of Competition in the Primary Service Area and Availability of Healthcare 

Services ..................................................................................................................................... 15

1. Economic Framework for Analyzing Hospital Competition ......................................... 15

2. Primary Service Area ..................................................................................................... 17

3. Diversion Ratio Analysis Confirms that SUNY Upstate and Crouse Are Close 

Competitors ........................................................................................................................... 18

4. High Market Shares and Concentration Levels Confirm that the Proposed COPA Is 

Likely to Result in Significant Disadvantages ...................................................................... 20

5. Analysis of Service Overlaps Confirms that SUNY Upstate and Crouse Are Close 

Competitors ........................................................................................................................... 25

B. Entry of Other Healthcare Providers Would Not Be Timely, Likely, or Sufficient to 

Replace the Competition Lost as a Result of the Merger .......................................................... 26

C. Merger Likely Would Depress Wage Growth for Hospital Employees and Exacerbate 

Challenges with Recruiting and Retaining Healthcare Professionals ....................................... 27

VI. Benefits of the COPA Are Unlikely to Outweigh the Disadvantages Resulting from a 

Reduction in Competition and Less Restrictive Arrangements May be Available ..................... 30

A. Proposed Merger Likely Would Have a Substantial Adverse Impact on the Quality and 

Price of Health Care Services in the Syracuse Area ................................................................. 32

1. Consolidation of Clinical Services Is Uncertain and Could Reduce Patient Access ..... 34

2. Hospitals Can Pursue Clinical Standardization without the COPA ............................... 36

3. COPA Is Unnecessary for Population Health Improvement .......................................... 37

4. Implementation of Uniform EMR System Is Unnecessary to Improve Quality of Care 38

B. Proposed Merger Likely Would Reduce Patient Access to Healthcare Services in the 

Syracuse Area ............................................................................................................................ 40

C. Claims of Cost Savings, Efficiencies, and Improvements in Resource Utilization Are 

Unsubstantiated, Not Merger-Specific, and Insufficient to Overcome the Likely Competitive 

Harm .......................................................................................................42
FTC Staff Submission (Public) – October 7, 2022 

ii

D. Merger Would Make It More Difficult for Health Care Payers to Negotiate Reasonable 

Payment and Service Arrangements with the Combined Hospital Entity, Likely Resulting in 

Higher Prices for Patients and Employers ................................................................................. 45

E. Merger Likely Would Substantially Reduce Competition for Physician Services and 

Ancillary Healthcare Services ................................................................................................... 49

VII. Possible Terms and Conditions Imposed Under Active Supervision Are Unlikely to 

Mitigate the Disadvantages Resulting from Loss of Competition ................................................ 49

A. Parties’ Proposed Conditions and Monitoring Plan Are Insufficient ............................ 50

B. Possibility of Voluntary Termination Poses Serious Concerns and Revocation of COPA 

Is Unlikely to be an Effective Remedy ..................................................................................... 52

C. General Concerns with Conduct Remedies ................................................................... 53

VIII. Conclusion ........................................................................................................................ 57
FTC Staff Submission (Public) – October 7, 2022 

1 

The staff of the Federal Trade Commission’s (“FTC”) Bureau of Competition, Bureau of 

Economics, and Office of Policy Planning (collectively, “FTC staff”) 1 respectfully submits this 

public comment regarding the Certificate of Public Advantage application (“COPA 

Application”) submitted by State University of New York Upstate Medical University (“SUNY 

Upstate”) and Crouse Health System, Inc. (“Crouse”) (collectively, the “Parties”) to the New 

York State Department of Health (“NY DOH”) 2 pursuant to New York Public Health Law 

Article 29-F. 3 This comment supplements the information we sent to the NY DOH on August 

17, 2022, which included an FTC staff policy paper describing empirical support for the FTC’s 

long-standing concerns with COPA legislation.

4

 We appreciate the opportunity to present our 

views on SUNY Upstate’s proposed acquisition of Crouse (also referred to as “proposed 

merger”) in connection with the NY DOH’s review of their COPA Application. 

I. Executive Summary

FTC staff submits this comment to express our concern that the proposed merger presents 

substantial risk of serious competitive and consumer harm in the form of higher healthcare costs, 

lower quality, reduced innovation, reduced access to care, and depressed wages for hospital 

employees. Applying the standard of the New York COPA Act and Regulations, there is not 

sufficient evidence to conclude that the potential harms are likely to be outweighed by the 

potential benefits of the merger. Furthermore, it is doubtful that the regulatory conditions 

imposed by the NY DOH would effectively mitigate all of the potential anticompetitive harms to 

patients in the Syracuse area – both in the short term and in the decades to come. 

The New York state legislature passed the New York COPA Act allowing collaborations 

among healthcare providers, including hospital mergers, with an ultimate aim “to promote 

improved quality and efficiency of, and access to, health care services and to promote improved

clinical outcomes to the residents of New York.” 5 However, supplanting competition with a

COPA regulatory scheme that shields specific hospital transactions from vigorous antitrust 

enforcement and allows for anticompetitive provider consolidation in highly concentrated 

markets likely undermines these laudable goals. As discussed below, competition has proven to 

1 These comments express the views of the FTC’s Bureau of Competition, Bureau of Economics, and Office of 

Policy Planning. These comments do not necessarily represent the views of the Commission or of any individual 

Commissioner. The Commission has, however, voted to authorize staff to submit these comments. 2 Application for Certificate of Public Advantage Submitted by SUNY Upstate and Crouse to New York State 

Department of Health (posted Aug. 10, 2022). 3 New York Public Health Law, Chapter 45, Article 29-F, §§ 2999-aa, 2999-bb, Improved Integration of Health 

Care and Financing [hereinafter New York COPA Act]. See also 10 NYCRR Subpart 83-2 et seq., Certificate of 

Public Advantage (effective Dec. 17, 2014), https://regs health.ny.gov/content/subpart-83-2-certificate-publicadvantage [hereinafter New York COPA Regulations]. 4 See Federal Trade Commission, FTC Policy Perspectives on Certificates of Public Advantage (Aug. 15, 2022) and 

Key COPA Facts, both available at www.ftc.gov/copa (Attachment A). FTC staff had previously raised concerns 

with COPA applications submitted to the NY DOH under the Delivery System Reform Incentive Payment program. 

See FTC Staff Comment to New York State Department of Health Regarding DSRIP COPA Applications, 

https://www.ftc.gov/system/files/documents/advocacy documents/ftc-staff-comment-center-health-care-policyresource-development-office-primary-care-health-systems/150422newyorkhealth.pdf (Apr. 22, 2015). 5 New York COPA Act § 2999-aa.
FTC Staff Submission (Public) – October 7, 2022 

2 

be a more reliable and effective mechanism for controlling healthcare costs while preserving 

quality of care. 

New York has engaged in statewide initiatives to reduce excess hospital bed capacity, 

consolidate competing healthcare services, and encourage collaboration and clinical integration 

among healthcare providers. FTC staff understands that, per the recommendations of the 

Commission on Health Care Facilities in the 21st Century (also known as the “Berger 

Commission”), SUNY Upstate and Crouse already entered an Affiliation and Collaborative 

Agreement, which required joint planning and service sharing under the supervision of the NY 

DOH.

6

 In addition, it is our understanding that SUNY Upstate and Crouse were jointly involved 

in the Delivery System Reform Incentive Payment (“DSRIP”) program, as members of the 

Central New York Care Collaborative Performing Provider System, which encouraged 

collaboration among competing healthcare providers under the supervision of the NY DOH to 

improve New York’s Medicaid program. 7 Indeed, the NY DOH appears to have invested 

substantial time and resources to implement these healthcare delivery reform initiatives, which 

granted significant public funding for participating healthcare providers, including SUNY 

Upstate and Crouse. 8 With the Parties already participating in state programs designed to reduce 

costs and improve quality and accessibility, we question whether a full merger between the 

Parties under the NY DOH’s supervision would confer meaningful benefits that could not 

already be achieved through these prior initiatives or other less restrictive alternatives that do not 

permanently eliminate close competition. 

FTC staff’s concerns detailed in this submission are based on our assessment to date of 

the proposed merger and the limited information available,

9

 applying the analytical framework 

described in the Horizontal Merger Guidelines (“Merger Guidelines”) that antitrust agencies, 

state courts, and federal courts use to evaluate mergers.

10 We have conducted preliminary 

evaluations of both the potential harm to patients and employees from the loss of competition as 

well as the potential benefits, including clinical quality benefits and cost savings, that the Parties

claim they will be able to achieve through the proposed merger. The NY DOH considers these 

6 See New York State Department of Health, REPORT ON THE IMPLEMENTATION OF THE REPORT OF THE COMMISSION 

ON HEALTH CARE FACILITIES IN THE TWENTY-FIRST CENTURY at 65-66, 

https://www health.ny.gov/facilities/commission/docs/implementation of the report of the commission.pdf

(describing the Affiliation and Collaborative Agreement between SUNY Upstate and Crouse).

7 See New York State Department of Health, Delivery System Reform Incentive Payment (DSRIP) Program, 

https://www health.ny.gov/health care/medicaid/redesign/dsrip/index.htm. 8 See, e.g., New York State Department of Health, Central New York Care Collaborative, Inc., 

https://www.health.ny.gov/health care/medicaid/redesign/dsrip/pps map/county/co cny htm (stating that the 

CNYCC received total DSRIP award dollars in excess of $323 million from 2015 through 2020); New York State 

Department of Health, NYS DSRIP Quarterly Reports (2014-2020), 

https://www.health.ny.gov/health care/medicaid/redesign/dsrip/quarterly reports htm (indicating that the CNYCC 

may have received total DSRIP related funding in excess of $500 million from 2014 through 2020).

9

 Despite requests from FTC staff to the Parties seeking detailed information typical for evaluating a transaction of 

this magnitude, the Parties have not supplied any information to the FTC. 10 U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES (2010), 

https://www ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf [hereinafter Merger Guidelines].

As discussed further in Section II, if the Commission were to challenge a merger in court, the FTC would follow the 

legal standard in Section 7 of the Clayton Act.
FTC Staff Submission (Public) – October 7, 2022 

3 

same factors when reviewing COPA applications. Thus, the goals of our analysis are closely 

aligned with the analysis that the NY DOH will undertake. For ease of reference, we present our 

analysis using the specific review factors contained in the New York COPA Regulations. 11

Competition between SUNY Upstate and Crouse appears to benefit area patients and 

employers, by enabling health insurers to negotiate lower hospital reimbursement rates (i.e., 

prices) on behalf of their customers. This competition ultimately reduces the prices that patients 

must pay in premiums, copayments, deductibles, and other out-of-pocket expenses. Furthermore, 

competition between the Parties likely improves healthcare quality, as well as the availability of 

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

respective systems. This competition likely also results in optimal wages and benefits for 

hospital employees. FTC staff has interviewed numerous market stakeholders who expressed 

concerns that the proposed merger between SUNY Upstate and Crouse will lead to higher prices 

and reduced quality of care, reduced access to healthcare services, and worsened working 

conditions and wages for hospital employees. 

FTC staff’s quantitative economic analyses confirm that SUNY Upstate competes closely 

with Crouse, and that the proposed merger will result in high market shares. To measure the 

degree of lost competition likely to result from the proposed merger, we calculated diversion 

ratios to estimate the extent to which patients view SUNY Upstate and Crouse as substitutes. The 

diversion ratios show a high degree of substitutability – i.e., extremely close competition – 

between SUNY Upstate and Crouse. More than 35% of each hospital’s patients view the other 

merging party as their next best choice. Diversion ratios of this magnitude indicate that the 

proposed merger would likely lead to significant price increases, as well as reduced business 

incentives to maintain or improve quality. 12 FTC staff also estimates that post-merger, SUNY 

Upstate and Crouse would have a combined share of greater than 45% of commercially insured 

inpatient hospital services in the Primary Service Area (“PSA”), which would increase market 

concentration to a level that triggers a legal presumption of significant anticompetitive effects.

And in Onondaga County, where the effects of the proposed merger likely would be felt most 

acutely by patients, the Parties would have a combined share of nearly 67% of commercially 

insured inpatient hospital services. 13

The Parties assert that the merger would “create a coordinated, highly integrated system 

with the objective of improving quality of care, increasing access to care, and lowering the costs 

of health care in the communities served by the Parties.” 14 The Parties, however, have not 

provided sufficient information to substantiate many of these claims, nor have they demonstrated 

that the claimed benefits and cost savings would offset the merger’s substantial harm to 

competition. Moreover, the proposed merger does not appear necessary to achieve many of these 

11 NY COPA Regulations § 83-2.5, https://regs.health.ny.gov/content/section-83-25-review-process. 12 See Section V.A.3 for further discussion of diversion ratios. 13 See Section V.A.4 for further discussion of market shares and concentration analyses. In the COPA Application, 

the Parties refer to a 17-county area as “Central New York” and inaccurately assert that this constitutes the PSA. 

FTC staff does not believe this broad of an area constitutes either the PSA or a relevant geographic market for 

antitrust purposes. See Section V.A.2 for further discussion of the PSA. 14 COPA Application at 41.
FTC Staff Submission (Public) – October 7, 2022 

4 

claimed benefits, which may be realized through arrangements that are less restrictive to 

competition. 

To the extent that the COPA must offer public advantages in order to be approved, the 

impact of the proposed merger on employee pay and benefits may be relevant to the NY DOH’s 

review. 15 Consider, for example, the likelihood that the proposed merger will depress wage 

growth for registered nurses and respiratory therapists due to increased employer consolidation. 

Consolidation of these systems may also leave certain healthcare professionals with fewer 

employment and training opportunities. Furthermore, any wage depression resulting from the 

merger may exacerbate the current challenges of recruiting and retaining healthcare professionals 

in this region. 

The Parties propose some conditions that they claim will limit the potential for any 

unintended negative consequences. 16 These conditions are vague and unenforceable, and appear 

to be nothing more than aspirational goals that fall short of the types of “conduct remedies” that 

other state health authorities have attempted as part of COPA oversight. 17 Furthermore, the 

Parties suggest that filing an Annual Performance Report and developing a framework for 

measuring progress after the COPA is approved will constitute sufficient monitoring and 

supervision. Such an ex-post framework is unlikely to hold the Parties accountable or mitigate 

the potential disadvantages or anticompetitive effects associated with the proposed merger. 

Finally, we note our concern about the lack of transparency surrounding this COPA 

process. 18 The COPA Application has not yet been made readily available to the public. The 

FTC has found that it benefits from broad stakeholder input, and has reason to believe the NY 

DOH would benefit from such input as well. This is particularly true given the significant impact 

this merger is likely to have on the delivery of healthcare services in the region. Based on the 

foregoing reasons which are fully supported below, we urge the NY DOH to deny the Parties’ 

COPA Application. 

15 See Section V.C for further discussion of wage effects. 16 See COPA Application at 69. 17 See Section VII for further discussion of the Parties’ proposed conditions and conduct remedies more generally. In 

merger challenges, the FTC prefers “structural remedies” (i.e., an injunction preventing consummation of a merger 

or a divestiture of assets) rather than “conduct remedies” (i.e., restrictions intended to regulate the conduct of a 

merged firm). 18 See, e.g., James Mulder, SUNY Upstate Hides Huge Amounts of Information About Merger With Crouse, 

Syracuse.com (Aug. 25, 2022), https://www.syracuse.com/health/2022/08/suny-upstate-hiding-huge-amounts-ofinformation-about-merger-with-crouse html; James Mulder, SUNY Upstate, Crouse Officials Stay Mum on Biggest 

Hospital Merger in Syracuse History, Syracuse.com (Aug. 26, 2022), 

https://www.syracuse.com/health/2022/04/suny-upstate-crouse-officials-stay-mum-on-biggest-hospital-merger-insyracuse-history html. 
FTC Staff Submission (Public) – October 7, 2022 

5 

II. FTC’s Interest and Experience

The FTC’s mission includes promoting fair competition in healthcare markets that will 

benefit patients, hospital employees, and the public at large. 19 To carry out this mission, 

Congress has charged the FTC with enforcing the Clayton Act, which prohibits mergers and 

acquisitions that may substantially lessen competition or tend to create a monopoly. 20 In 

addition, the FTC enforces the Federal Trade Commission Act, which prohibits unfair methods 

of competition and unfair or deceptive acts or practices in or affecting commerce. 21 Pursuant to 

its statutory mandate, the FTC seeks to identify mergers and acquisitions, business practices, 

laws, and regulations that may lessen competition. 

Vigorous competition among healthcare providers in an open marketplace provides 

patients with the benefits of lower prices, higher quality, greater access, innovation for goods and 

services, and improved wages and benefits for employees. 22 Anticompetitive mergers and 

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

advocacy. 23 A critical part of the FTC’s role in protecting the public is reviewing proposed 

mergers and acquisitions in the healthcare industry. The FTC has considerable experience in 

evaluating proposed hospital, outpatient facility, and physician group mergers, to determine 

whether they may substantially lessen competition. 24 

19 Commissioner Wilson has reservations regarding the use of “fair competition” rather than “competition.”

Although there may be a future debate regarding the differences between “fair competition” and “unfair methods of 

competition,” the substance of today’s comment is not impacted by this distinction.

20 See Clayton Act, 15 U.S.C. § 18; Federal Trade Commission Act, 15 U.S.C. § 45. 21 Id. 22 See Nat’l Soc. of Prof. Eng’rs v. United States, 435 U.S. 679, 695 (1978) (The antitrust laws reflect “a legislative 

judgment that, ultimately, competition will produce not only lower prices, but also better goods and services. . . . 

The assumption that competition is the best method of allocating resources in a free market recognizes that all 

elements of a bargain – quality, service, safety, and durability – and not just the immediate cost, are favorably 

affected by the free opportunity to select among alternative offers.”). 23 See, e.g., FED. TRADE COMM’N, Competition in the Health Care Marketplace, https://www ftc.gov/tipsadvice/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; 

Joseph Farrell, Paul A. Pautler & Michael G. Vita, Fed. Trade Comm’n, Economics at the FTC: Retrospective 

Merger Analysis with a Focus on Hospitals, 35 REV. INDUS. ORG. 369 (2009), 

http://link.springer.com/content/pdf/10.1007%2Fs11151-009-9231-2.pdf; FED. TRADE COMM’N, Examining Health 

Care Competition, (Mar. 20-21, 2014), https://www.ftc.gov/news-events/events-calendar/2014/03/examining-healthcare-competition; FED. TRADE COMM’N & U.S. DEP’T OF JUSTICE, Examining Health Care Competition, (Feb. 24-

25, 2015), https://www ftc.gov/news-events/events-calendar/2015/02/examining-health-care-competition. These 

workshops focused on the competition implications of various issues that are central to healthcare reform, including 

the challenges of measuring healthcare quality, as well as evolving healthcare provider and payment models. The 

workshop record suggests that neither a transition to value-based payment models nor improved population health 

management require anticompetitive levels of provider consolidation. See also FED. TRADE COMM’N & U.S. DEP’T 

OF JUSTICE, IMPROVING HEALTH CARE: A DOSE OF COMPETITION (2004), 

https://www.ftc.gov/sites/default/files/documents/reports/improving-health-care-dose-competition-report-federaltrade-commission-and-department-justice/040723healthcarerpt.pdf [hereinafter DOSE OF COMPETITION REPORT]. 24 See FED. TRADE COMM’N, OVERVIEW OF FTC ACTIONS IN HEALTH CARE SERVICES AND PRODUCTS, supra note 

23, at Section III.
FTC Staff Submission (Public) – October 7, 2022 

6 

The FTC advocates against the use of COPAs through comments and testimony 

submitted to state legislators and other stakeholders due to concerns that COPAs may enable 

activity that would substantially reduce competition. 25 In 2017, the FTC announced a policy 

project to assess the impact of COPAs on prices, quality, access, and innovation for healthcare 

services. 26 This project has included empirical research of past COPAs, a public workshop 

highlighting practical experiences with COPAs and related policy considerations, and an ongoing 

study of recently approved COPAs. 27 

FTC staff recently released a paper, FTC Policy Perspectives on Certificates of Public 

Advantage, and a brief information sheet, Key COPA Facts, which summarize empirical research 

on COPAs approved in other states and findings from our COPA assessment policy project. 28 In 

particular, we have learned that COPAs can be difficult to monitor and regulate over a long 

period, and that COPA oversight regimes are not always successful in mitigating price and 

quality harms resulting from a loss in competition. Indeed, several COPAs have resulted in 

substantial price increases for patients, as well as declines in quality of care. Furthermore, when 

COPA oversight is removed, the risk of price and quality harms increases significantly.

III. FTC Evaluates Healthcare Mergers Similarly to the Approach Outlined in the New 

York COPA Act and Regulations 

The FTC’s goal to promote fair competition in healthcare markets for patients, 

employees, and the public at large is similar to the NY DOH’s mission to “protect, improve and 

promote the health, productivity and wellbeing of all New Yorkers.” 29 Likewise, the approach 

that the NY DOH must use to review a COPA application is similar to the approach FTC staff 

uses to review hospital mergers. 

The New York COPA Act describes a state policy “to encourage, where appropriate, 

cooperative, collaborative and integrative arrangements including but not limited to, mergers and 

25 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-servicescommission-regarding-certificate-public-advantage/20100902010119texashhsccopacomment.pdf. 26 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-publiccomments-regarding-impact-certificates-public-advantage/copa assessment public notice 11-1-17 revised 3-27-

19.pdf. 27 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-copasassessing-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/pressreleases/2019/10/ftc-study-impact-copas. 28 See Federal Trade Commission, FTC Policy Perspectives on Certificates of Public Advantage (Aug. 15, 2022) and 

Key COPA Facts, both available at www.ftc.gov/copa (Attachment A). 29 New York State Department of Health, About the New York State Department of Health: Mission, Vision and 

Values, https://www health ny.gov/about/ (last accessed Aug. 17, 2022).
FTC Staff Submission (Public) – October 7, 2022 

7 

acquisitions among health care providers . . . under the active supervision of the [NY DOH] 

commissioner . . . where the benefits of such active supervision, arrangements and actions of the 

commissioner outweigh any disadvantages likely to result from a reduction of competition.” 30

The NY DOH promulgated regulations to implement the New York COPA Act, which lay out 

several factors to be considered when reviewing COPA applications, including: the financial 

condition of the hospitals, the competitive dynamics of the relevant geographic area, the 

potential benefits and disadvantages of the COPA, and whether there are less restrictive 

alternatives that would result in a more favorable balance of the potential benefits and 

disadvantages. 31 

The FTC and U.S. Department of Justice (“DOJ”) have jointly issued Merger Guidelines

that outline the analytical framework used by the antitrust agencies to evaluate the competitive 

impact of a proposed merger. These guidelines reflect experience in analyzing a wide variety of 

mergers – including many hospital and other healthcare-related mergers, both proposed and 

consummated – as well as economic and other relevant research. Federal and state courts 

routinely rely on the Merger Guidelines framework to analyze the likely competitive effects of a 

proposed hospital merger. Ultimately, as stated in the Merger Guidelines, the “Agencies seek to 

identify and challenge competitively harmful mergers while avoiding unnecessary interference 

with mergers that are either competitively beneficial or neutral.” 32 

When reviewing a proposed hospital merger, FTC staff devotes significant resources to 

understand the transaction’s potential efficiencies and other benefits (e.g., lower costs, improved 

quality, capacity expansion, entry into new treatment areas), as well as its potential competitive 

harm (e.g., higher prices, reduced quality, less access to care, and depressed wages). Some 

hospital mergers, including those that raise competitive concerns, may yield meaningful clinical 

quality improvements, cost savings, and other benefits that might not be possible without the 

merger. Taking this into account, FTC staff’s merger analysis typically includes a thorough 

assessment of the potential efficiencies and other benefits, as well as the disadvantages and 

harms resulting from a reduction in competition. 

FTC staff has an ongoing investigation of the proposed merger. As is customary in our 

investigations of hospital mergers, a team of attorneys, economists, and financial analysts has 

interviewed market participants and stakeholders, including health insurers, employers, physician 

practices, trade groups, unions, and other affected entities. We have performed economic 

analyses using hospital discharge data and a labor market analysis. To the extent we have been 

able to access relevant information, 33 we have considered the financial condition of the hospitals, 

as well as some of the potential clinical quality benefits and cost savings that the Parties claim

30 New York COPA Act § 2999-aa. See also NY COPA Regulations § 83-2.6 (stating that the NY DOH “may issue 

a Certificate of Public Advantage for the Cooperative Agreement or planning process, if it determines that the 

benefits likely to result from the Agreement or planning process outweigh the disadvantages.”). 31 See New York COPA Regulations § 83-2.5, https://regs.health.ny.gov/content/section-83-25-review-process. 32 Merger Guidelines § 1. 33 FTC staff has issued Civil Investigative Demands to the Parties and requested information that would allow us to 

assess the proposed merger and the claims they make in their COPA Application, but they have not been 

forthcoming with this information to date.

FTC Staff Submission (Public) – October 7, 2022 

9 

attachments, year-to-date unaudited financial statements, operating and capital 

budgets/projections, valuation and liquidation analyses, synergy/efficiencies analyses, 

reorganization/restructuring plans, closure or service reduction plans, loan documents, 

correspondence with creditors including any applicable covenant compliance certificates and 

waivers, and all relevant documentation regarding any recent efforts undertaken to divest or sell 

assets, issue debt and obtain funding from investors, establish strategic partnerships and find 

alternative (less anti-competitive) purchasers than the proposed merger. Follow-up requests for 

additional information and meetings or calls to discuss such materials are a typical part of the 

review process. The FTC often utilizes formal requests such as Civil Investigative Demands to 

obtain these materials and any additional documentation needed for its investigations. 

 Based on the FTC staff’s review of the materials provided in the COPA Application and 

CON Application, significantly more information is needed to adequately assess the financial 

viability of the Parties. To date, the scope of supporting financial documentation that has been 

provided is quite limited. Audited financial statements for 2018-2020 were provided for Crouse

and its affiliates, which includes Crouse Health Hospital, Inc., Crouse Health Network, LLC and 

Crouse Medical Practice, PLLC. 36 Unaudited financial statements for 2021 were provided for 

Crouse Health Hospital, Inc. and Crouse Medical Practice, PLLC. 37 Audited financial statements 

for 2018-2020 and unaudited financial statements for 2021 were provided for the University 

Hospital (“UH”), an affiliate of SUNY Upstate. 38 Financial statements were not provided for any 

other SUNY Upstate affiliates. 39

 FTC staff believes that to adequately assess the financial condition and viability of each 

of the Parties, the following information should be obtained, if available: 

• 2021 audited financial statements. In addition to audited financial statements being 

presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), 

the notes and attached schedules included with audited financial statements provide 

36 

 

f 

h 

h See

CON Application Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates Audited Financial Statements 

December 31, 2020 and 2019 at 6. Unaudited financial statements for 2021 were provided for only Crouse Health 

Hospital, Inc. and Crouse Medical Practice, PLLC. 37 COPA Application Attachments 8-10 (CHS audited financial statements for 2018-2020); CON Application

Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates Audited Financial Statements December 31, 2020 

and 2019); CON Application Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates Statistics & 

Financial Statements December 2021. 38 COPA Application Attachment 2 (UH audited financial statements for 2018-2020); COPA Application 

Attachment 5 (UH unaudited financial statements for 2021); CON Application Schedule 9 Attachment, University 

Hospital Audited Financial Statements December 31, 2020 and 2019; CON Application Schedule 9 Attachment, 

University Hospital Financial Statements December 31, 2021.

39 UH is a department of the State University of New York Upstate Medical University (“SUNY Upstate”). SUNY 

Upstate is a medical campus of The State University of New York. SUNY Upstate operates a single inpatient 

hospital with two separate campuses: UH and Upstate Community Hospital. See COPA Application at 15.
FTC Staff Submission (Public) – October 7, 2022 

10 

important information that is not included with unaudited financial statements. It is

important to understand any new disclosures and significant changes since the 2020 

audited statements were provided. For instance, 

 

It would be useful to understand how that particular liquidity measure may have changed 

during 2021 based on updated data and in conjunction with 2021 financial statements 

prepared in accordance with GAAP. And to the extent either Party is claiming financial 

distress, 

 

 

 

 

 

 Verification of 

the existence or absence of such a disclosure in the 2021 audited financial statements 

would be important. Among other useful disclosures, the notes to the 2021 audited 

financial statements would also include updated schedules regarding the amount of each 

company’s long-term debt, its pension obligations, and its minimum required debt and 

pension payments. 

• 2022 year-to-date unaudited financial statements. Given the passage of time since the end 

of fiscal year 2021, it is important to understand the most recent financial details of each 

company. Monthly and/or quarterly internal financial statements (balance sheets, income 

statements, cash flow statements) are often generated in the normal course of business, 

and if so, should be readily available. 

• Operating and capital budgets/projections. It is important to understand how each of the 

Parties expected to operate independently of the proposed merger. Contemporaneous, 

standalone operating and capital budgets prepared by each of the Parties in the normal 

course of business should be provided and reviewed to properly make such an 

assessment. Those documents may also provide a necessary, additional level of detail not 

typically provided in the financial statements. 

 

 

 

 It would be important to identify and understand 

those expenses when considering the profitability of Crouse. 

40 

 See COPA Application Attachment 10 at 14; CON 

Application Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates Audited Financial Statements 

December 31, 2020 and 2019 at 14.

41 See, e.g., CON Application Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates Statistics & 

Financial Statements December 2021 at 5; CON Application Schedule 9 Attachment, Crouse Health System, Inc. 

and Affiliates Audited Financial Statements December 31, 2020 and 2019 at 3; COPA Application Attachment 10 at 

3. 
FTC Staff Submission (Public) – October 7, 2022 

11 

• Valuations and liquidation analyses. It is important to understand the market value of any 

real estate and other significant assets that may be available as a source of funds for each 

of the Parties. 

 

 

 it is important 

to understand the market value of all of the properties Crouse currently holds, which 

would be facilitated by a review of any available valuation analyses or similar market 

assessments of such property. It is also important to review any recent enterprise 

valuations (including any underlying native financial models) or liquidation analyses that 

may have been conducted for Crouse as an entity, which would be useful in determining 

the attractiveness of the hospital to other potential acquirers. 

• Synergy/efficiencies analyses. Although the Parties provided several presentations that 

discussed and summarized the expected benefits and synergies expected from the 

combination, no supporting documentation or underlying native financial models that 

may have been relied upon were provided. This information is critical in understanding 

the key inputs, assumptions, and robustness of such analyses. In addition, FTC staff 

requires sufficient and reasonable support to show whether such benefits are likely 

cognizable and specific to the proposed merger, which also has not been included in the 

COPA and CON Applications. 

• Reorganization/restructuring plans. It is also important to understand what restructuring 

and reorganization plans have been contemplated and attempted by reviewing 

contemporaneous documents that support such claims.

• Closure or service reduction plans. To the extent either of the Parties are claiming that 

only the proposed merger would prevent a cessation of operations and reduction of 

service lines, it is important to obtain and review contemporaneous documentation that 

will support such claims. 

• Loan documents. A review of current loan documents and related agreements (e.g., 

security agreements, promissory notes) is customary to understand the terms, obligations, 

and the rights of the Parties pursuant to those agreements.

• Correspondence with creditors including any applicable covenant compliance certificates 

and waivers. It is important to review correspondence from lenders regarding the status of 

existing obligations, periodic compliance reports, events of default, requests for loan 

modifications, requests for waivers to loan covenants, and requests for additional 

42 See COPA Application Attachment 14, Asset Purchase Agreement (July 6, 2022), Schedule 1.1.84 (Hospital Real 

Property); COPA Application Attachment 14, Lease Agreement (July 6, 2022) at 2. 43 COPA Application at 52; CON Application Schedule 9 Attachment, Crouse Health System, Inc. and Affiliates 

Statistics & Financial Statements December 2021 at 5. 
FTC Staff Submission (Public) – October 7, 2022 

12 

funding. 

 

 

 

 

 

 f 

 

 

 

 

 , it is certainly reasonable to 

explore whether Crouse, independent of the proposed merger, could re-negotiate or 

replace its current bond debt to obtain debt with more favorable terms. 48

• Relevant documentation regarding any recent efforts undertaken to divest or sell assets. 

The COPA Application stated: 

 

 

 

 As noted previously, it is important to determine the market value of 

any remaining significant assets held by Crouse (including the hospital real property) to 

determine their prospects to generate funds. For instance, it is unclear whether, 

independent of the proposed merger, the Crouse hospital real property could be sold to a 

third-party and leased back to Crouse. 

• Relevant documentation regarding any recent efforts undertaken to issue debt and obtain 

funding from investors. As noted above, it is important to explore the prospects of issuing 

new debt and attracting investors, 

 

 . 

• Relevant documentation regarding any recent efforts undertaken to establish strategic 

partnerships and find alternative (less anti-competitive) purchasers than the proposed 

merger. To determine whether a less anti-competitive alternative may be available, it is 

important to understand the efforts undertaken to establish any such strategic partnerships 

and find alternative purchasers. 

44 COPA Application at 52. 45 See COPA 

Application Attachment 4I-5 at 5. 46 COPA Application Attachment 19 at 8. 47 COPA Application at 52. 48 . See COPA Application Attachment 4I-4 at 13; COPA 

Application Attachment 4I-5 at 8. 49 COPA Application at 52-53. 
FTC Staff Submission (Public) – October 7, 2022 

13 

 

 Apparently, comments 

made by Crouse Health Board Chair Patrick Mannion during a public forum during the 

week of August 15, 2022 indicated that Crouse’s board of directors had issued a request 

for proposal and held conversations with many interested organizations before SUNY 

Upstate was selected. Similarly, 

 f 

 

 No supporting or contemporaneous documentation has been 

provided to indicate whether such options were viable alternatives to the proposed 

merger. 

V. Competitive Dynamics of the Primary Service Area: The Proposed COPA Is Likely 

to Result in Significant Disadvantages Due to a Reduction in Competition Between 

SUNY Upstate and Crouse

NY DOH COPA FACTOR (b): The dynamics of the relevant primary service area, 

including the availability of suitable and accessible health care services and the 

level of competition in the primary service area, the likelihood that other health 

care providers will enter or exit the primary service area, the health care workforce 

and the existence of unique challenges such as difficulties in recruiting and 

retaining health care professionals

ASSESSMENT: In this section, FTC staff describes our economic analyses of the 

proposed merger, which includes information about how the merger is likely to affect the 

availability of healthcare services and the level of competition in the PSA, as well as entry 

conditions and unique workforce challenges. At the outset, we note that the Parties have asserted 

a PSA that is much broader than the commonly accepted definition. As we explain in more detail 

below, the actual PSA includes portions of nine counties – not the 17 counties asserted by the 

Parties. 52 FTC staff has evaluated the competitive dynamics in the PSA as it is defined in the 

New York COPA Regulations. 53 In addition, FTC staff has evaluated the competitive dynamics 

in Onondaga County separately from the PSA, as this is the likely locus of the merger’s effects. 

Our preliminary analyses suggest that the proposed combination of SUNY Upstate and 

Crouse would eliminate close competition between the hospital systems for patients residing in 

the combined PSA, and particularly in Onondaga County. SUNY Upstate appears to routinely 

compete with Crouse on price, quality, innovation, and patient experience for inclusion in health 

50 COPA Application at 65. 51 COPA Application Attachment 4I-1 at 3. 52 See COPA Application at 37. In the COPA Application, the Parties refer to a 17-county area as “Central New 

York” and inaccurately assert that this constitutes the PSA. FTC staff does not believe this broad of an area 

constitutes either the PSA or a relevant geographic market for antitrust purposes. See Section V.B. for further 

discussion. 

53 FTC staff does not believe the PSA necessarily represents a “relevant geographic market” under the Merger 

Guidelines or antitrust case law, which analyze how insurers (and in turn, their members) would respond to price 

increases imposed by a hypothetical monopolist.
FTC Staff Submission (Public) – October 7, 2022 

14 

insurer networks and to attract patients to their respective hospital system for inpatient, 

outpatient, and physician services. Contrary to the Parties’ claims that their service offerings are 

complementary, 54 SUNY Upstate and Crouse offer similar facility locations, service offerings, 

and quality of care. 55 Each system operates acute care hospitals that provide inpatient services, 

as well as outpatient facilities, and they employ physicians across a number of specialties. There 

is significant geographic overlap between these hospitals’ facilities in the areas from which they 

draw patients. 56 Indeed, SUNY Upstate University Hospital and Crouse Hospital are located 

across the street from one another and share a medical campus. Consistent with our economic 

analyses, empirical research indicates that mergers among hospitals in close proximity are likely 

to result in particularly significant price increases. 57 By eliminating this competition, the 

proposed merger would substantially increase the combined system’s ability to exercise its 

market power, enabling it to extract higher prices in negotiations with health insurers, which in 

turn would likely lead to higher healthcare costs for employers and patients. The proposed 

merger also would reduce the combined system’s business incentives to maintain or improve the 

quality or availability of healthcare services. 

Because SUNY Upstate and Crouse also compete as participants in healthcare labor 

markets, the proposed merger will reduce competition to recruit and retain healthcare employees. 

The reduction in labor market competition could lead to reduced wages and benefits for 

healthcare employees. 

The Parties list several goals of the COPA, including preserving and enhancing access to 

care; improved utilization of existing capacity at Crouse facilities, while avoiding a costly 

facility expansion at SUNY Upstate’s facilities; supporting SUNY Upstate’s academic and 

research mission; preserving critical services and jobs; and improving health equity. 58 They 

claim that “[o]ther than the investments Upstate is committing to make in Crouse facilities and 

infrastructure, the Parties are not aware of any increased costs or prices that will result from the 

Transaction.” 59 They further claim that they “have not identified any disadvantages to quality, 

access, or cost, associated with the Transaction,” 60 These statements are not supported by the 

available evidence. As we discuss in more detail below, the cost savings and efficiencies claimed 

by the Parties are speculative and unsubstantiated at this point. Indeed, as context, studies show 

that mergers often do not achieve projected cost savings and efficiencies. 61 Furthermore, 

54 See COPA Application at 21-22, 31-32, 57. 55 See Table 6 depicting the vast majority of all patients treated at SUNY Upstate are treated for conditions that are 

also treated at Crouse, and vice-versa. 56 See generally COPA Application at 37-38. See also PSA Analysis and Diversion Ratio Analysis, infra Sections 

V.A.2-3; FTC Map: SUNY Upstate and Crouse Individual and Combined Primary Service Areas (Attachment C). 57 See, e.g., WILLIAM B. VOGT & ROBERT TOWN, ROBERT WOOD JOHNSON FOUND., RESEARCH SYNTHESIS REPORT 

NO. 9: HOW HAS HOSPITAL CONSOLIDATION AFFECTED THE PRICE AND QUALITY OF HOSPITAL CARE? 7 (2006), 

http://www rwjf.org/content/dam/farm/reports/issue briefs/2006/rwjf12056/subassets/rwjf12056 1 (“Mergers 

among hospitals that are close together geographically generate greater price increases than do mergers among 

distant hospitals.”).

58 COPA Application at 34-35. 59 COPA Application at 61. 60 COPA Application at 65. 61 See infra note 156. 
FTC Staff Submission (Public) – October 7, 2022 

15 

 

, so it is difficult to understand how this merger could nevertheless foster the creation 

of jobs or improve access to healthcare. Finally, contrary to what the Parties claim, there is 

substantial danger of competitive harm from the merger and insufficient evidence to demonstrate 

it would be outweighed by any potential benefits. Moreover, the commitments offered by the 

Parties are unlikely to mitigate this harm, or do so in a timely fashion. 

The bases for FTC staff’s assessment of the competitive effects of the proposed merger 

are described in the following subsections. Subsection A describes the geographic and services 

areas in which the Parties currently compete for patients, and characterizes the likely effects of 

the post-merger reduction in competition for residents of the Parties’ combined PSA, as well as 

Onondaga County. Subsection B describes entry conditions in the relevant geographic area and 

explains that entry of new healthcare providers is not likely to occur. Subsection C describes the 

impact the merger could have on wage growth for hospital employees, which could exacerbate 

any challenges with recruiting and retaining healthcare professionals.

A. Level of Competition in the Primary Service Area and Availability of 

Healthcare Services

We first describe the generally accepted economic framework for analyzing hospital 

competition in subsection A.1. We then describe the Parties’ PSA in subsection A.2. In 

subsection A.3, we present the diversion ratio analysis using 2019 patient discharge data from 

the Statewide Planning and Research Cooperative System (“SPARCS”) 62 to assess the 

competitive effects of the proposed merger. In subsection A.4, we present market share and 

concentration analysis using the SPARCS data. Finally, in subsection A.5, we present an analysis 

of service overlaps using the SPARCS data.

1. Economic Framework for Analyzing Hospital Competition

The FTC and healthcare economists use a two-stage framework for analyzing 

competition in hospital markets. In the first stage, hospitals compete for inclusion in health 

insurers’ networks. Health insurers – on behalf of their customers (employer and individual

patients) – use competition between hospitals as leverage to negotiate better reimbursement rates 

(i.e., prices). This, in turn, results in lower premiums, copayments, deductibles, and other out-ofpocket expenses for (i) employers who purchase health insurance for their employees, (ii) 

employees who receive health insurance as a benefit, and (iii) consumers who purchase their 

own health insurance. This first-stage competition benefits all commercially insured individuals 

as well as plan sponsors (employers and unions) and insurers. In the second stage, hospitals 

62 See New York Department of Health, Statewide Planning and Research Cooperative System (SPARCS) Overview, 

https://www health.ny.gov/statistics/sparcs/. FTC staff includes the following disclaimer from NY DOH: “This 

publication was produced from raw data purchased from or provided by the New York State Department of Health 

(NYS DOH). However, the conclusions derived, and views expressed herein are those of the author(s) and do not 

reflect the conclusions or views of NYSDOH. NYSDOH, its employees, officers, and agents make no 

representation, warranty or guarantee as to the accuracy, completeness, currency, or suitability of the information 

provided here.”
FTC Staff Submission (Public) – October 7, 2022 

16 

compete to attract patients. Competition between hospitals to attract patients and physician 

referrals leads to increased quality and availability of healthcare services. This second-stage 

competition benefits all commercially insured patients as well as those covered by Medicare, 

Medicaid, and other forms of government pay. 

 Thus, hospital systems compete on both price and quality. When competing hospitals 

merge, two different kinds of adverse effects may occur: higher prices charged to insurance 

companies (which are then passed on to employers and patients) and non-price effects such as 

reduced quality and availability of services. 63 These anticompetitive effects are larger when the 

merging hospitals are closer (i.e., more intense) competitors, and when non-merging hospitals 

are less significant competitors.

 This framework is consistent with a large and growing body of empirical research finding 

that mergers between close competitors in concentrated healthcare provider markets are likely to 

result in substantial consumer harm, without offsetting improvements in quality. 64 For example, 

one paper discussing several studies of hospital mergers concludes that “the magnitude of price 

increases when hospitals merge in concentrated markets is typically quite large, most exceeding 

20 percent.” 65 Notably, this empirical finding holds for both for-profit and not-for-profit 

hospitals. 66 In other words, non-profit hospitals can and do exercise market power and raise 

prices, similar to for-profit hospitals. 67 Thus, as most courts have recognized, the non-profit 

status of merging hospitals does not mitigate the potential for anticompetitive harm. 68 

63 Merger Guidelines §§ 1, 6. 64 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 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. 65 GAYNOR & TOWN, supra note 64, at 2. 66 See, e.g., Robert Town, The Economists’ Supreme Court Amicus Brief in the Phoebe Putney Hospital Acquisition 

Case, 1 HEALTH MGMT. POL’Y & INNOVATION 60 (2012), http://www hmpi.org/pdf/HMPI-

%20Town,%20Phoebe%20Putney.pdf; Gaynor, Ho & Town, supra note 64. 67 See, e.g., Michael G. Vita & Seth Sacher, The Competitive Effects of Not-For-Profit Hospital Mergers: A Case 

Study, 49 J. INDUS. ECON. 63 (2001), http://onlinelibrary.wiley.com/doi/10.1111/1467-6451.00138/epdf (finding 

substantial price increases resulting from a merger of non-profit, community-based hospitals, and determining that 

mergers involving non-profit hospitals are a legitimate focus of antitrust concern); Steven Tenn, The Price Effects of 

Hospital Mergers: A Case Study of the Sutter–Summit Transaction, 18 INT’L J. ECON. BUS. 65, 79 (2011), 

http://www.tandfonline.com/doi/full/10.1080/13571516.2011.542956 (finding evidence of post-merger price 

increases ranging from 28%-44%, and concluding that “[o]ur results demonstrate that nonprofit hospitals may still 

raise price quite substantially after they merge. This suggests that mergers involving nonprofit hospitals should 

perhaps attract as much antitrust scrutiny as other hospital mergers.”).

68 See, e.g., Fed. Trade Comm’n v. OSF Healthcare Sys., 852 F. Supp. 2d 1069, 1081 (N.D. Ill. 2012) (“[T]he 

evidence in this case reflects that nonprofit hospitals do seek to maximize the reimbursement rates they receive.”); 
FTC Staff Submission (Public) – October 7, 2022 

17 

2. Primary Service Area

 The NY DOH defines the PSA to be “the lowest number of zip codes from which the 

party draws at least 75 percent of its patients.” 69 In our experience this is the generally accepted 

definition, and other state health authorities and hospitals define the PSA in the same or similar 

manner. We calculated the combined 75 percent PSA for the Parties (i.e., the lowest number of 

zip codes from which SUNY Upstate and Crouse combined draw 75 percent of their patients) 

using 2019 SPARCS data. Using this definition, the Parties’ PSA consists of portions of nine 

counties in central New York: Onondaga, Oneida, Oswego, Jefferson, Cayuga, Madison, 

Tompkins, Cortland, and St. Lawrence. It is unclear why the Parties’ COPA Application asserts 

that the PSA includes 17 counties; a larger so-called PSA would of course understate their actual 

competitive significance in the area that they serve. The geographic extent of the combined PSA 

is shown in Attachment C and described in Table 1 below. 

Table 1: SUNY Upstate-Crouse Combined PSA

(Based on 2019 SPARCS Data) 

Fed. Trade Comm’n v. ProMedica, No. 3:11 CV 47, 2011 WL 1219281, at *22 (N.D. Ohio Mar. 29, 2011) (finding 

that a nonprofit hospital entity “exercises its bargaining leverage to obtain the most favorable reimbursement rates 

possible from commercial health plans.”); United States v. Rockford Mem’l Corp., 898 F.2d 1278, 1284-87 (7th Cir. 

1990) (rejecting the contention that nonprofit hospitals would not seek to maximize profits by exercising their 

market power); Fed. Trade Comm’n v. Univ. Health, Inc., 938 F.2d 1206, 1213-14 (11th Cir. 1991) (“[T]he district 

court’s assumption that University Health, as a nonprofit entity, would not act anticompetitively was improper.”); 

Hospital Corp. of America v. Fed. Trade Comm’n, 807 F.2d 1381, 1390-91 (7th Cir. 1986) (rejecting the contention 

that nonprofit hospitals would not engage in anticompetitive behavior). See also DOSE OF COMPETITION REPORT, 

supra note 23, ch. 4, at 29-33 (discussing the significance of nonprofit status in hospital merger cases, and 

concluding that the best available empirical evidence indicates that nonprofit hospitals exploit market power when 

given the opportunity and that “the profit/nonprofit status of the merging hospitals should not be considered a factor 

in predicting whether a hospital merger is likely to be anticompetitive.”).

69 New York COPA Regulations § 83-2.2(i).
FTC Staff Submission (Public) – October 7, 2022 

18 

While the combined PSA includes patients from 52 zip codes (see Table 1) in nine 

counties, most of those zip codes are in Onondaga County, and most patients in the PSA reside 

in Onondaga County. Overall, SUNY Upstate and Crouse account for 42.2% of all patient 

discharges from zip codes within the combined PSA. 

 In addition to the combined PSA, we separately calculated the individual PSAs for 

SUNY Upstate and Crouse. A map of the zip codes included in the combined PSA, in SUNY 

Upstate’s individual PSA, and in Crouse’s individual PSA is included as Attachment C to this 

comment. 70 We find that Crouse’s individual PSA is contained almost entirely within SUNY 

Upstate’s PSA. Crouse’s individual PSA includes 39 zip codes, 37 of which overlap with the 

SUNY Upstate PSA. SUNY Upstate’s individual PSA is broader, containing 57 zip codes. 

SUNY Upstate’s broader individual PSA reflects the fact that SUNY Upstate offers some 

services that Crouse does not, 71 and some patients with higher-acuity conditions are willing to 

travel further to visit SUNY Upstate as a result.

While there are other hospitals located within the area of the Parties’ combined PSA, 

these hospitals are generally smaller, located far away from Syracuse, and do not draw patients 

from a wide area. As we describe below, patients do not consider these other hospitals to be 

close substitutes for SUNY Upstate or Crouse, and these hospitals have little or no competitive 

significance for SUNY Upstate and Crouse. The one exception is St. Joseph’s Health Hospital 

(“St. Joseph’s”), which is owned by Trinity Health and also located within Syracuse. 

3. Diversion Ratio Analysis Confirms that SUNY Upstate and Crouse 

Are Close Competitors

To directly measure the degree of competition between the merging hospitals, FTC staff 

performed a diversion ratio analysis. 72 This analysis calculates what would happen if, 

hypothetically, one of the merging hospital systems were removed from an insurer’s network and 

was no longer an option for that insurer’s patient members. The patients who would have used 

their preferred hospital system must now use another. The fraction of a hospital’s former patients 

who would now go to another particular hospital is the diversion ratio from the first hospital to 

70 See FTC Map: SUNY Upstate and Crouse Individual and Combined Primary Service Areas (Attachment C). 71 For example, SUNY Upstate has one of three burn units in New York State to the west of the Hudson River. 72 To calculate diversion ratios, we estimate a patient choice model using SPARCS data for commercially insured 

patients covering calendar year 2019. We focus on the hospital choices of commercially insured patients because 

they determine the negotiated prices between hospitals and insurers. We also focus on general acute care services 

(mental health and addiction services, for example, may be negotiated separately and also have different market 

dynamics with different sets of providers). For a discussion of the underlying methodology used to calculate 

diversion ratios, see Joseph Farrell, David J. Balan, Keith Brand & Brett W. Wendling, Economics at the FTC: 

Hospital Mergers, Authorized Generic Drugs, and Consumer Credit Markets, 39 Rev. Indus. Org. 271 (2011), 

http://link.springer.com/content/pdf/10.1007%2Fs11151-011-9320-x.pdf; Devesh Raval, Ted Rosenbaum & Steve 

Tenn, A Semiparametric Discrete Choice Model: An Application to Hospital Mergers, 55 Econ. Inquiry 1919 

(2017), https://papers.ssrn.com/sol3/papers.cfm?abstract id=3026754. 
FTC Staff Submission (Public) – October 7, 2022 

19 

the second. 73 The estimated diversion ratio between two hospitals accounts for patients’ 

geographic location (as determined by the 5-digit zip code of the patient), health condition (as 

determined by the diagnosis-related-group (“DRG”) codes used for the patient), and other patient 

characteristics such as gender and age. All hospitals in the state of New York are included in 

FTC staff’s diversion ratio analysis as possible alternatives for patients. Thus, unlike the market 

share and concentration estimates described in the next subsection, the diversion ratio calculation

reflects the importance of geographic proximity for patients’ choices without constraining the 

analysis to a particular geographic area. 

 

The diversion ratio is a useful measure of the degree of patient overlap between merging 

hospitals, and the relative bargaining positions of the hospital systems and insurers. If a 

significant fraction of the patients “diverted” from SUNY Upstate (Crouse) would choose Crouse 

(SUNY Upstate), then the two merging parties are considered close competitors and close 

substitutes for inclusion in an insurer’s network. Before the merger, the presence of Crouse 

(SUNY Upstate) in the insurer’s network constrains the reimbursement rate that SUNY Upstate 

(Crouse) can obtain in negotiations with the insurer. The merger would remove this competitive 

constraint on negotiated prices, and likely cause prices to rise. The degree of the price increase 

depends on the diversion ratio – a higher diversion ratio likely means a larger anticompetitive 

price increase post-merger. FTC staff’s diversion ratio analysis is presented in Table 2. 

Table 2: Diversion Ratio Analysis in Combined PSA

(Based on 2019 SPARCS Data) 

73 See Merger Guidelines § 6.1 (“Diversion ratios between products sold by one merging firm and products sold by 

the other merging firm can be very informative for assessing unilateral price effects, with higher diversion ratios 

indicating a greater likelihood of such effects.”). Unilateral price effects refer to the ability of a merged firm to raise 

prices on its own, without colluding with other competitors.
FTC Staff Submission (Public) – October 7, 2022 

20 

The diversion analysis confirms that SUNY Upstate and Crouse are close substitutes 

from the perspective of patients and payers. FTC staff calculates that if SUNY Upstate were no 

longer an option for area residents, 38% of the patients who currently use SUNY Upstate would 

seek care at Crouse. Conversely, if Crouse were no longer an option for area residents, 35% of 

the patients who currently use Crouse would seek care at SUNY Upstate. 74 These high diversion 

ratios are not surprising, given that SUNY Upstate and Crouse serve patients from a similar 

geographic area with similar health conditions, and there are very few nearby third-party 

hospitals. These diversion ratios indicate that a merger between SUNY Upstate and Crouse 

would eliminate direct head-to-head competition and likely lead to significant price increases, as 

well as reduced business incentives to maintain or improve quality. These diversion ratios equal 

or exceed many recent hospital merger cases where courts found the proposed mergers to be 

anticompetitive. 75

The same analysis also confirms that only one other hospital, St. Joseph’s in Onondaga 

County, closely competes with SUNY Upstate and Crouse. That is, if SUNY Upstate (Crouse) 

were no longer an option, nearly all of the patients who currently use SUNY Upstate (Crouse) 

and would not seek care at Crouse (SUNY Upstate) would instead seek care at St. Joseph’s. The 

estimated diversion of SUNY and Crouse patients to any other particular hospital system in New 

York State is less than 4%. These diversion ratios strongly indicate that a merger between SUNY 

Upstate and Crouse would reduce the number of options available for most of their patients from 

three to two. It is also worth noting that the presence of St. Joseph’s as a close competitor to 

SUNY Upstate and Crouse does not mitigate concerns about the proposed acquisition. After the 

acquisition, health insurers would have only two hospital options to include in a provider 

network for Syracuse area patients, and those patients would only have two local hospital 

systems providing general acute care (“GAC”) inpatient services.

4. High Market Shares and Concentration Levels Confirm that the 

Proposed COPA Is Likely to Result in Significant Disadvantages

General principles of antitrust law and economics indicate that mergers between close 

competitors in highly concentrated hospital markets are likely to result in significant harm to 

74 These diversion ratios are estimated using the observed choices of patients within the combined PSA. The same 

analysis can be performed using a wider geographic area. We have estimated the same statistical model on the 

Parties’ combined 90 percent service area and find very similar diversion ratios. In other words, the calculated 

diversion ratios are not particularly sensitive to the geographic area used to estimate the model. 75 See, e.g., Complaint in the Matter of Advocate Health Care Network, Advocate Health and Hospitals Corporation, 

and NorthShore University HealthSystem ¶ 41, Docket No. 9369 (Dec. 18, 2015) 

https://www ftc.gov/system/files/documents/cases/151218ahc-pt3cmpt.pdf (diversion ratios were 20-25%);

Complaint in the Matter of Penn State Hershey Medical Center and PinnacleHealth System ¶ 46, Docket No. 9368 

(Dec. 14, 2015) https://www ftc.gov/system/files/documents/cases/160408pinnacleamendcmplt.pdf (diversion ratios 

were 30-40%); Fed. Trade. Comm’n Proposed Findings of Fact and Conclusions of Law in the Matter of 

Hackensack Meridian Health and Englewood Healthcare Foundation ¶ 100, Civil Action No. 2:20-cv-18140-JMVJBC (D.N.J. Jun. 4, 2021) (diversion rations were 17-45%), 

https://www ftc.gov/system/files/documents/cases/337 2021.06.04 ftc fof redacted.pdf. 
FTC Staff Submission (Public) – October 7, 2022 

21 

competition, resulting in higher prices, lower quality care, or reduced wages for hospital staff. 76

For this reason, market shares and concentration are also important tools for assessing the 

potential for adverse competitive effects resulting from a merger. Consistent with the diversion 

ratio analysis discussed above, the proposed merger would create a system with a high market 

share and lead to a highly concentrated market, likely resulting in substantial harm to patients

due to lost competition. 

Courts and antitrust agencies use a standard measure, the Herfindahl-Hirschman Index 

(“HHI”), to gauge a merger’s effect on market concentration. 77 Under the Merger Guidelines 

and relevant case law, mergers resulting in a post-merger HHI above 2,500 and an increase in 

HHI of more than 200 points are presumed likely to enhance the merged firm’s market power 

and to be anticompetitive. 78 

The concentration analysis is most appropriate when applied to a properly defined 

relevant antitrust market. The generally accepted definition of a “relevant antitrust market” is a 

set of substitute products over which a hypothetical monopolist could exercise market power by 

negotiating a small but significant non-transitory increase in price. This test for whether a set of 

substitute products constitutes a relevant antitrust market is sometimes called the “hypothetical 

monopolist test.” 79 The geographic boundaries of a relevant antitrust market for the analysis of 

hospital competition are not necessarily the same as those of a PSA. 

In merger investigations, defining the relevant antitrust market is a fact-intensive exercise 

involving interviews with market participants and reviewing confidential documents, in addition 

to data analyses. While we have not formally defined a relevant antitrust market in this comment, 

the diversion analysis, which shows that SUNY Upstate, Crouse, and St. Joseph’s are close 

76 See, e.g., Merger Guidelines §§ 5-6; United States v. Phil. Nat’l Bank, 374 U.S. 321, 363-66 (1963) 

(“Specifically, we think that a merger which produces a firm controlling an undue percentage share of the relevant 

market, and results in a significant increase in the concentration of firms in that market, is so inherently likely to 

lessen competition substantially that it must be enjoined in the absence of evidence clearly showing that the merger 

is not likely to have such anticompetitive effects.”). 

77 HHI measures are calculated by summing the squares of the individual firms’ market shares. For hospital mergers, 

they are based on the market shares of all hospitals (or systems) deemed to be in the market.

78 Merger Guidelines § 5.3. Courts accept this presumption of illegality when evaluating hospital mergers. See, e.g., 

ProMedica Health Sys., Inc. v. Fed. Trade Comm’n, 749 F.3d 559, 570 (6th Cir. 2014) (“[T]he Commission is 

entitled to take seriously the alarm sounded by a merger’s HHI data.”); id. (“These two aspects of this case – the 

strong correlation between market share and price, and the degree to which this merger would further concentrate 

markets that are already highly concentrated – converge in a manner that fully supports the Commission’s 

application of a presumption of illegality.”); Fed. Trade Comm’n v. OSF Healthcare Sys., 852 F. Supp. 2d 1069, 

1079 (N.D. Ill. 2012) (“High levels of concentration raise anticompetitive concerns, and the HHI calculation 

provides one way to identify mergers that are likely to invoke these concerns.”); Fed. Trade Comm’n v. Univ. 

Health, Inc., 938 F.2d 1206, 1211 n.12 (11th Cir. 1991) (“The most prominent method of measuring market 

concentration is the Herfindahl-Hirschman Index (HHI).”); id. at 1218 n.24 (“Significant market concentration 

makes it easier for firms in the market to collude, expressly or tacitly, and thereby force price above or farther above 

the competitive level.”) (quotation marks omitted); United States v. Rockford Mem’l Corp., 898 F.2d 1278, 1285 

(7th Cir. 1990) (“The defendants’ immense shares in a reasonably defined market create a presumption of 

illegality.”).

79 See Merger Guidelines § 4.2.1. Agencies typically consider a “small but significant price increase” to be five 

percent. Id. 
FTC Staff Submission (Public) – October 7, 2022 

22 

substitutes for one another (while no other hospitals are), suggests that Onondaga County likely 

constitutes a relevant antitrust market. 

 f 

 

 

 f 

 

Below, we report the results of our concentration analysis for the combined PSA as well 

as for the set of GAC hospitals within Onondaga County. We also report the results of our 

concentration analysis for all patient discharges as well as limited to discharges of commercially 

insured GAC patients. Because commercial hospital rates are negotiated with insurance 

companies, a merger’s effect on hospital prices for commercially insured patients is often a 

helpful proxy for the degree of competition between the merging hospitals. Of course, the 

benefits of hospital competition, including improved patient experience and investment in 

innovation, accrue to all patients, not only the commercially insured. 

Table 3 contains the results of our concentration analysis for hospitals serving patients 

residing in the combined PSA. The post-merger HHI for all discharges is 2,457 and the increase 

in HHI is 836. The combined SUNY Upstate-Crouse hospital system would have a share of 

42.2% of inpatient hospital services for patients living in the combined PSA. 82 These metrics are 

even higher when looking specifically at commercially insured GAC patients, with a post-merger 

HHI of 2,769, an increase in HHI of 1,034, and a combined share for SUNY Upstate and Crouse 

of 45.5%. The combined share and HHI calculations exceed the thresholds that would create a 

presumption of illegality under the Merger Guidelines and the relevant case law, 83 and also 

exceed some of the levels in past hospital mergers that courts have found to be anticompetitive 

and blocked. 84 As with the diversion ratio analysis, all hospitals in the state of New York are 

included in the shares and concentration analysis for patients residing in the combined PSA. 

80 COPA Application Attachment 4I-6 at 17. 81 COPA Application Attachment 4I-1 at 14. 82 Crouse has affiliations with three hospitals smaller hospitals in rural areas in central and Northern New York: 

Claxton-Hepburn Medical Center in Ogdensburg (the 11th row in Table 3), Carthage Area Hospital in Carthage, and 

Community Memorial Hospital in Ithaca. See https://www.crouse.org/north-country-hospitals-affiliation. For the 

purposes of the share analysis, these are considered separate hospitals. If they were included as part of Crouse, the 

Parties’ combined share and the increase in HHI would be even greater.

83 See supra note 78. The concentration levels in the Syracuse area had already increased in recent years, including 

from SUNY Upstate’s 2011 purchase of Community General Hospital. See, e.g., Katie Keith, Sabrina Corlette & 

Olivia Hoppe, Assessing Responses to Increased Provider Consolidation in Three Markets: Detroit, Syracuse, and 

Northern Virginia; Case Study Analysis: The Syracuse Health Care Market, Center on Health Insurance Reforms at 

6 (Nov. 2018), https://georgetown.app.box.com/s/38whcvigzyytlzznecxz0oq9qklsaitq (“Syracuse’s provider market 

has become increasingly concentrated over the last several years.”).

84 See Table B1: Market Shares and HHIs in Prior Healthcare Merger Cases (Attachment B). 
FTC Staff Submission (Public) – October 7, 2022 

23 

Table 3: Shares and Concentration Analysis

Hospitals Serving Patients Residing in the Combined PSA

(Based on 2019 SPARCS Data) 

FTC staff has assessed concentration using the combined PSA because this is the 

geographic area specifically referenced in the New York COPA Regulations. As we explained 

above, this area is likely broader than a market properly defined for antitrust purposes, meaning 

the shares listed in Table 3 likely overstate the competitive significance of hospitals outside of 

Syracuse and understate the likely anticompetitive impact of the proposed merger. In Table 4 

below we report the results of the concentration analysis for Onondaga County. As we explained 

above, this potential relevant antitrust market definition likely satisfies the hypothetical 

monopolist test. 
FTC Staff Submission (Public) – October 7, 2022 

24 

Table 4: Shares and Concentration Analysis

Hospitals Located in Onondaga County

(Based on 2019 SPARCS Data) 

The results for all discharges and GAC services for commercially insured patients are 

very similar. For commercially insured GAC discharges, the post-merger HHI is 5,556 and the 

increase in HHI is 2,197. The combined SUNY Upstate-Crouse hospital system would have a 

share of 66.7% of GAC inpatient hospital services for commercially insured patients seeking 

care in Onondaga County. 

Finally, we performed the same share and concentration analysis for all patients residing 

in Onondaga County, regardless of which hospital they chose (as opposed to all hospitals located 

in Onondaga County, regardless of the origin of the patients, as shown above in Table 4). The 

results of this analysis are shown in Table 5 below and are broadly similar to the results of the 

concentration analysis in Table 4. For patients residing in Onondaga County (which is where 

most patients in the PSA reside), the proposed merger would reduce the number of available 

hospitals from three to two for nearly all patients. 
FTC Staff Submission (Public) – October 7, 2022 

25 

Table 5: Shares and Concentration Analysis

Hospitals Serving Patients Residing in Onondaga County

(Based on 2019 SPARCS Data) 

5. Analysis of Service Overlaps Confirms that SUNY Upstate and 

Crouse Are Close Competitors

In addition to the diversion ratio and concentration analyses described above, FTC staff 

also performed an analysis of the 2019 SPARCS inpatient discharge data to evaluate the overlap 

in the Parties’ services. We find that, contrary to the Parties’ claims that their service offerings 

are complementary, 85 the patient conditions they treat (and hence the services they provide) are 

very similar.

 Using the 2019 SPARCS inpatient discharge data, FTC staff measured service overlaps 

as the DRG codes that are common to both hospitals. 86 DRG codes are used to classify patients 

according to diagnosis and medical complexity and are a common way to classify sets of 

services offered by hospitals. Any DRG code that appears in the data for both hospitals for at 

least X inpatient events is included in the overlap set, where X is equal to 1, 3, or 5 patients. 

Table 6 reports the number of DRG codes in each overlap set along with the percentage of all 

patients treated at both SUNY Upstate and Crouse that are in the overlap set. 

85 See COPA Application at 21-22, 31-32, 57. 86 See CMS Guidance, Design and development of the Diagnosis Related Group (DRG), 

https://www.cms.gov/icd10m/version37-fullcodecms/fullcode cms/Design and development of the Diagnosis Related Group (DRGs).pdf. 
FTC Staff Submission (Public) – October 7, 2022 

26 

Table 6: SUNY Upstate and Crouse Patients with Overlapping DRGs

(Based on 2019 SPARCS Data) 

Table 6 shows that the vast majority of all patients treated at SUNY Upstate are treated 

for conditions that are also treated at Crouse, and vice-versa. For example, the 421 DRGs for 

which both SUNY Upstate and Crouse treated at least three patients account for 90% of all 

Upstate patients and 96% of all Crouse patients. The 341 DRGs for which both SUNY Upstate 

and Crouse treated at least five patients account for 85% of all SUNY Upstate patients and 93% 

of all Crouse patients. 87 In other words, SUNY Upstate and Crouse treat similar types of patients 

with similar health conditions. 88 This suggests that most patients view SUNY Upstate and 

Crouse as competing options for the treatment of their health conditions. The proposed merger 

would leave those patients with one fewer competing option. 

B. Entry of Other Healthcare Providers Would Not Be Timely, Likely, or 

Sufficient to Replace the Competition Lost as a Result of the Merger

Another factor that the NY DOH must consider when evaluating the COPA Application 

is the likelihood that other healthcare providers will enter or exit the PSA. 89 Under the Merger 

Guidelines framework, the FTC considers whether entry by a new competitor would be timely, 

likely, and sufficient to alleviate the harm to competition caused by the proposed merger. 90 FTC 

staff acknowledges that such entry – if it would be timely, likely, and sufficient – could offset or 

reduce concerns in years to come from the elimination of competition between SUNY Upstate 

and Crouse. 

The evidence obtained to date shows, however, that new entry would not be timely, 

likely, or sufficient to offset the competitive harm of the proposed merger. Construction and 

87 In principle, any threshold number of patient visits for each DRG can be used to define the “overlap set,” and 

there is no reason to prefer “at least 3” to “at least 5,” or vice-versa. Any threshold risks understating the degree of 

overlap in the services provided by SUNY Upstate and Crouse, because one hospital system may fall just above the 

threshold while the other falls just below the threshold due only to chance. For example, a DRG that is treated 6 

times at SUNY Upstate and 4 times at Crouse would not be included in the “at least 5” overlap set, despite the fact 

that both hospitals treat patients who received the same diagnosis code.

88 FTC staff also evaluated the degree of overlap in Major Diagnostic Categories (“MDCs”) treated by each hospital. 

SUNY Upstate and Crouse both treat patients with conditions that fall within each MDC, with one exception: SUNY 

Upstate has the only burn unit in the central New York region, so Crouse (along with all other hospitals in this 

region) must send burn patients to SUNY Upstate or Strong Memorial in Rochester (which is not located in this 

region). 89 New York COPA Regulations § 83-2.5(b). 90 Merger Guidelines § 9.
FTC Staff Submission (Public) – October 7, 2022 

27 

operation of new acute care hospitals involve significant capital investment and take many years 

from the initial planning stage to opening. Furthermore, new entry or expansion by acute care 

hospitals would have to meet the requirements of New York’s CON program, which is overseen 

by the NY DOH and the Public Health and Health Planning Council. 91 It is unlikely that any 

firm could overcome the entry barriers necessary to build a new acute care hospital in the 

Syracuse area in the foreseeable future. Unsurprisingly, FTC staff’s investigation to date has 

revealed no such plans for new entry by acute care hospitals. 

C. Merger Likely Would Depress Wage Growth for Hospital Employees and 

Exacerbate Challenges with Recruiting and Retaining Healthcare 

Professionals

 In evaluating the dynamics of the healthcare workforce in the PSA, the NY DOH should 

consider the impact of the proposed merger on healthcare employee wages, and how that could 

exacerbate the current challenges with recruiting and retaining employees that the Parties have 

claimed. 92 Indeed, it is part of the NY DOH’s vision to consider the “wellbeing of all New 

Yorkers.” 93 SUNY Upstate and Crouse assert that the COVID-19 pandemic created 

unprecedented challenges, particularly staffing shortages. 94 The FTC agrees that it is critically 

important to preserve access to healthcare services during the COVID-19 pandemic, and has 

issued statements clarifying the role of antitrust enforcement during this difficult time. 95 

The impact of hospital consolidation on competition in labor markets has garnered 

particular attention during recent FTC merger reviews and is relevant to the NY DOH’s analysis, 

as this can affect employee pay and community access to healthcare services. 96 A recent 

academic study found that hospital mergers generating large increases in employer concentration 

have meaningful and statistically significant effects on employee wages. 97 Depression of wage 

91 See New York State Department of Health, CON Review Types as Determined by Facility Type, 

https://www.health.ny.gov/facilities/cons/more information/review process.htm. 92 COPA Application at 43, 64 (describing higher attrition rate of clinical and administrative staff due to alternative 

higher-wage employment opportunities, health care worker burnout, and early retirement, as well as the difficulties 

of recruiting providers that have not already trained in the central New York area). 93 New York State Department of Health, About the New York State Department of Health: Mission, Vision and 

Values, https://www health ny.gov/about/ (last accessed Aug. 17, 2022). 94 COPA Application at 43. 95 U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, JOINT ANTITRUST STATEMENT REGARDING COVID-19,

https://www.ftc.gov/system/files/documents/public statements/1569593/statement on coronavirus ftc-doj-3-24-

20.pdf (Mar. 24, 2020). 96 See e.g., FTC COPA Workshop Transcript: Session 2 (Afternoon) at 29 (Jun. 18, 2019), 

https://www ftc.gov/system/files/documents/public events/1508753/session2 transcript copa.pdf [hereinafter FTC 

COPA Workshop Transcript: Session 2] (remarks by Elena Prager describing how labor market effects are a 

relevant consideration for states who are evaluating COPAs, and may care about constituent pay and community 

access, among other policy goals; for states that have a broad public interest mandate and want to take these issues 

into account, there is sufficient evidence of “substantial and detectable effect on worker pay”). 

97 See Elena Prager & Matt Schmitt, Employer Consolidation and Wages: Evidence from Hospitals, American 

Economic Review (2021), https://www.aeaweb.org/articles?id=10.1257/aer.20190690 [hereinafter Prager & Schmitt 

Study]. See also David Arnold, Mergers and Acquisitions, Local Labor Market Concentration, and Worker 

Outcomes, Working Paper (2020), https://darnold199.github.io/jmp.pdf;Elena Prager Presentation at FTC COPA 
FTC Staff Submission (Public) – October 7, 2022 

28 

growth could dissuade qualified hospital employees (already in short supply in many parts of the 

country) from seeking employment, which could create or exacerbate a shortage of qualified 

workers and undermine the quality of patient care and access to services. 98 Lower income levels 

for hospital employees may also worsen population health in local communities where hospitals 

are leading employers. 99 According to the Parties, SUNY Upstate is currently the largest 

employer in the central New York region and Crouse is among the ten largest. 100 According to 

data from Onondaga County, SUNY Upstate is by far the largest employer in the county and 

Crouse is the fifth largest. 101 Likewise, a 2018 study of the Syracuse healthcare market by the 

Center for Health Insurance Reform found that the healthcare sector is a key economic driver for 

the region, and “many residents [are] employed by one of the three health systems.” 102 FTC staff 

is not aware that this proposed COPA, or any COPA for that matter, has imposed conditions or 

incorporated provisions that would mitigate the merger’s potentially negative impact on hospital 

employee wages. 

FTC staff conducted a preliminary analysis of the likely competitive effects of the 

proposed merger in healthcare labor markets using 2020 American Hospital Association

(“AHA”) data on employment of registered nurses and respiratory therapists. 103 FTC staff 

Workshop, Effects of Hospital Mergers on Employee Pay (Jun. 18, 2019), 

https://www.ftc.gov/system/files/documents/public events/1508753/slides-copa-jun 19.pdf at 109 (describing the 

study and methodology).

98 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. 99 See FTC COPA Workshop Transcript: Session 2, supra note 96, Christopher Garmon remarks at 30-31 

(discussing 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 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). 100 See COPA Application at 43; Crouse Health, Upstate Medical University Seeks Approval to Acquire Crouse 

Health (Apr. 14, 2022), https://www.crouse.org/news/upstate-medical-university-seeks-approval-to-acquire-crousehealth/. 101 See Onondaga County Website, Major Employers, http://www.ongov.net/about/majorEmployers.html. 102 Katie Keith, Sabrina Corlette & Olivia Hoppe, ASSESSING RESPONSES TO INCREASED PROVIDER CONSOLIDATION 

IN THREE MARKETS: DETROIT, SYRACUSE, AND NORTHERN VIRGINIA; CASE STUDY ANALYSIS: THE SYRACUSE 

HEALTH CARE MARKET, Center on Health Insurance Reforms at 3 (Nov. 2018), 

https://georgetown.app.box.com/s/38whcvigzyytlzznecxz0oq9qklsaitq. 103 See AHA Data Solutions, https://www.aha.org/data-insights/aha-data-products (representing information 

provided by nearly 6,300 hospitals and more than 400 health care systems). While the AHA data report on several 

different categories of employees, respiratory therapists and registered nurses may be most relevant because a 

majority of them are employed in hospitals. See Mayo Clinic College of Medicine and Science, Explore Health Care 

Careers: Respiratory Therapist, https://college mayo.edu/academics/explore-health-care-careers/careers-az/respiratory-therapist/ (last accessed Oct. 3, 2022); U.S. Bureau of Labor Statistics, Occupational Workplace 

Handbook: Registered Nurses, https://www.bls.gov/ooh/healthcare/registered-nurses.htm#tab-3 (last accessed Oct. 

3, 2022). Moreover, registered nurses make up more than 30% of hospital employment. See U.S. Bureau of Labor 

Statistics: The Economics Daily, Registered nurses made up 30 percent of hospital employment in May 2019 (Apr. 

27, 2020), https://www.bls.gov/opub/ted/2020/registered-nurses-made-up-30-percent-of-hospital-employment-inmay-2019 htm. 
FTC Staff Submission (Public) – October 7, 2022 

29 

evaluated labor concentration in the commuting zone for nursing labor, as developed by the U.S. 

Department of Agriculture. 104 For the proposed merger, this commuting zone consists of the 

following six counties: Cayuga, Cortland, Madison, Onondaga, Oswego, and Tompkins. While

this commuting zone may not necessarily represent a relevant antitrust market, it is consistent 

with other empirical research on the effects of concentration in hospital labor markets. FTC staff 

used these data to calculate the number and share of employees working at all hospital facilities 

in this commuting zone, as well as pre- and post-merger HHIs for the proposed merger. 

FTC staff found that the labor markets for both registered nurses and respiratory 

therapists will be highly concentrated after the proposed merger, and that the merger would 

increase concentration significantly. Using the AHA data, Table 7 shows that SUNY Upstate and 

Crouse have a combined share in the commuting zone of 50.1% for registered nurses and 45.0% 

for respiratory therapists. The post-merger HHIs are 3,093 and 2,734, respectively, and the 

increases in HHI are 949 and 874, respectively. The post-merger HHIs and changes in HHIs 

suggest that the proposed merger may cause harm to competition for registered nurses and 

respiratory therapists. 105 

Using the exact data and methodology employed in the Prager and Schmitt study of 

concentration in hospital labor markets cited above, FTC staff also calculated employment shares 

using total hospital employment as reported to the Centers for Medicare & Medicaid Services 

(“CMS”) in hospitals’ annual cost reports. 106 Using the CMS data, Table 7 also shows that 

SUNY Upstate and Crouse would account for nearly 50% of total hospital employment within 

the commuting zone, and that the combination of their shares would lead to a post-merger HHI 

of 3,015 and an increase in HHI of 1,027. This analysis suggests that harm to competition for 

labor as an input caused by the proposed merger will not be limited to registered nurses and 

respiratory therapists. 107

104 The U.S. Department of Agriculture developed commuting zones using 2000 census data on commuting patterns. 

FTC staff’s definition of the labor market for registered nurses follows much of the recent literature, which shows 

that around 80% of job applications on career websites are submitted by residents living within the commuting zone.

See, e.g., Prager & Schmitt Study; José Azar, Ioana Marinescu & Marshall I. Steinbaum, Labor Market 

Concentration, NBER Working Paper No. 24147 (2019), https://www.nber.org/papers/w24147; Ioana Marinescu &

Roland Rathelot, Mismatch Unemployment and the Geography of Job Search, 10 AM. ECON. J. MACROECON. 42

(2018), https://www.aeaweb.org/articles?id=10.1257/mac.20160312. 105 For context, these increases in HHI are very close to the 75th percentile among hospital mergers calculated in the 

Prager and Schmitt study, which found negative effects on hospital employee wage growth for mergers causing an 

increase in concentration above the 75th percentile. 106 See CMS, Hospital Cost Report Public Use File, https://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/Medicare-Provider-Cost-Report/HospitalCostPUF (last accessed Oct. 3, 

2022). FTC staff used data from 2018, the most recent year available. 107 Only hospitals that report data to both AHA and CMS are included in the labor concentration analysis. This 

includes non-GAC hospitals such as psychiatric centers and long-term care facilities and excludes Veterans Affairs 

hospitals.
FTC Staff Submission (Public) – October 7, 2022 

30 

Table 7: Hospital Employment Shares in SUNY Upstate-Crouse Commuting Zone

(Based on 2020 AHA Data and 2018 CMS Data) 

In addition to significantly increasing concentration in the labor markets for registered 

nurses and respiratory therapists, the merger would combine two significant nursing schools. 

SUNY Upstate is the largest provider of training for healthcare professionals in the central New 

York region, and its proposed acquisition of Crouse’s nursing school would further strengthen its 

position. 

 

 

VI. Benefits of the COPA Are Unlikely to Outweigh the Disadvantages Resulting from a 

Reduction in Competition and Less Restrictive Arrangements May be Available 

In conjunction with our standard analysis under the Merger Guidelines, FTC staff 

evaluated the proposed merger applying the benefits and disadvantages factors that the NY DOH

must consider when reviewing the COPA Application. 109 Based on the information we have 

obtained to date, we do not have reason to believe the Parties’ claimed benefits of the COPA are 

likely to outweigh the significant disadvantages that would result from a reduction in 

competition between SUNY Upstate and Crouse. Furthermore, we have considered “the 

availability of arrangements that are less restrictive to competition and achieve the same benefits 

or a more favorable balance of benefits over disadvantages attributable to any reduction in 

competition.” 110 Under this factor, we believe there may be less restrictive alternative 

arrangements available.

108 COPA Attachment 4I-1 at 14. 109 New York COPA Regulation 83-2.5 (c)-(d). 110 New York COPA Regulation 83-2.5 (e).

Hospital / System County FTE Share FTE Share FTE Share

SUNY Upstate Onondaga 1,587 37.4% 74 30.8% 5,591 35.2%

St. Joseph's Onondaga 843 19.9% 52 21.7% 3,107 19.5%

Crouse Onondaga 538 12.7% 34 14.2% 2,322 14.6%

Cayuga Medical Center Tompkins 434 10.2% 25 10.4% 1,203 7.6%

Oswego Health Oswego 263 6.2% 18 7.5% 854 5.4%

Auburn Community Hospital Cayuga 178 4.2% 9 3.8% 702 4.4%

Oneida Health Madison 162 3.8% 17 7.1% 703 4.4%

Guthrie Cortland Medical Center Cortland 122 2.9% 6 2.5% 612 3.8%

Community Memorial Hospital Madison 72 1.7% 5 2.1% 218 1.4%

Richard H. Hutchings Psychiatric Center Onondaga 42 1.0% 0 0.0% 585 3.7%

Pre-merger HHI:

Post-merger HHI:

Change in HHI:

Combined SUNY Upstate - Crouse Share:

2,144 1,860

3,093 2,734

949 874

Registered Nurses Respiratory Therapists

50.1% 45.0%

Hospital Employees

49.8%

1,988

3,015

1,027
FTC Staff Submission (Public) – October 7, 2022 

31 

Under the New York COPA Act and Regulations, the NY DOH must consider whether 

the proposed COPA is likely to generate sufficient public benefits to offset the likely harm to 

consumers. This inquiry is similar to the analysis that courts and antitrust agencies perform when 

assessing the competitive impact of mergers. 111 As noted above, the Merger Guidelines reflect 

the combined experience of the antitrust agencies when assessing mergers. In addition to 

considering competitive harm, that assessment also explicitly includes consideration of the 

potential benefits resulting from the proposed merger. 

For cost savings and quality benefits to be recognized as cognizable efficiencies under 

the Merger Guidelines, they must be sufficiently substantiated by the merging hospitals so that 

courts and antitrust agencies “can verify by reasonable means the likelihood and magnitude of 

each asserted efficiency, how and when each would be achieved (and any costs of doing so), how 

each would enhance the merged firm’s ability and incentive to compete, and why each would be 

merger-specific.” 112 Rigorous substantiation of efficiency claims is critical because efficiencies 

are difficult to verify and quantify, in part because much of the information is in the hands of the 

Parties, and because efficiencies may not be realized. 113 Efficiency claims also must be “mergerspecific” – meaning they can only be achieved by this particular merger and not through other 

means having the same or lesser anticompetitive effects.

Any cost savings and quality benefits that are substantiated and merger-specific must 

then be balanced against the likely competitive harm. Under the Merger Guidelines, the greater 

the potential anticompetitive effects from a merger, the greater the efficiencies need to be to 

outweigh the anticipated harm from the merger, and the more certain it must be that any 

efficiencies would be passed through to consumers. Where the proposed merger is likely to result 

in substantial harm to competition, the Merger Guidelines require a showing of extraordinary 

efficiencies to overcome that harm. 114 Experience has shown that “[e]fficiencies almost never 

justify a merger to monopoly or near-monopoly.” 115

111 See Merger Guidelines § 10; Fed. Trade Comm’n v. ProMedica, No. 3:11 CV 47, 2011 WL 1219281, at *57 

(N.D. Ohio Mar. 29, 2011) (finding that the defendant’s efficiencies claims did not rebut a presumption of 

anticompetitive effects); Fed. Trade Comm’n v. OSF Healthcare Sys., 852 F. Supp. 2d 1069, 1088-89 (N.D. Ill. 

2012) (recognizing the Merger Guidelines approach for evaluating efficiencies); Fed. Trade Comm’n v. Univ. 

Health, Inc., 938 F.2d 1206, 1222 (11th Cir. 1991) (recognizing that efficiencies are an important consideration in 

predicting whether a transaction would substantially lessen competition). 

112 Merger Guidelines § 10. 113 Indeed, legal cases indicate that efficiency claims based on “speculation and promises about post-merger 

behavior” are not sufficient. United States v. H&R Block, Inc., 833 F. Supp. 2d 36, 89 (D.D.C. 2011) (quoting Fed. 

Trade Comm’n v. H.J. Heinz, 246 F.3d 708, 720-721 (D.C. Cir. 2001)). 114 Merger Guidelines § 10. See also ProMedica, 2011 WL 1219281, at *57 (“Efficiencies must be ‘extraordinary’ 

to overcome high concentration levels”) (quoting Fed. Trade Comm’n v. H.J. Heinz, 246 F.3d 708, 721 (D.C. Cir. 

2001)); OSF Healthcare Sys., 852 F. Supp. 2d at 1089 (“‘[h]igh market concentration levels require proof of 

extraordinary efficiencies’”) (quoting H&R Block, 833 F. Supp. 2d at 89). 115 Merger Guidelines § 10.
FTC Staff Submission (Public) – October 7, 2022 

32 

A. Proposed Merger Likely Would Have a Substantial Adverse Impact on the 

Quality and Price of Health Care Services in the Syracuse Area 

NY DOH COPA BENEFIT FACTOR (c)(3): Enhancement of the quality of health 

care provided by the Parties to the Cooperative Agreement

NY DOH COPA DISADVANTAGE FACTOR (d)(1): Increased costs or prices of 

health care in the primary service area resulting from the Cooperative Agreement, 

after taking into consideration improvements in quality and outcomes 

NY DOH COPA DISADVANTAGE FACTOR (d)(2): Diminished quality, 

availability, and efficiency of health care services

ASSESSMENT: As described above, our analysis indicates that SUNY Upstate and 

Crouse are close competitors and that the geographic service area is highly concentrated. As a 

result, the proposed merger would give the combined hospital system increased bargaining 

leverage with insurers to negotiate significantly higher reimbursement rates, because insurers 

would no longer be able to play two competitors off of each other during negotiations. These 

price increases typically are passed through from insurers to consumers in the form of higher 

premiums, copayments, deductibles, and other out-of-pocket expenses. 116 Thus, contrary to the 

statements by the Parties that they “are not aware of any increased costs or prices that will result 

from the Transaction,” 117 the proposed merger likely would have a substantial adverse impact on 

patients with respect to the price of healthcare services. 

 

 

 As described in Section VII, the Parties have 

not proposed any enforceable terms or conditions that would mitigate this harm.

The elimination of competition between SUNY Upstate and Crouse would also 

significantly diminish the Parties’ business incentives to maintain or improve current levels of 

quality, patient experience, and access to services and innovative technology, because the 

combined hospital system would no longer risk losing patients to its pre-merger rival. These nonprice dimensions of competition greatly benefit patients and are among the factors by which 

employers and consumers evaluate the desirability of a provider network. Today, these hospitals 

know that patients can choose to seek care at, and physicians can send their referrals to, another 

system if they are not satisfied with the quality, patient experience, or services offered by one of 

the hospital systems. That threat of losing patients and physician referrals to a rival system 

incentivizes each system to provide the best possible quality and patient experience, to add new 

services and technology, and to enhance the availability and convenience of care. Thus, the 

116 See infra Section VI.D, for further discussion of this dynamic. 117 COPA Application at 61. 118 

 

 

 
FTC Staff Submission (Public) – October 7, 2022 

33 

proposed merger could reduce the quality of care, all other things equal. Importantly, a reduction 

in quality of care can have an adverse effect on patient outcomes such as mortality, readmissions, 

and length of stay. Reduced availability of services may result in decreased patient access, 

increased travel time to receive services, increased emergency room wait times, and other 

negative consequences.

In the COPA Application, the Parties argue that the merger generally would lead to 

improved availability and quality of care, as well as enhanced clinical coordination throughout 

the merged entity. 119 Assessing potential quality improvements has long been a central element 

of FTC hospital merger investigations because we recognize that a hospital merger could 

improve patient health outcomes under certain circumstances. We often analyze the clinical 

quality effects likely to occur as a result of consolidation with guidance from leading academic 

and policy experts in healthcare quality. We also evaluate how the merger affects the hospitals’ 

business incentives to deliver higher quality care, and whether changes brought about by the 

merger would enable the combined hospitals to provide higher quality care more cheaply or 

efficiently than they could achieve individually. 

Empirical literature evaluating the relationship between competition and various 

measures of hospital quality of care does not support the conclusion that hospital consolidation 

generally improves clinical quality of healthcare services. To the contrary, studies demonstrate 

the net effect of mergers of competing hospitals on quality is often negative, and increased 

competition is associated with better quality. 120 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.

As we have stated previously, FTC staff needs more information to fully assess the 

Parties’ claims and the Parties have not supplied this information to date. Based on FTC staff’s 

deep experience in evaluating these types of quality justifications, however, it appears that many 

of the Parties’ claims about the likely quality benefits from the merger are unsubstantiated or the 

benefits appear modest in scope. Furthermore, it appears that many of the claimed quality 

119 See, e.g., COPA Application at 39-41 (describing how the proposed merger will lead to “improvements in cancer 

screening, prevention, and treatment services, retention of vital cardiac services, better care coordination for 

newborns, and integration of behavioral health services;” clinical synergies, such as nurse navigators providing 

services across the care continuum at the combined organization, “through which best practices and service line 

offerings of each institution can be adopted for the combined enterprise as a whole;” and reduced wait times and 

improved patient access and experience).

120 See Romano & Balan, supra note 128; Gaynor, Ho & Town, supra note 64; GAYNOR & TOWN, supra note 64; 

Beaulieu, Dafny, Landon, Dalton, Kuye & McWilliams, supra note 64, at 56 (finding “no evidence of quality 

improvement attributable to changes in ownership. Our findings corroborate and expand on previous research on 

hospital mergers and acquisitions in the 1990s and early 2000s and are consistent with a recent finding that 

increased concentration of the hospital market has been associated with worsening patient experiences.”); Marah 

Noel Short & Vivian Ho, Weighing the Effects of Vertical Integration Versus Market Concentration on Hospital 

Quality, Medical Care Research and Review 1-18, at 14 (2019), 

https://journals.sagepub.com/doi/pdf/10.1177/1077558719828938 (finding “increased hospital market concentration 

is strongly associated with reduced quality across multiple measures. With this result in mind, regulators should 

continue to focus scrutiny on proposed hospital mergers, take steps to maintain competition, and reduce 

counterproductive barriers to entry.”). 
FTC Staff Submission (Public) – October 7, 2022 

34 

enhancements may be achieved through less restrictive alternatives that would not eliminate the 

valuable competition between the Parties – either by the Parties independently, through another 

form of collaboration between the Parties, or through an alternative merger or affiliation with a 

different partner that would not meaningfully reduce competition. 

1. Consolidation of Clinical Services Is Uncertain and Could Reduce 

Patient Access

Although the Parties contend that they 

 as a result of the proposed merger, the COPA Application includes numerous 

examples of planned consolidation of clinical services. The Parties acknowledge that “[w]ith 

respect to those services that are currently offered by both Parties, the Transaction will enable the 

Parties to consolidate those service lines which can reduce duplicative costs and administrative 

burden.” 122 Duplicative service lines that appear to be targeted for consolidation include: 

neurology, neurosurgery, and stroke care; labor and delivery services; cardiac surgery services; 

surgical oncology services; and emergency department services. 123 In addition, several service 

lines that the Parties describe as complementary appear to be targeted for consolidation, 

including: cardiology and cardiac surgery; pediatric specialty care and NICU services; and 

inpatient and outpatient behavioral health services and addiction treatment services. 124 This

proposed consolidation of clinical services likely would require considerable effort, money, and 

time. The Parties have not provided sufficiently detailed information in the COPA Application, 

so it remains unclear whether the merged entity could successfully consolidate clinical services 

so as to improve patient outcomes, or when the merging hospitals might expect to realize any 

purported quality benefits. 

Moreover, although the Parties claim they are pursuing the COPA “to proactively 

preserve critical services and workforce,” 125 it is entirely possible that consolidation could 

reduce the availability of, and patient access to, healthcare services – for example, due to the 

closure of hospital facilities or a reduction in hospital staff. If this were to occur, then the 

consolidation of clinical services could be more harmful to patients than beneficial. 

The Parties suggest that a post-merger consolidation of the cardiac surgery programs is 

necessary to maintain sufficient volumes of procedures “to ensure the longevity of the cardiac 

surgery program and to meet the corresponding minimum requirements for the structure heart 

program,” and that without this consolidation, SUNY Upstate’s program is at risk of closing. 126

The Parties claim that over the last two years, both hospitals’ cardiac surgical volumes have 

121 COPA Application at 64. 122 COPA Application at 57. 123 COPA Application at 42, 45-49, 57, 59-61. 124 COPA Application at 41-42, 45-49, 63. 125 COPA Application at 35. 126 COPA Application at 42. 
FTC Staff Submission (Public) – October 7, 2022 

35 

fallen below minimum requirements. 127 While FTC staff would need more information to fully 

assess these claims, the research literature shows that a “volume/outcome” relationship only 

exists for a limited set of procedures and services, including trauma and certain other complex 

procedures. 128 Any quality benefits from the Parties’ proposed clinical consolidation would, 

therefore, be confined to those services for which there is a demonstrated volume/outcome 

relationship. 

The Parties also suggest that shifting SUNY Upstate’s low-acuity services to Crouse, 

thereby opening up beds for higher-acuity and more specialized care at the main Upstate 

Hospital, will improve utilization and grow several priority service lines, including: 

neurosciences, cardiac services, hematology and oncology, behavioral health, pediatrics/labor 

and delivery, primary care, and physician medicine and rehabilitation. 129 However, repurposing 

acute care beds and consolidating co-located facilities are unlikely to have a volume/outcome 

relationship. As a result, although these other types of consolidation could result in some cost 

savings, they would be unlikely to significantly improve quality. 

Moreover, even for procedures where there is a volume/outcome relationship, 

consolidation that might improve clinical quality outcomes would only be merger-specific if it 

would enable the merged hospital system to surpass certain volume thresholds that the hospitals 

could not otherwise meet independently. Further, even if the merging hospital systems were able 

to obtain substantiated, merger-specific volume/outcome related improvements in clinical 

outcomes by consolidating services, those benefits must be weighed against any potential 

disadvantages that could result from the consolidation. 130 For example, if closing some facilities

would be necessary to consolidate volume at a more limited number of facilities, the increased 

travel time to these consolidated facilities could have an adverse impact on some patients. 

Finally, to consolidate clinical services, the Parties must be able to integrate successfully 

and this involves achieving sufficient cultural compatibility. Indeed, the difficulty of unifying 

organizational cultures has been identified as a significant challenge to integrating facilities and a 

primary reason that anticipated benefits of hospital mergers may fail to materialize. 131 

127 The Parties state that according to CMS, structural heart programs must perform at least 1,000 cath lab 

procedures and 400 percutaneous coronary intervention (“PCI”) procedures. Over the last two years, SUNY Upstate 

claims to have performed 981 and 993 cath lab procedures and 323 and 292 PCIs, respectively. Crouse claims to 

have performed 390 cath lab and 763 PCI procedures during this time frame. COPA Application at 42. 128 See Patrick Romano & David Balan, A Retrospective Analysis of the Clinical Quality Effects of the Acquisition of 

Highland Park Hospital by Evanston Northwestern Hospital, 18 INT’L J. ECON. BUS. 45 (2011), 

http://www.tandfonline.com/doi/abs/10.1080/13571516.2011.542955. 129 COPA Application at 42-43. 130 See Kenneth Kizer, Independent Assessment of the Proposed Merger between Mountain States Health Alliance 

and Wellmont Health System 17-19 (Nov. 21, 2016), 

https://www.vdh.virginia.gov/content/uploads/sites/96/2016/11/Kennith-KIZER-INDEPENDENT-ASSESSMENTMSHA-WHS-MERGER.pdf. 131 See id. at 24-25 (“Notwithstanding that the VA Healthcare System is completely administratively and financially 

integrated, and has a longstanding well-defined mission, there were significant challenges in merging facilities under 

common management primarily because of the often disparate local cultures prevalent at individual facilities – even 

when in some instances they were geographically separated by only a few miles and served much the same 

population.”).
FTC Staff Submission (Public) – October 7, 2022 

36 

 

 

 

 

2. Hospitals Can Pursue Clinical Standardization without the COPA

The Parties claim the COPA “is anticipated to result in substantial benefits for the 

combined organizations, for patients, and the community at large,” and that “a central objective 

of this Transaction is to utilize existing resources in a more efficient manner, reducing 

duplication of operational efforts currently in place, and to more closely coordinate the manner 

in which care is delivered across the sites of care within the combined organization.” 133 Yet 

beyond such general statements regarding various service lines, the Parties do not identify any 

specific areas targeted for quality improvement or detailed plans for achieving improvements. A 

hospital merger may generate overall quality improvements when the merging hospitals have 

very different clinical quality levels if the merger allows the clinically inferior hospital to come 

under the management, and adopt the practices, of the clinically superior hospital, thereby 

improving quality at the inferior hospital. Based on the information FTC staff has obtained to 

date, neither hospital appears to suffer from low quality levels, meaning the potential for overall 

quality improvements may be limited. FTC staff will continue to assess this issue in its ongoing 

investigation. 

Having said that, if SUNY Upstate and Crouse want to engage in greater efforts to 

coordinate care with one another and improve health outcomes for patients, they have other 

options without having to merge. Although standardizing clinical policies and procedures may 

lead to quality improvements, the Parties can achieve these either on their own, through some 

collaboration short of a merger, or through mergers or affiliations with alternative partners that 

raise fewer competitive concerns. As the antitrust agencies have consistently made clear, the 

antitrust laws are not an impediment to legitimate, procompetitive collaboration that would 

benefit consumers. Indeed, the FTC has issued extensive guidance to healthcare providers about 

ways that they can collaborate without running afoul of the antitrust laws. 134 Generally, most of 

the benefits from the merger may be achieved through alternatives that are less restrictive to 

competition and achieve comparable benefits or a more favorable balance of benefits over 

disadvantages. 135

132 COPA Application Attachment 4I-3 at 14. 133 COPA Application at 57. 134 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-commissionjustice-department-policy-statements-health-care-antritrust/hlth3s.pdf (see specifically Statement 6 regarding 

provider participation in exchanges of price and cost information, Statement 7 regarding joint purchasing 

arrangements among providers of health care services, and Statement 8 regarding physician network joint ventures); 

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. 135 This assumes that benefits would be achieved as a result of the merger. FTC staff believes that any benefits 

resulting from the merger that are substantiated and merger-specific are likely to be modest.
FTC Staff Submission (Public) – October 7, 2022 

37 

Indeed, the Parties have collaborated in numerous ways over the last fifteen years 

pursuant to the Berger Commission recommendations and the DSRIP program. Such efforts

include a Clinical Affiliation Agreement, an AAMC Uniform Clinical Training Affiliation 

Agreement, and several additional clinical or operational agreements intended “to take advantage 

of the proximity between the hospitals and avoid unnecessary duplicative capital 

expenditure.” 136 These statewide initiatives were implemented and supervised by the NY DOH, 

and appear to have required substantial resources and public funding. 

 Furthermore, they 

claim that other than the proposed merger, there are “no other available arrangements that would 

have a less restrictive impact on competition in the primary service area and achieve the same 

benefits, including that preserve Crouse as a safety-net hospital in the community for the long 

term, or that could achieve a more favorable balance of benefits.” 137 Despite the FTC’s requests 

for more information from the Parties about these arrangements, the Parties have not supplied the 

documents and information that would be necessary to evaluate their claims. As we noted 

previously, if the Parties were unable to achieve the purported goals of these prior state 

initiatives – namely, to reduce costs and improve quality and accessibility – then we question 

whether they can now achieve these goals through the proposed merger. 

Furthermore, it appears that 

 

 . It is possible, therefore, that there were other partners Crouse could have 

selected that may have raised fewer antitrust concerns. 

 , 

the FTC has no way of evaluating this claim without more detailed information. Indeed, as we 

described previously, it appears that Crouse had conversations with several interested 

organizations, 

 FTC staff encourages the 

NY DOH to request additional documents and information about prior collaborative 

arrangements between the Parties and Crouse’s partner search, to determine whether the Parties’ 

claims in the COPA Application are accurate.

3. COPA Is Unnecessary for Population Health Improvement

The Parties claim that the COPA will “enhance Upstate’s ability to provide care to underserved populations” and “align two health systems already committed to health equity, but who, 

when combined, will be able to achieve greater advances in health equity.” 139 They suggest that 

combining Upstate’s Global Health and Crouse’s Population Health capabilities will enable them 

to enhance access to care across central New York. 140

136 COPA Application at 36. See COPA Application Attachment 14 for complete list of contractual relationships 

between the Parties. See also Berger Commission Report, supra note 6; DSRIP Program Overview, supra note 7. 137 COPA Application at 65. 138 See discussion of Crouse’s partner search, supra at 13. 139 COPA Application at 44. 140 COPA Application at 44.
FTC Staff Submission (Public) – October 7, 2022 

38 

However, both Parties appear to already engage in extensive population health initiatives. 

For example, SUNY Upstate and Crouse both participated in the development of the Onondaga 

County Community Health Assessment and Improvement Plan, along with many other providers 

and community stakeholders. 141 And the COPA Application lists numerous population health 

initiatives that both hospitals have engaged in to prevent chronic disease; promote a healthy and 

safe environment; promote healthy women, infants, and children; promote well-being and 

prevent mental and substance abuse disorders; prevent communicable diseases; and address 

health equity. 142 It is unclear why the proposed merger is necessary for any of these population 

health management initiatives. The relevant question is whether SUNY Upstate and Crouse

would be more likely to participate in such initiatives, or participate more effectively, with this 

merger than they would without it. The Parties present no evidence that this is the case. It 

appears that the region can continue to benefit from these initiatives without incurring the 

disadvantages associated with the proposed merger. Antitrust laws do not prevent these hospitals 

from pursuing population health initiatives in the absence of the merger. Furthermore, there does 

not appear to be any enforceable commitment requiring the combined hospital system to achieve 

these goals post-merger. 

4. Implementation of Uniform EMR System Is Unnecessary to Improve 

Quality of Care

 According the Parties, 

 

 

 

 . 143 Instead, SUNY Upstate has 

agreed to install its EMR system, EPIC, at Crouse as part of the proposed merger. 144 Without 

more detailed information from the Parties, FTC staff has been unable to verify any of these 

details and 

 . Nevertheless, FTC staff has attempted to evaluate the Parties’ claim that 

bringing patient medical records onto a unified EMR will enable them to better coordinate care 

for patients. 

For several reasons, the Parties’ claims regarding a uniform EMR system may be 

overstated. First, they have not demonstrated that the incremental benefit of a common IT 

platform would be of sufficient magnitude to significantly improve patient health outcomes. 

Patients who will only use facilities in one of the current hospital systems are not likely to 

benefit from the combination of the EMR platforms. There are ways for hospitals to effectively 

share information with each other, even with separate EMR systems, further limiting the benefits 

of a common system. Moreover, it is possible that federal legislation regarding EMR 

141 COPA Application at 41. See also Onondaga County Community Health Assessment and Improvement Plan 

2019-2021, http://www.ongov.net/health/documents/OnondagaCountyCHA-CHIP.pdf. 142 COPA Application at 53-56. 143 COPA Application at 49-50. 144 COPA Application at 41, 46.
FTC Staff Submission (Public) – October 7, 2022 

39 

interoperability may reduce or obviate the need for a common EMR platform between the 

Parties. 145

 Second, any benefit of a common EMR system would have to be compared to its costs.

Converting to a common EMR system can be extremely expensive and time consuming, 146 and 

the conversion process can delay access to critical patient information. f 

 

 All told, the time, difficulties, and expense of converting to a common 

EMR system may outweigh the potential benefit.

 Third, a Health Information Exchange (“HIE”) already exists in central New York, which 

enables secure access to patient information across the continuum of care, thereby improving 

patient health outcomes. 149 HealtheConnections appears to have been available since 2011, and 

both SUNY Upstate and Crouse appear to be participants. The Parties have not adequately 

explained the incremental benefit of the information accessible on a combined EMR system 

versus that available on the existing HIE. Furthermore, under the Affiliation and Collaborative 

Agreement, the Parties received a $5.1 million HEAL4 grant in 2007 from the NY DOH for 

information technology updates at SUNY Upstate, so that both hospitals could share electronic 

information. 150 The Parties have not adequately explained how this money was used and why 

they now need a combined EMR system.

In summary of Section VI.A, the proposed merger appears to eliminate direct head-tohead competition between SUNY Upstate and Crouse, and will likely lead to significantly higher 

145 See Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), which requires widespread exchange 

of health information through interoperable certified EMR technology among healthcare providers. Absent the 

merger, the Parties are already required to achieve EMR interoperability. This undermines the Parties’ argument that 

a merger is necessary to achieve a common EMR platform, so that the hospitals can exchange health information.

See also CMS, Promoting Interoperability Programs, https://www.cms.gov/regulations-andguidance/legislation/ehrincentiveprograms?redirect=/ehrincentiveprograms (last accessed Oct. 3, 2022); CMS, 

Certified EHR Technology, https://www.cms.gov/Regulations-andGuidance/Legislation/EHRIncentivePrograms/Certification (last accessed Oct. 3, 2022); CMS, 2022 Medicare 

Promoting Interoperability Program: Certified Electronic Health Record Technology Fact Sheet, 

https://www.cms.gov/files/document/2022-cehrt-fact-sheet.pdf (last accessed Oct. 3, 2022). 146 See Akanksha Jayanthi & Ayla Ellison, 8 Hospitals’ Finances Hurt by EHR Costs, BECKER’S HOSPITAL CFO

(May 23, 2016), http://www.beckershospitalreview.com/finance/8-hospitals-finances-hurt-by-ehr-costs.html; 

Akanksha Jayanthi, 8 Epic EHR Implementations with the Biggest Price Tags in 2015, BECKER’S HEALTH IT & CIO

REVIEW (Jul. 1, 2015), http://www.beckershospitalreview.com/healthcare-information-technology/8-epic-ehrimplementations-with-the-biggest-price-tags-in-2015 html. 147 COPA Application at 49.

 

 149 Healthe Connections, About Us, https://www healtheconnections.org/about-us/ (listing SUNY Upstate, Crouse, 

and St. Joseph’s as hospital participants in Onondaga County). See also, Health IT Connections, Central New York's 

Health Information Exchange Connects Four Area Hospitals, Lab To Improve Patient Care And Continues Its 

Expansion Across CNY (May 3, 2011), https://www healthitoutcomes.com/doc/central-new-yorks-healthinformation-0001. 150 See New York State Department of Health, REPORT ON THE IMPLEMENTATION OF THE REPORT OF THE 

COMMISSION ON HEALTH CARE FACILITIES IN THE TWENTY-FIRST CENTURY at 66, supra note 6. 
FTC Staff Submission (Public) – October 7, 2022 

40 

prices and reduced business incentives to maintain or improve quality and access to care.

Importantly, the benefits of competition among healthcare providers are not confined to those 

patients covered by commercial insurance plans. Competition benefits all patients, including 

those who are covered by government insurance programs (i.e., Medicare and Medicaid) or are 

uninsured. By far, the most important such benefit is improved quality of care. As noted above, 

competition-reducing mergers often reduce quality. Those quality reductions could affect all of 

the hospitals’ patients, not just those with commercial insurance. Competition may also 

indirectly restrain the prices or premiums paid by patients covered by a government insurance 

program or who are uninsured. 151

B. Proposed Merger Likely Would Reduce Patient Access to Healthcare

Services in the Syracuse Area

NY DOH COPA BENEFIT FACTOR (c)(1): Preservation of needed health care 

services in the relevant primary service area that would be at risk of elimination in the 

absence of a Cooperative Agreement

NY DOH COPA BENEFIT FACTOR (c)(2): Improvement in the nature or distribution 

of health care services in the primary service area, including expansion of needed health 

care services or elimination of unnecessary health care services

NY DOH COPA BENEFIT FACTOR (c)(4): Expansion of access to care by medicallyunderserved populations 

ASSESSMENT: The Parties claim they must consolidate certain clinical services in 

order to preserve them and that integration, along with the use of a single EMR system, will 

generally improve coordination of care and offer enhanced access to vulnerable patient 

populations. 152 However, as FTC staff has already noted, consolidation of services could just as 

likely lead to a reduction in access to care. For example, the Parties cite concerns about changing 

demographics and the financial pressures and capacity constraints they will face as utilization 

151 Many Medicare patients are covered by Medicare Advantage (MA) plans rather than by traditional Medicare. 

MA hospital prices are negotiated rather than fixed and, as such, vary from traditional Medicare hospital prices. See

Robert A. Berenson, Jonathan H. Sunshine, David Helms & Emily Lawton, Why Medicare Advantage Plans Pay 

Hospitals Traditional Medicare Prices, 34 HEALTH AFFAIRS 1289 (Aug. 2015), 

http://content.healthaffairs.org/content/34/8/1289.abstract; Laurence Baker, M. Kate Bundorf, Aileen Devlin & 

Daniel Kessler, Medicare Advantage Plans Pay Hospitals Less Than Traditional Medicare Pays, 35 HEALTH 

AFFAIRS 1444 (Aug. 2016), http://content healthaffairs.org/content/35/8/1444.abstract. A competition-reducing 

merger may to some extent increase MA prices, and those increases will be passed through to Medicare 

beneficiaries in the form of higher MA premiums or reduced benefits. In addition, under the Patient Protection and 

Affordable Care Act, prices that non-profit hospitals charge to uninsured, self-pay patients eligible for financial 

assistance can be no more than “amounts generally billed to insured patients.” See Sara Rosenblum, Additional 

Requirements For Charitable Hospitals: Final Rules On Community Health Needs Assessments And Financial 

Assistance, HEALTH AFFAIRS BLOG (Jan. 23, 2015), http://healthaffairs.org/blog/2015/01/23/additionalrequirements-for-charitable-hospitals-final-rules-on-community-health-needs-assessments-and-financial-assistance/. 

The calculation of these “amounts generally billed” includes commercial insurance prices, which means that 

increases in commercial prices also increase the prices that hospitals are permitted to charge to uninsured patients. 152 See, e.g., COPA Application at 41-42.
FTC Staff Submission (Public) – October 7, 2022 

41 

increases from a growing 65-and-older population, and claim the proposed merger is necessary 

to alleviate these concerns and preserve access to healthcare services. 153 However, the Parties 

have not presented sufficient evidence that they lack the financial resources to continue operating 

independently and to maintain quality and access to healthcare services. We urge the NY DOH

to consider whether any challenges the Parties face in response to the changing delivery and 

payment landscape can be addressed in less restrictive ways than the proposed merger, without 

reducing valuable competition in this region. 

Notably, the Parties have made no firm commitments to keep open or maintain current 

service levels at hospitals and other facilities. Indeed, they would likely need to consolidate 

facilities and services to achieve projected cost savings and efficiencies, which would likely lead 

to a reduction in access to healthcare services, including potentially urgent care. The Parties have 

identified some general service areas in which they expect to consolidate volume at one hospital 

or the other following the merger, including: neurology, neurosurgery, and stroke care; labor and 

delivery services; cardiology and cardiac surgery services; surgical oncology services; 

emergency department services; pediatric specialty care and NICU services; and inpatient and 

outpatient behavioral health services and addiction treatment services. We encourage NY DOH 

to weigh carefully the potential benefits of consolidating volume against the potential harms, 

including reduced capacity and increased patient drive times. 

The Parties’ efficiencies claims also raise concerns about reduced capacity and access for 

healthcare. For example, the Parties claim that absent the proposed merger, SUNY Upstate 

would have to build additional inpatient space 

to meet increasing inpatient demands. SUNY Upstate claims to be severely capacity 

constrained and Crouse claims to consistently have excess capacity, 

. Following the proposed merger, SUNY Upstate intends to utilize all of Crouse’s 

existing beds and does not expect to request any additional beds from the NY DOH in the near 

future. The Parties claim that this plan will make 134 beds available to the system, immediately 

alleviating SUNY Upstate’s capacity constraints and avoiding the “costly” inpatient bed tower 

expansion. 154 Without more detailed information from the Parties, FTC staff is unable to verify 

the accuracy of these claims. To be clear, this plan does not mean that bed capacity in the 

Syracuse area will actually increase under the merger. In fact, rather than constructing new 

facilities as SUNY Upstate had considered prior to proposing the merger, the Parties now plan to 

use the available capacity at Crouse to alleviate capacity constraints. Thus, the merger will likely 

lead to a reduction in capacity in the Syracuse area, which could result in less patient access to 

healthcare facilities and services. 

Furthermore, SUNY Upstate can already refer patients to Crouse if it is capacity 

constrained at any given time. As previously discussed, there is significant overlap between 

SUNY Upstate and Crouse in terms of the health conditions of the patients they treat. Therefore, 

absent the merger, Crouse is already a good alternative for potential transfers from SUNY 

Upstate for the vast majority of patients treated there. At best, the Parties’ claims are limited to 

153 COPA Application at 38-39. 154 COPA Application at 34-35, 46.
FTC Staff Submission (Public) – October 7, 2022 

42 

the extent that they can leverage higher acuity service offerings and physician coverage 

capabilities available only at SUNY Upstate, and not Crouse. However, the Parties do not 

quantify the impact of this claim, nor do they assess the likely number of patients who would be 

transferred from Crouse to SUNY Upstate post-merger who could not be transferred pre-merger. 

C. Claims of Cost Savings, Efficiencies, and Improvements in Resource 

Utilization Are Unsubstantiated, Not Merger-Specific, and Insufficient to 

Overcome the Likely Competitive Harm

NY DOH COPA BENEFIT FACTOR (c)(5): Lower costs and improved efficiency of 

delivering health care services, including reductions in administrative and capital costs 

and improvements in the utilization of health care provider resources and equipment 

ASSESSMENT: The Parties claim that the merger will generate substantial cost savings 

and efficiencies through avoidance of capital expenditures, consolidation of clinical services, 

elimination of redundancies, reductions in labor expenses, and reductions in purchasing and 

other non-labor expenses. 155 For the reasons below, the purported gains in cost savings may be 

overstated and may not outweigh the lost competition. Furthermore, experience and evidence 

demonstrate that many hospital mergers do not result in significant efficiencies, despite company 

projections that they will. 156

FTC staff recognizes that mergers have the potential to achieve cost savings and 

efficiencies, and we consider this as part of our analysis. Here, however, the Parties have not 

provided sufficient detail to evaluate the credibility and magnitude of their claims. For example, 

the Parties have not identified the specific steps necessary to achieve any savings, the 

expenditures involved, and a sufficient breakdown of the estimated annual cost savings for each 

category of claimed efficiencies in their COPA Application. Without this information, the 

likelihood and magnitude of cost savings claims cannot be verified, which is necessary for the 

NY DOH to determine whether any claimed efficiencies would offset the significant 

disadvantages of the proposed merger. Furthermore, even assuming the Parties could achieve 

155 See COPA Application at 45-49, 57, 59-61, 64, 67; COPA Application Attachment 19. 156 See Hannah Neprash & J. Michael McWilliams, Provider Consolidation and Potential Efficiency Gains: A 

Review of Theory and Evidence, 82 ANTITRUST L.J. 551, 553 (2019) (“In total, the literature suggests that 

consolidation among health care providers – whether horizontal or vertical – does not, on average, result in welfareenhancing efficiencies. While our findings do not preclude the existence of merger-specific efficiencies in specific 

transactions, they do suggest that antitrust enforcers and policymakers should apply considerable scrutiny to claims 

of such efficiencies.”). See also BRUCE BLONIGEN & JUSTIN PIERCE, EVIDENCE FOR THE EFFECTS OF MERGERS ON 

MARKET POWER AND EFFICIENCY (Board of Governors of the Federal Reserve System, Finance and Economics 

Discussion Series 2016-082, 2016), https://www.federalreserve.gov/econresdata/feds/2016/files/2016082pap.pdf at 

5 (“In summary, we find evidence that M&As increase markups on average across U.S. manufacturing industries, 

but find little evidence for channels often mentioned as potential sources of productivity and efficiency gains.”); 

Scott A. Christofferson, Robert S. McNish, and Diane L. Sias, Where mergers go wrong, 10 McKinsey on Finance 1

(Winter 2004), 

http://www mckinsey.com/client service/corporate finance/latest thinking/mckinsey on finance/~/media/mckinse

y/dotcom/client service/corporate%20finance/mof/pdf%20issues/mof issue 10 winter%2004.ashx (“Most 

companies routinely overestimate the value of synergies they can capture from acquisitions.”).
FTC Staff Submission (Public) – October 7, 2022 

43 

some cost savings, it is unclear how much would be passed through to healthcare consumers in 

the form of lower prices. 

In addition, many of the claimed savings are the type that likely are achievable without 

the proposed merger. The Parties have not shown that all of the claimed benefits are both 

merger-specific and incremental to the benefits the Parties would have achieved without the 

merger. The Parties pledge to use cost savings derived from the merger to invest in quality and 

healthcare initiatives, including population health improvement initiatives. However, it is unclear 

what portion of the savings is truly incremental compared to the current or future investments 

that the hospitals would have made independently, absent the merger. SUNY Upstate and Crouse

already make significant investments in quality and healthcare initiatives, and likely would 

continue to do so without the merger.

 There do not appear to be any enforceable commitments to achieve cost savings or 

efficiencies, or to use these savings to fund quality and access improvements. Even if the Parties

were able to reduce their costs by eliminating competing clinical services, that is not an 

unqualified benefit. Those cost savings may be derived from a reduction in staff or closure of 

facilities, thereby reducing patient access to healthcare services and forcing some patients to

travel further to receive care or wait longer for appointments, which may reduce quality of care 

and patient satisfaction. The Parties claim that “Upstate not only intends to preserve the jobs at 

Crouse, it will grow the employee population, contributing high-value jobs to the 

community.” 157 However, the COPA Application also acknowledges that 

 

 Notably, much of the efficiencies section of the COPA Application is redacted so the 

public has no way of evaluating the Parties’ plans to consolidate or eliminate services to achieve 

cost savings. Any detrimental impact this consolidation would have on the quality of patient care 

should receive appropriate consideration. 

The Parties claim the proposed merger will enable them to utilize resources in a more 

efficient manner and reduce duplicative costs and administrative burden. 159 Yet, although they 

describe plans to avoid future capital expenditures, they have not identified any specific past 

expenditures that they believe to have been unnecessary or duplicative. To the contrary, 

 

 

 

 

 

157 COPA Application at 43. 158 See, e.g., 

 

 

 159 COPA Application at 45-49, 57, . 
FTC Staff Submission (Public) – October 7, 2022 

44 

 

 

 Economic research indicates that hospital competition leads to lower costs, more 

effective resource utilization, and improved patient health outcomes, as compared to highly 

concentrated markets with less competition. 161 Competition between hospitals often leads to 

investments that improve patient care and access to healthcare services. Thus, to the extent that 

hospital competition results in facility expansions and new equipment purchases that improve 

access and quality, competition is good for consumers, not unnecessary or wasteful. Eliminating 

this competition could lead to a less productive allocation of resources and thereby deny 

consumers these benefits. 162 For example, although new equipment can be costly, the quality 

benefits associated with technology advances may justify these expenditures. 163 Investments in 

facilities, technology, and equipment 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, all of which are far from wasteful, but quite beneficial. In contrast, to the extent 

that the combined system’s future plans include the consolidation of clinical services, including 

reduced facility and equipment investments, this could result in reduced patient choice and 

160 . The SUNY Master Capital Plan for 2021-22 lists approximately $50 million for 

projects under design at SUNY Upstate’s University Hospital, $208.8 million for projects under construction, 

including building a new Health and Wellness Center on the SUNY Upstate campus, and $15.2 million in seven 

Capital Plan Projects for SUNY Upstate. See SUNY Master Capital Plan Report, State-Operated Campuses, Fiscal 

Year 2021-22, at 79-82. 

 

161 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 (finding that hospital competition 

unambiguously improves social welfare: competition leads to substantially lower costs and lower levels of resource 

use, as well as lower rates of adverse patient health outcomes); 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 (finding that 

hospital competition leads to improved quality and resource utilization).

162 At the FTC COPA Workshop, participants discussed the impact of state regulatory approaches for reducing 

duplication of healthcare services. Robert Fromberg from Kaufman Hall, an organization that represents health 

systems, emphasized the importance of reducing duplicative or underused clinical services, and the role of COPAs 

as a mechanism for health systems to accomplish this goal. FTC COPA Workshop Transcript: Session 2, supra note 

96, Robert Fromberg remarks at 31-33. See also Kaufman Hall Submission to the FTC (Jun. 4, 2019), 

https://www regulations.gov/document?D=FTC-2019-0016-0010. Professor Thomas Stratmann then presented his 

economic research on the effects of CON laws. While CON laws are distinct from COPA laws, they both have the 

effect of restricting competition among healthcare providers in order to rationalize certain services. The policy goals 

of CON and COPA laws are also similar – to achieve cost savings by reducing duplicative or underused services, to 

improve quality of care, and to improve access for services. Thus, CON research may be relevant for considering the 

impact of COPA laws and regulations. Professor Stratmann’s research indicates that states with CON laws have 

reduced access to care and reduced quality, as compared to states without CON laws. See also Vivian Ho 

Submission to the FTC (Jun. 5, 2019), https://www.regulations.gov/document?D=FTC-2019-0016-0012 (describing 

empirical research that demonstrates “[w]ell-intentioned state CON regulations have not improved patient outcomes 

or lowered costs for patients. Healthy market competition amongst hospitals is a better strategy for improving 

patient welfare.”). 163 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 (“When costs and benefits are 

weighed together, technological advances have proved to be worth far more than their costs.”).
FTC Staff Submission (Public) – October 7, 2022 

45 

access to healthcare services. For example, as discussed above, the Parties’ plans to forego an 

expansion of SUNY Upstate’s inpatient facility appears to be a reduction of capacity that could 

reduce patient access.

D. Merger Would Make It More Difficult for Health Care Payers to Negotiate 

Reasonable Payment and Service Arrangements with the Combined Hospital 

Entity, Likely Resulting in Higher Prices for Patients and Employers

NY DOH COPA DISADVANTAGE FACTOR (d)(3): Inability of health care 

payers or health care providers to negotiate reasonable payment and service 

arrangements 

NY DOH COPA BENEFIT FACTOR (c)(6): Implementation of payment methodologies 

that control excess utilization and costs, while improving outcomes 

ASSESSMENT: The New York COPA Regulations require the NY DOH to consider 

whether the proposed merger would have an adverse impact on the ability of health insurers to 

negotiate payment and service arrangements with healthcare providers. Ultimately, this is an 

important indicator of how the merger is likely to impact consumers because health insurers 

negotiate on behalf of their customers – area residents and employers. When hospitals obtain 

greater bargaining leverage, they are able to negotiate higher reimbursement rates (i.e., prices) 

with insurers. Insurers typically pass on these higher prices to consumers in the form of higher 

premiums, copayments, deductibles, and other out-of-pocket expenses. This affects fully insured 

employers who offer coverage to their employees, self-insured employers who pay their 

employees’ healthcare claims, employees who pay some portion of their health insurance 

benefits, and individuals who purchase health insurance directly. 164 Furthermore, employers 

facing higher costs may reduce insurance coverage for their employees or eliminate insurance 

coverage altogether. Higher healthcare costs can also be passed through to employees in the form 

of lower wages and total compensation. 165 Because the FTC is concerned about the impact that 

164 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. 165 See, e.g., Gaynor, Ho & Town, supra note 64, at 236 (stating that employers pass through higher health care 

costs dollar for dollar to workers, either by reducing wages or fringe benefits, or even dropping health insurance 

coverage entirely); GAYNOR & TOWN, supra note 64, at 1 (“Ultimately, increases in health care costs (which are 

generally paid directly by insurers or self-insured employers) are passed on to health care consumers in the form of 

higher premiums, lower benefits and lower wages[.]”); 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; 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 (finding 

that increased health insurance costs lead to reduced wages and employment); 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 (finding that as health insurance costs increase, 

employers that offer health insurance reduce total employee compensation); Jay Bhattacharya & M. Kate Bundorf, 

The Incidence of the Healthcare Costs of Obesity, 28 J. HEALTH ECON. 649 (2009), 
FTC Staff Submission (Public) – October 7, 2022 

46 

healthcare mergers will have on consumers, we take seriously the impact that a hospital merger 

will have on the ability of insurers to negotiate competitive prices and other contractual terms on 

consumers’ behalf.

Currently, prices for inpatient, outpatient, and physician services provided by SUNY 

Upstate and Crouse are set via negotiations between each hospital system and insurers. We focus 

our discussion below on inpatient hospital services, but the same analysis applies to outpatient 

and physician services. Each side in these negotiations has some bargaining power. The insurer’s 

bargaining power stems from the fact that the hospital wants access to the insurer’s patient 

members, and the hospital’s bargaining power stems from the fact that its inclusion in the 

insurer’s network will make that network more attractive to potential patient members. The 

prices that result from these negotiations are a function of the relative bargaining leverage of the 

two sides in the negotiations, which will depend on how each side would fare if no agreement 

were reached. Generally, the less one side has to lose from failure to reach an agreement, relative 

to the other side, the more favorable prices and other contractual terms it will be able to 

negotiate. Mergers of competing hospitals give hospitals more relative bargaining leverage 

because, after the merger, insurers now have more to lose from failing to reach agreement with 

the merged system.

Today, SUNY Upstate and Crouse independently have substantial bargaining leverage in 

negotiations with health insurers. An insurer network that lacks the hospitals of either system is 

less attractive to employers and consumers than a network that includes the hospitals of both 

systems, and this gives each system significant bargaining power today relative to insurers. 

However, the bargaining leverage of each hospital system is limited by the availability of the 

other system (as well as St. Joseph’s) as an alternative. That is, an insurer could still offer a fairly 

attractive network if it included only two of these three Syracuse area hospital systems, 

especially because that more limited network would likely be offered at a discount. 166 After the

proposed merger, an insurer would have to agree to SUNY Upstate’s rates or offer a health plan 

consisting of just one Syracuse area health system. Moreover, there is some indication from a 

recent study that SUNY Upstate raised rates at Community General after it acquired the 

independent hospital system in 2011: 

SUNY Upstate was reportedly aggressive after its 2011 merger with Community General 

in increasing prices and refusing, for instance, to phase in cost increases over time. As 

one insurer respondent noted, “my most expensive hospital took over my cheapest 

http://www.sciencedirect.com/science/article/pii/S0167629609000113 (finding that increased health insurance costs 

can be passed to employees in the form of lower wages); and Jonathan Gruber, The Incidence of Mandated 

Maternity Benefits, 84 AM. ECON. REV. 622 (1994), http://economics.mit.edu/files/6484 (finding that increased 

health insurance costs can be passed to employees in the form of lower wages). 166 It is important to note that, even in this case, both the hospital system and the insurer still benefit from reaching 

an agreement, and so agreement is usually reached. But the terms on which agreement is reached depend on the 

relative bargaining power of the hospital system and the insurer, which in turn will depend on the degree of hospital 

competition.
FTC Staff Submission (Public) – October 7, 2022 

47 

hospital so the pricing of my cheapest hospital is now the same as my most expensive 

hospital.” 167

Despite the Parties’ vague assurance that they “do not anticipate an immediate change in 

commercial reimbursement rates,” (emphasis added) 168 the proposed merger would give the 

combined hospital system the ability to extract substantially higher reimbursement rates from 

health insurers during contract negotiations, whether or not it occurs immediately. 

 

 

 

The Parties also assert the proposed merger would facilitate the expansion of value-based 

payment arrangements with government and commercial payers. 171 However, it is unclear 

exactly how the merger would affect the combined hospital system’s business incentives to enter 

into value-based payment models. It is possible that the COPA, by increasing the combined 

hospital system’s bargaining leverage, could diminish its willingness to cooperate with payers’ 

attempts to lower costs through value-based and risk-based contracting models, if adopting such 

an approach would prove less profitable than traditional fee-for-service models. Thus, with its 

substantial post-merger market power, the combined hospital system may be able to resist certain 

efforts to negotiate beneficial value-based or risk-based contracts that make it worse off than feefor-service contracts because insurers will have no viable alternatives than to contract with the 

combined hospital system. Supporting this conclusion, recent empirical research suggests that 

consolidation among healthcare providers has not facilitated the increased use of value-based 

payment models, and that providers in concentrated markets may be able to resist such 

initiatives. 172 On a related note, recent literature suggests that health systems with increased 

167 Katie Keith, Sabrina Corlette & Olivia Hoppe, ASSESSING RESPONSES TO INCREASED PROVIDER CONSOLIDATION 

IN THREE MARKETS: DETROIT, SYRACUSE, AND NORTHERN VIRGINIA; CASE STUDY ANALYSIS: THE SYRACUSE 

HEALTH CARE MARKET, Center on Health Insurance Reforms at 6 (Nov. 2018), 

https://georgetown.app.box.com/s/38whcvigzyytlzznecxz0oq9qklsaitq. 168 COPA Application at 59. 169 COPA Application Attachment 4I-1 at 16. 170 COPA Application Attachment 4I-4 at 10 

 . 171 COPA Application at 60-61. 172 See Hannah Neprash, Michael Chernew & J. Michael McWilliams, Little Evidence Exists to Support the 

Expectation that Providers Would Consolidate to Enter New Payment Models, 36 HEALTH AFFAIRS 346, 353 

(2017), https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2016.0840 (“These findings suggest that new payment 

models may have triggered some consolidation as a defensive reaction to the threat these models could pose, rather 

than as a way to achieve efficiencies in response to the new incentives. Hospitals and specialists in particular might 

consolidate both horizontally and vertically to achieve sufficient market share to resist payer pressure to enter risk 

contracts or weaken ACOs’ ability to exploit competition in hospital and specialty markets, and compel reductions 

in prices and service volume. . . . Specifically, our study supports skepticism of claims by providers that they are 

consolidating primarily to engage in risk contracts and achieve efficiencies.”); Cooper, Craig, Gaynor & Reenen, 

supra note 64, at 104 (“Finally, there is widespread agreement that payment reform (shifting to contracts where 

providers bear more risk) is crucial to increasing hospital productivity (McClellan et al. 2017). Our analysis suggests 

that providers who have fewer potential competitors will be more able to resist attempts at such payment reform.”).
FTC Staff Submission (Public) – October 7, 2022 

48 

scale are not more likely to engage in or be more successful at value-based contracting. 173

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

hospital systems and insurers nationwide, and is mandated by CMS in some circumstances. 174 

 

 

 In keeping with this trend, SUNY Upstate and Crouse likely 

would continue to transition to value-based initiatives independently. Crouse admits that it 

“maintains four value-based payment arrangements with government and commercial payors, 

and intends to expand those arrangements following the Transaction.” 176 

 

 

 

 By 

pairing Crouse’s primary care base and population health infrastructure with SUNY Upstate’s 

specialists, the Parties contend the proposed merger would “greatly accelerate Upstate’s ability 

to participate in value-based arrangements and enhance Crouse’s current capabilities.” 177

Without more detailed information from the Parties, FTC staff is unable to verify the accuracy of 

these claims. However, to the extent these hospitals have already transitioned to value-based 

initiatives and would have continued to expand value-based initiatives independently, this cannot 

be considered a merger-specific benefit. 178

173 See, e.g., 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/sizeshould-matter (finding that greater size has not led to lower costs or better quality outcomes for consolidated health 

systems); David Muhlestein, Robert Saunders & Mark McClellan, Medical Accountable Care Organization Results 

for 2015: The Journey to Better Quality and Lower Costs Continues, HEALTH AFFAIRS BLOG (Sept. 9, 2016), 

http://healthaffairs.org/blog/2016/09/09/medicare-accountable-care-organization-results-for-2015-the-journey-tobetter-quality-and-lower-costs-continues/ (“Also consistent with last year, large, consolidated ACOs did not 

necessarily achieve the best performance. In fact, we found that the opposite was often true, as smaller, physicianled ACOs were more likely to improve quality and lower cost enough to earn shared savings. This result is a 

cautionary note given the trend toward mergers and consolidations among health systems; consolidation and 

larger size do not necessarily lead to the functional integration and efficiency needed to succeed under 

alternative payment models.”) (emphasis added). 174 See CMS, Value-Based Programs, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/Value-Based-Programs/Value-Based-Programs (last accessed Oct. 3, 2022); U.S. Dep’t of Health & 

Human Servs., Better, Smarter, Healthier: In Historic Announcement, HHS Sets Clear Goals and Timeline for 

Shifting Medicare Reimbursements From Volume to Value (Jan. 26, 2015). 175 COPA Attachment 4I-1 at 16. 176 COPA Application at 60. 177 COPA Application at 61. 178 See Fed. Trade Comm’n v. Penn State Hershey Med. Ctr., 838 F.3d 327, 350-51 (3d Cir. 2016) (suggesting that 

the ability to engage in risk-based contracting cannot be considered a cognizable, merger-specific benefit when both 

of the merging hospitals are already capable of doing this independently).
FTC Staff Submission (Public) – October 7, 2022 

49 

E. Merger Likely Would Substantially Reduce Competition for Physician 

Services and Ancillary Healthcare Services

NY DOH COPA DISADVANTAGE FACTOR (d)(4): Reduced competition 

among physicians, allied health professionals, other health care providers, or other 

persons furnishing goods or services to, or in competition with, health care 

providers and the potential for adverse health system quality, accessibility and cost 

consequences

ASSESSMENT: The framework to evaluate outpatient providers and physician services 

mergers is essentially the same as that described above for inpatient hospitals. Like hospitals, 

providers of outpatient services and physician services compete for inclusion in health plan 

networks and to attract patients. These providers negotiate reimbursement rates with insurers, 

and the rates negotiated depend on their relative bargaining leverage. When there are adequate 

alternatives to a particular provider, an insurer has a greater ability to resist demands for higher 

rates by a particular outpatient provider and physician-services provider. 

Based on the information FTC staff has obtained to date, SUNY Upstate and Crouse 

appear to be close competitors for outpatient and physician services. The systems operate 

competing outpatient centers that serve the Syracuse area, and each system employs physicians 

across numerous specialties. The systems compete for inclusion in insurer networks and 

negotiate with insurers to establish rates for outpatient and physician services. The proposed 

merger would eliminate the competition between the systems for outpatient and physician 

services and would further consolidate those markets. Post-merger, the combined system’s 

negotiating leverage is likely to increase substantially, which is likely to lead to higher prices and 

reduced quality and availability of physician and outpatient services to the serious detriment of 

area residents and employers. 

 In summary of Section VI, it appears that the proposed merger is likely to result in 

serious disadvantages resulting from the loss of competition, while any benefits are likely to be 

modest and may be largely achievable by other means that are less restrictive to competition.

Again, FTC staff notes that to fully assess these issues during our ongoing investigation, we need 

more detailed information that the Parties have not yet provided. In the following section, we 

assess whether regulatory terms and conditions could mitigate the likely disadvantages of the 

COPA. 

VII. Possible Terms and Conditions Imposed Under Active Supervision Are Unlikely to

Mitigate the Disadvantages Resulting from Loss of Competition

NY DOH COPA FACTOR (g): The extent to which active supervision is likely to 

mitigate the disadvantages

ASSESSMENT: The Parties do not appear to offer any enforceable commitments to 

mitigate the potential anticompetitive harms resulting from the merger. Instead, the Parties offer 

the following vague conditions they claim will limit the potential for unintended negative 
FTC Staff Submission (Public) – October 7, 2022 

50 

impacts following the merger – most of which are merely aspirational promises to continue what 

they are already doing or would have to do under current laws, regardless of the COPA. 

• Continuing to operate and provide a full range of essential health care services at 

Crouse; 

• Maintaining or enhancing essential health care services in all counties Upstate serves;

• Bringing a Comprehensive Heart Institute to the region;

• Treating Medicare and Medicaid patients at all inpatient and outpatient locations;

• Publicly reporting quality information and other key metrics through reporting; 

• Committing to good faith negotiations with all payors; and

• Reporting changes in prices on negotiated rates consistent with price transparency 

laws – this will allow the Department to monitor changes in prices on negotiated 

rates. 179

A. Parties’ Proposed Conditions and Monitoring Plan Are Insufficient

The Parties claim their proposed conditions and monitoring approach “will mitigate any 

potential disadvantages of a Cooperative Agreement by ensuring that the proposed goals and 

benefits of the Cooperative Agreement are tracked, measured and achieved.” 180 FTC staff 

strenuously disagrees with this characterization. To the contrary, the proposed conditions fail to 

define exactly what would be required of the Parties, provide no objective assurance that any of 

these conditions will actually be achieved, and lack any mechanism for holding the combined 

hospital system accountable if it does not fulfill the conditions. The Parties’ proposal for 

monitoring the impact of the COPA consists of little more than an offer to file an Annual 

Performance Report that will include a written narrative describing the benefits achieved under 

the COPA. The quality metrics the Parties propose to track their progress are quite limited, 181

and although the Parties offer to provide supporting “data and metrics” in their annual reports, 

they do not specify which data and metrics will be used. Instead, the Parties suggest that after the 

COPA is approved, they would work collaboratively with the NY DOH to jointly develop targets 

that would measure progress towards program goals. 182 This kind of post-transaction 

determination of performance metrics does not allow for public evaluation of active state 

supervision. It also, critically, delays measuring or monitoring of those metrics by the state.

While FTC staff has raised concerns about COPA conditions attempted in other states, 

the Parties’ proposed conditions fall short of what we have observed elsewhere. In particular, 

although price regulation is not a substitute for market competition, in this case, there does not 

even appear to be any mechanism for the NY DOH to regulate prices for healthcare services. 

Unenforceable commitments to negotiate with payers in good faith and comply with price 

179 COPA Application at 70. 180 COPA Application at 71. 181 See COPA Application Attachment 22 

 . 182 See COPA Application at 69-70.
FTC Staff Submission (Public) – October 7, 2022 

51 

transparency law reporting requirements will do nothing to prevent anticompetitive price 

increases that are likely to occur as a result of the merger. 

Furthermore, measuring healthcare quality can be challenging and the NY COPA 

Regulations do not specify objective, quantitative quality of care benchmarks by which claimed 

benefits can be evaluated, much less weighed against the disadvantages likely to result from the 

COPA. It is unclear how the NY DOH could objectively determine whether the hospital 

attestations regarding quality benefits are accurate, and thus whether the combined hospital 

entity is complying with the requirements of the COPA. 183 Critically, there appear to be no 

meaningful enforcement mechanisms if the hospital fails to achieve its promises regarding 

quality improvements, other than revoking the COPA. And it should be noted that revoking the 

COPA does not really punish the Parties for failing to achieve quality improvements. Indeed, the 

Parties may consider this outcome desirable because it would leave them unconstrained in their 

ability to exercise market power to the detriment of Syracuse area patients.

The Parties propose that in the event the NY DOH determines there are any material 

deviations from the COPA terms and conditions, that the hospital system would have 30 days to 

adopt a remediation plan intended to correct any deficiencies. 184 However, no further details are 

specified as to what would be required in a remediation plan and it is unclear what happens if a 

remediation plan proves inadequate for resolving a problem with the COPA. 

Finally, the Parties suggest that the NY DOH implement a monitoring plan similar to 

what was used for COPAs approved under the DSRIP program. 185 FTC staff is aware of only 

one Performing Provider System (“PPS”) that received COPA approval under the DSRIP 

program in 2015 – Staten Island PPS. 186 However, it is unclear exactly what the NY DOH did to 

monitor this COPA, which expired when the DSRIP program ended in 2020. Some of the NY 

DOH’s quarterly DSRIP reports reference plans to monitor the Staten Island PPS COPA. 187 We 

have not been able to confirm that the NY DOH accomplished these plans or how the NY DOH

assessed any information it may have obtained. Without greater transparency into the specific 

details of the NY DOH’s active supervision for this COPA, we cannot say whether it would be 

sufficient for monitoring the proposed hospital merger to mitigate the potential for 

anticompetitive harms and disadvantages. However, we note that monitoring a fully merged 

hospital system in perpetuity presumably would be quite different than monitoring a DSRIP 

provider collaboration for a limited duration as part of a broader statewide initiative aimed only 

at the Medicaid program. 

183 See New York COPA Regulations § 83-2.9 (requesting that COPA recipients address several factors in their 

annual performance reports, but not specifying any objective data or metrics that must be provided).

184 See COPA Application at 69. 185 See COPA Application at 71. 186 See New York State Department of Health Public Health and Health Planning Council, Executive Summary for 

the Staten Island PPS COPA Application, 

https://www health.ny.gov/facilities/public health and health planning council/meetings/2016-11-17/docs/copasipps staten island pps.pdf. 187 See New York State Department of Health, NYS DSRIP Quarterly Reports (2014-2020), 

https://www health.ny.gov/health care/medicaid/redesign/dsrip/quarterly reports htm. 
FTC Staff Submission (Public) – October 7, 2022 

52 

B. Possibility of Voluntary Termination Poses Serious Concerns and Revocation 

of COPA Is Unlikely to be an Effective Remedy 

Under the New York COPA Regulations, the hospital can voluntarily terminate its COPA 

by giving 30 days’ notice after the COPA has been in effect for a minimum of two years. 188 This 

means that once all of the hospital assets are combined, the hospital could terminate the COPA 

and therefore no longer be constrained by any meaningful competition or state regulation of 

potentially anticompetitive conduct. At this point, antitrust enforcement would not be a likely 

remedy. Indeed, as we discuss below, we have significant concerns about the difficulty and 

feasibility of separating a hospital system after assets have been integrated. 

The New York COPA Regulations require the NY DOH to review periodic reports 

submitted by the hospitals and allow the NY DOH to revoke the COPA if it investigates the 

hospital’s activities and determines that the hospital is not complying with the terms of the 

COPA or the benefits of the merger no longer outweigh the disadvantages attributable to a 

reduction in competition. 189 Unfortunately, there is no certainty that this provision would protect 

the public if the COPA does not fulfill its promised benefits.

Even if the NY DOH attempted to order a divestiture of assets as part of the revocation of 

a COPA, this is unlikely to return the hospital systems to their pre-merger status and fully restore 

the lost competition once the merger has already been consummated. Hospital mergers can 

involve a significant degree of integration. For example, the combined entity could consolidate 

or close hospitals; consolidate and transfer service lines; reorganize physician and other staffing 

at hospitals (with some physicians potentially leaving the area); negotiate new, consolidated 

contracts with health insurers; integrate EHR and other IT systems; integrate accounting and 

other financial systems; eliminate management and other staff; consolidate administrative 

services and vendors; and change many aspects of daily operations at these hospitals. These 

changes likely would alter patient travel patterns and facility preferences, as well. Reversing all 

of this integration and these changes through revocation of the COPA would be highly 

disruptive, and quite likely impossible. 190

188 New York COPA Regulations § 83-2.14. 189 New York COPA Regulations § 83-2.10. 190 Recent FTC and DOJ statements have indicated that the agencies are willing to seek post-consummation 

structural relief in appropriate circumstances. See ANTITRUST DIV., U.S. DEP’T OF JUSTICE, MERGER REMEDIES

MANUAL 19 (2020), https://www.justice.gov/atr/page/file/1312416/download (“If the acquired assets are integrated, 

crafting an effective divestiture to eliminate the anticompetitive effects may be difficult, but nonetheless necessary 

to undo the illegal effects of the merger.”); Ian Conner, Former Director, Bureau of Competition, FTC, Remarks at 

GCR Live 9th Annual Antitrust Law Leaders Forum: Fixer Upper: Using the FTC’s Remedial Toolbox to Restore 

Competition 4 (Feb. 8, 2020), 

https://www.ftc.gov/system/files/documents/public statements/1565915/conner gcr live conduct remedies 2-8-

20.pdf (“For many reasons, it may be hard to resurrect a competitor or form a new player that is able to exert the 

same competitive intensity that the target would have provided, but for the merger in question. The recent Remedy 

Study noted that the Commission may face significant challenges in crafting a remedy for a consummated merger, 

especially if the acquired business has been merged and its assets combined with those of the acquiring firm. . . . 

Nevertheless, even when it is hard and may require assets and services beyond those acquired, breakup of the 

merged company to reestablish competition is still the most likely remedy for a consummated merger.”); FED.
FTC Staff Submission (Public) – October 7, 2022 

53 

For that reason, antitrust agencies typically seek to prevent or remedy problematic 

mergers before they are consummated because it is inherently challenging, and rarely feasible, to 

“unscramble the eggs” and unwind the assets of companies after they have been integrated. 191

Historically, the FTC has faced difficulties in obtaining effective remedial relief after assets have 

been combined through a merger, including hospital and other healthcare provider mergers. 

Indeed, even in certain cases where the FTC has proven that such a merger was anticompetitive 

and resulted in higher prices without offsetting quality improvements or enhanced patient 

experience, the FTC has been unable to obtain a viable divestiture remedy for these harms. 192

Similarly, if the COPA is approved, and SUNY Upstate is allowed to merge its operations with 

Crouse, the remedies available if the merger does not yield its promised benefits would be 

severely limited.

The revocation provision does not guarantee a restoration of pre-consolidation market 

competition, nor does it guarantee an adequate timeline for restoring pre-consolidation market 

competition. Based on recent FTC experience, it can take a year or more to finalize divestitures, 

even when there has not been significant facility, clinical, and other integration between the 

Parties. 193

C. General Concerns with Conduct Remedies 

Beyond what the Parties offered in the COPA application, the NY DOH has independent 

discretion to impose terms and conditions on recipients of COPAs in an attempt to mitigate the 

disadvantages resulting from loss of competition, although we do not know whether this will 

happen or what possible terms might entail. Other states have imposed various types of terms 

and conditions on recipients of COPAs, including rate regulation, mechanisms for sharing cost 

savings and efficiencies with local residents, public reporting of quality metrics, and 

TRADE COMM’N, THE FTC’S MERGER REMEDIES 2006-2012: A REPORT OF THE BUREAUS OF COMPETITION AND 

ECONOMICS 12, 18-19 (2017), https://www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-

report-bureaus-competition-economics/p143100 ftc merger remedies 2006-2012.pdf (describing the significant 

challenges in crafting a remedy for a consummated merger when assets have been combined).. 191 See, e.g., Deborah L. Feinstein, Former Director, Bureau of Competition, FTC, Remarks at the Fifth National 

Accountable Care Organization Summit: Antitrust Enforcement in Health Care: Proscription, not Prescription (Jun. 

19, 2014), https://www ftc.gov/system/files/documents/public statements/409481/140619 aco speech.pdf 192 See, e.g., Opinion of the Commission on Remedy in the Matter of Evanston Northwestern Healthcare Corp. 89-

91, Docket No. 9315 (Apr. 28, 2008),

https://www ftc.gov/sites/default/files/documents/cases/2008/04/080428commopiniononremedy.pdf; Statement of 

the Federal Trade Commission in the Matter of Phoebe Putney Health Sys., Inc., Docket No. 9348 (Mar. 31, 2015), 

https://www ftc.gov/system/files/documents/public statements/634181/150331phoebeputneycommstmt.pdf

(Commission unable to unwind merger of two hospitals merging to a monopoly because of state certificate of need 

laws and regulations).

193 See, e.g., Press Release, Fed. Trade Comm’n, FTC Approves ProMedica Health System’s Divestiture of former 

Rival St. Luke’s Hospital (Jun. 24, 2016), https://www.ftc.gov/news-events/press-releases/2016/06/ftc-approvespromedica-health-systems-divestiture-former-rival-st (Divestiture of hospital approved in June 2016, four years after 

Commission ruled that the proposed transaction violated the Clayton Act); Order to Maintain Assets at 1-2, Saint 

Alphonsus Med. Center-Nampa, Inc. v. St. Luke’s Health System, Ltd., No. 1:12-cv-00560-BLW (D. Idaho Dec. 10, 

2015) (Order appointing trustee to oversee divestiture of hospital 22 months after district court enjoined the 

transaction and over two and a half years after Commission filed complaint for permanent injunction). 
FTC Staff Submission (Public) – October 7, 2022 

54 

commitments regarding certain contractual provisions between the hospitals and commercial 

health insurers. Such terms and conditions are often referred to as “conduct remedies” because 

they attempt to ameliorate the harm to competition and consumers resulting from a merger by 

imposing restrictions on the merged entity’s conduct. 194

 

It is doubtful that conduct remedies can drive meaningful cost savings and quality 

improvements with as much force as maintaining a competitive environment. Conduct remedies 

that purport to restrain price increases are unlikely to replicate the pricing dynamics that would 

have prevailed absent the merger because such a remedy cannot replace the competitive 

conditions that otherwise would have existed. Rate review cannot simulate the nuanced, iterative 

responses that competitors make in response to each other during the negotiation process. 195 In 

addition, a conduct remedy designed to mitigate one type of harm may inadvertently create 

another type of harm as an unintended consequence. For example, a conduct remedy limiting 

price increases may result in the unintended reduction in quality of care. 

Conduct remedies designed to prevent price increases have several serious 

deficiencies. First, they are typically temporary. After the conduct remedy expires, the less 

competitive market structure remains, but any constraint imposed by the remedy will be 

eliminated, and prices are likely to increase as a result. 196 Second, designing and enforcing price 

restrictions is a complicated and highly resource-intensive endeavor, in part because such 

restrictions would need to constrain prices for all current and future services provided by the 

merged entity during the relevant timeframe, and account for different (or changes in) 

reimbursement methodologies. 197 In the healthcare industry, in particular, where prices, quality, 

and costs are difficult to measure, these kinds of regulatory mechanisms often do not achieve 

their intended purpose, no matter how well-intentioned. 198 

194 In contrast to conduct remedies, “structural remedies,” which include divestitures and injunctions preventing 

mergers, restore or maintain competition at the pre-merger level, thereby remedying the source of the 

anticompetitive harm – the elimination of competition between the merging hospitals. Under a conduct remedy, 

competition at the pre-merger level is not maintained. Designing a conduct remedy that would counteract the effects 

of an anticompetitive merger is nearly impossible because the source of the harm is not prevented. 195 See Commonwealth v. Partners Healthcare Sys., No. SUCV2014–02033–BLS2, at 42 (Sup. Ct. of Mass. Jan. 30, 

2015), http://www mass.gov/ago/docs/press/2015/partners-memo-of-decision-and-order.pdf (“A conduct remedy, 

which typically involves regulation of specific conduct over a limited period of time, is more difficult to craft and 

easier to circumvent. It also does not directly address the problem, which is a loss of competition: indeed, it permits 

consolidation and then attempts to limit the consequences that flow from that by imposing certain restrictions on the 

defendant's behavior. . . . [C]onduct remedies ‘seek to thwart the natural incentives of the merged entity to behave as 

a single firm’ and thus require constant and costly monitoring.”).

196 See id. at 3 (stating that the temporary conduct remedies would be “like putting a band-aid on a gaping wound 

that will only continue to bleed (perhaps even more profusely) once the band-aid is taken off.”). 197 The purpose of imposing a conduct remedy is to constrain the exercise of market power following the merger. 

The constraint would not be effective if market power could be exercised by increasing the price of bundles of 

services containing a mix of constrained and unconstrained services. 

198 See Letter from 21 Health Care Economists to The Honorable Janet L. Sanders in the Matter of Commonwealth 

of Massachusetts v. Partners Healthcare Sys. (July 21, 2014) [hereinafter Partners Economist Letter]; 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

(“Economists have long recognized the difficulties of regulating monopolists and how regulation, no matter how 
FTC Staff Submission (Public) – October 7, 2022 

55 

Even assuming that price restrictions could effectively replicate pricing that would 

prevail were the Parties to continue to compete, the proposed merger would still likely cause a 

reduction in business incentives to improve or maintain quality. Economic theory and empirical 

evidence indicate that adverse quality effects of mergers are particularly likely in markets where 

prices are regulated. 199 For example, studies of the United Kingdom healthcare market, where 

rate regulation has long been the norm, demonstrate that highly concentrated provider markets 

have worse patient health outcomes than competitive provider markets. 200 

Designing a conduct remedy to mitigate the harms of lost quality competition would be 

extremely difficult and resource intensive. Any meaningful remedy would need to both establish 

an explicit quantitative measure of the level of quality that competition would have produced and 

require the merged entity to produce at least that level of quality. This is nearly impossible, for 

several reasons. While objective quality measures exist for specific inpatient hospital services

(and may be incorporated into commercial insurance contracts), these measures are not 

comprehensive and are difficult to establish; moreover, it would be even more difficult to 

establish those measures for non-inpatient services (e.g., outpatient services) because those 

quality measures are generally much less developed. 

It would be equally challenging to design a compliance mechanism to ensure that the 

combined hospital system achieved defined quality targets. Due to the complexities of assessing 

quality, no mechanism exists to impose a conduct remedy sufficient to offset a loss of quality 

competition. It is difficult to envision how a supervisor of the COPA would be able to effectively 

force the combined hospital system to achieve a particular quality metric. Even if it were 

possible to establish a meaningful penalty for failure to perform, the combined health system still 

would be less likely to reach the quality levels that the hospitals would have achieved 

independently in a competitive environment. 

The federal antitrust agencies have long contended that conduct remedies are inadequate 

for addressing competitive harms that result from horizontal mergers. Instead, the agencies

strongly prefer “structural remedies,” which seek to restore pre-merger competitive conditions 

through an injunction preventing consummation of a merger or a divestiture of assets. 201 Courts 

carefully crafted and implemented, can inadvertently create undesirable incentive problems.”); Cory S. Capps, 

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

System 32 (May 2, 2011) (“Economists generally agree that, with rare exceptions, competition produces better 

outcomes than regulation.”); Comment from Amerigroup Corp. to the Tenn. Dep’t of Health 4 (Sept. 21, 2015), 

https://www.tn.gov/assets/entities/health/attachments/Amerigroup-COPA Written Comments.pdf (“regardless of 

the obligations and restrictions placed on recipients of a COPA, regulations are never an effective substitute for 

competition”). 199 See, e.g., Gaynor, Ho & Town, supra note 64. 200 See, e.g., Gaynor, Moreno-Serra & Propper, supra note 161. 201 See DOJ Merger Remedies Manual, supra note 190; FTC Merger Remedies Study, supra note 190; Feinstein, 

supra note 191. See also Fed. Trade Comm’n, Analysis of Proposed Agreement Containing Consent Order to Aid 

Public Comment: In the Matter of Phoebe Putney Health System, Inc., et al., Docket No. 9348, at 1 (Aug. 22, 2013), 

https://www ftc.gov/sites/default/files/documents/cases/2013/08/130822phoebeputneyanal.pdf (“The Commission 
FTC Staff Submission (Public) – October 7, 2022 

56 

generally agree with this position. 202 In 2015, for example, a Massachusetts court rejected a 

consent agreement that would have allowed multiple hospital systems to merge, provided they 

agreed to certain conduct remedies. The court found that the proposed conduct remedies – which 

included price caps, component contracting, a prohibition on joint contracting, and physician and 

network growth restrictions – would have done little to restore the lost competition or to address 

the anticompetitive harms. 203 Furthermore, the court expressed serious concerns about its ability 

to enforce the conduct remedies, which would have required substantial technical expertise and 

resources to resolve complicated issues relating to healthcare pricing during a time in which 

healthcare contracting practices were changing enormously. 204 While every geographic area has 

unique aspects, these challenges would almost certainly arise in the Syracuse area. 

In summary, rate regulation and other conduct remedies do not replicate lost competition 

resulting from mergers, they are challenging and costly to implement, and they require constant 

supervision to ensure compliance. Adding to this complexity, hospitals subject to rate regulation 

and other conduct remedies often have strong financial incentives to circumvent the required 

regulatory commitments. 205 All of these factors would strain the state’s ability to determine 

whether the public policy goals of the COPA are being met and to hold the combined hospital 

system accountable. 

has declined to seek price cap or other nonstructural relief, as such remedies are typically insufficient to replicate 

pre-merger competition, often involve monitoring costs, are unlikely to address significant harms from lost quality 

competition, and may even dampen incentives to maintain and improve healthcare quality.”). 202 See, e.g., United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 330-31 (1961) (Supreme Court held that 

structural remedies to preserve competition are the preferred form of relief for mergers that violate Section 7 of the 

Clayton Act because they are “simple, relatively easy to administer, and sure.”). 203 See Partners Healthcare Sys., supra note 195, at 2. Indeed, several prominent health economists urged the 

Massachusetts court not to accept the consent agreement, arguing that it would not offset the consumer harm likely 

to result from the acquisitions. Responding to arguments offered by Partners that the mergers would yield economic 

and operational efficiencies, as well as quality improvements, that would help to slow the growth rate of healthcare 

expenditures and benefit consumers, the economists stated that “systematic evidence from hundreds of hospital 

mergers around the nation provides little empirical support for these assertions.” Partners Economist Letter, supra

note 198, at 2. 204 See Partners Healthcare Sys., supra note 195, at 19 (stating that the methodology for regulating prices “remains 

a mystery” to the court, and expressing concerns that any monitor would be able to handle the complex task of 

administering the price caps) (“Even with some expertise in the field, the monitor will have to take into account 

complex contractual arrangements between Partners and the major payers, each of which have their own unique 

features and tradeoffs. The prices at issue are not for a homogenous good or a single product but for a complex set of 

services which can be bundled and redefined from one year to the next.”).

205 See id. at 42 (“A conduct remedy, which typically involves regulation of specific conduct over a limited period of 

time, is more difficult to craft and easier to circumvent. It also does not directly address the problem, which is a loss 

of competition: indeed, it permits consolidation and then attempts to limit the consequences that flow from that by 

imposing certain restrictions on the defendant's behavior. . . . [C]onduct remedies ‘seek to thwart the natural 

incentives of the merged entity to behave as a single firm’ and thus require constant and costly monitoring.”); id. at 

32 (“Particularly where the product or transaction is complex and enforcement of the remedies is over a long period 

of time, there are many opportunities for the entity, in pursuit of its own self-interest, to ‘crowd’ the border of stated 

rules and create ways to evade them.”). 
FTC Staff Submission (Public) – October 7, 2022 

57 

VIII. Conclusion

Existing competition between SUNY Upstate and Crouse benefits patients, employers, 

and hospital employees in the Syracuse area by constraining prices for inpatient, outpatient, and 

physician services, which ultimately helps control out-of-pocket healthcare expenses. This

competition also has spurred these hospitals to offer a wide breadth of services and to strive to be 

high-quality providers of those services in order to attract physician referrals and patient 

admissions. 

The proposed merger would eliminate this beneficial competition and give SUNY 

Upstate the ability to exercise significant market power. This would likely result in higher prices 

and reduced quality for healthcare services in the Syracuse area. SUNY Upstate has not provided 

sufficient information regarding its plans for cost savings, efficiencies, and quality improvements 

to allow us to fully assess these factors. Any cost savings or quality benefits of the merger would 

need to be extraordinary in order to outweigh the significant competitive harm that is likely to 

result from the merger, and there is no indication that this is the case. Moreover, many of the 

claimed benefits likely could be achieved through an alternative arrangement – either 

independently, through another form of collaboration with each other, or through a merger or 

affiliation with a different partner – that would be less harmful to competition. It is doubtful that 

terms and conditions imposed under active supervision could mitigate the likely price effects of 

this merger, and they could exacerbate reductions in the quality of care or access to care for 

patients in the Syracuse area. Furthermore, there do not appear to be any enforceable 

commitments to maintain or improve quality and access.

In summary, FTC staff respectfully encourages the NY DOH to consider the following 

factors and questions when reviewing the COPA Application submitted by SUNY Upstate and 

Crouse: 

1. Will the proposed merger substantially reduce competition, allowing the combined 

hospital to negotiate higher prices for healthcare services, and reducing its business 

incentives to maintain or improve quality of care?

2. Are the claimed benefits (a) credible and verifiable, (b) likely to be achieved and passed 

through to consumers, (c) achievable only through this merger, and (d) of sufficient 

magnitude to outweigh the proposed merger’s significant disadvantages? 

3. Have the hospitals substantiated their plans sufficiently to ascertain the steps, timeframe, 

and costs necessary to (a) consolidate clinical services, (b) surpass volume thresholds that

the hospitals are not already capable of achieving independently to improve patient health 

outcomes, and (c) achieve projected synergies and cost reductions? 

4. Will terms and conditions imposed by the NY DOH under active supervision effectively 

mitigate the competitive harms of the merger, and are they capable of being successfully 

implemented and objectively monitored, to determine whether the COPA is meeting the 

stated public policy goals? 
FTC Staff Submission (Public) – October 7, 2022 

58 

5. Is there any meaningful mechanism for the NY DOH to discipline the combined hospital 

if it fails to meet the COPA requirements? 

6. How long does the NY DOH intend to provide regulatory oversight of the COPA, and 

what will happen in the event that the combined hospital voluntarily terminates the

COPA or the underlying legislation is repealed or revised to allow the COPA to expire? 

In our assessment, there is insufficient evidence that the potential benefits of the COPA

outweigh the potential disadvantages of the elimination of competition between SUNY Upstate 

and Crouse. 

We thank you for the opportunity to present our views and hope they will be helpful as 

you evaluate the COPA Application. We would be happy to provide any additional expertise and 

information that we are authorized to share in connection with your review. 

Please direct all questions regarding this submission to Gustav Chiarello, Attorney, 

Mergers IV Division, Bureau of Competition, 202-326-2633, gchiarello@ftc.gov; and Stephanie

Wilkinson, Attorney Advisor, Office of Policy Planning, 202-326-2084, swilkinson@ftc.gov. 
FTC Staff Submission (Public) – October 7, 2022 

FTC Public Comment

Attachment A

 
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. 
FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV /COPA 1

Introduction

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

proposed legislation regarding Certificate of Public Advantage (“COPA”) laws.1 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.2 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.3

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.4 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.5
FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV /COPA 2

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.6 

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,7 as well as optimal wages and benefits for employees.8 

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.9 Notably, this finding holds 

true with both for-profit and not-for-profit merging hospitals.10 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.11 

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

maintain or improve quality and patient access to care.12 Studies demonstrate the net effect of 

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

with better quality.13 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.14

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.15
FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV /COPA 3

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

where hospitals are leading employers.16 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.17 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.18 As 

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 – 
FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV /COPA 4

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.19 

“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 
FTC Policy Perspectives on COPA

FEDERAL TRADE COMMISSION • FTC.GOV /COPA 5

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.20

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.21 Related research suggests that health 

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

contracting.22 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.23

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,24 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.25 Competition 

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

quality.26 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.27

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.28 Anticompetitive mergers and 

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

advocacy.29 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.30 

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.31 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.32 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.33

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.34 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.35 

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.36 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.37

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.38

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.” 39 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.”40 

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.41

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.42 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.43 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.44 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.”45 Prisma and LifePoint then announced 

that they would no longer pursue the proposed acquisition.46 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.47 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.48
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FEDERAL TRADE COMMISSION • FTC.GOV /COPA 11

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.49 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, 

2022.50 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.51

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, 2022.52 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.53

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”).54 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.55 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.56

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.57 A representative for Ballad Health described the COPA 

implementation as successful.58 However, representatives from an independent physician group and 

health insurer raised concerns about the early COPA performance, including reduced access and 
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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.59 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.60 

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.61 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.62 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.”63 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. 
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FEDERAL TRADE COMMISSION • FTC.GOV /COPA 13

Endnote References

1 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.

2 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-healthmountainstates-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-staffcomment-texas-health-human-services-commission-regarding-certificate-publicadvantage/20100902010119texashhsccopacomment.pdf. 

3 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-ThroughChoice-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/wpcontent/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/presidentialactions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/ (discussing the importance of 

hospital competition).

4 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).

5 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.

6 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-policystatements-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. 

7 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. 

8 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. 

9 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. 

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

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

Ho & Town, supra note 7. 

11 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.

12 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, MED. 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 

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

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

14 See Prager & Schmitt, supra note 8. 

15 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. 

16 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).

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

18 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-assessingimpact-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-impactcopas [hereinafter FTC COPA Study].

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

Theory and Evidence, 82 ANTITRUST L.J. 551, 553 (2019), https://www.americanbar.org/digital-assetabstract.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).

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

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

21 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 HEALTH AFFAIRS 346, 353 (2017), 

https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2016.0840; Cooper, Craig, Gaynor & Reenen, supra note 7, at 104.

22 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, HEALTH AFFAIRS BLOG (Sept. 9, 2016), 

http://healthaffairs.org/blog/2016/09/09/medicare-accountable-care-organization-results-for-2015-the-journey-to-betterquality-and-lower-costs-continues/. 

23 See Centers for Medicare & Medicaid Services, Value-Based Programs, https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs (last accessed Aug. 4, 2022).

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

25 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. 

26 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. 

27 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-publicaccountability-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-carolinascertificate-of-public-advantage-law/. 

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

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

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

31 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, TRIBUNE-STAR (Dec. 2, 2021), https://www.tribstar.com/news/indiana_news/talks-focus-onterre-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, GLOBAL COMPETITION REVIEW (Jul. 28, 2022), 

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

32 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-copajun_19.pdf at 37.

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

forthcoming in J. Law Econ.).

34 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].

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

Robert A. Berenson, URBAN 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.

36 Garmon & Bhatt, supra note 33, at 20.

37 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

38 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. 

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

40 Id. at 41.

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.

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

43 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.”).

44 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-PRISMAHEALTH-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. 

45 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).

46 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-carolinahospitals. 

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

48 Id. at 21.

49 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/casesproceedings/151-0115/wellmont-healthmountain-states-health. 

50 See Tennessee Dep’t of Health, Certificate of Public Advantage (COPA), https://www.tn.gov/health/health-programareas/health-planning/certificate-of-public-advantage.html (last accessed Aug. 4, 2022).

51 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).

52 See Letter from Tennessee Office of the Attorney General to Ballad Health CEO (Dec. 3, 2021), 2021-12-03-AG-and-TDHReasonable-Recovery-Letter-to-Ballad.pdf (tn.gov) (last accessed Aug. 4, 2022). 

53 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/. 

54 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. 

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

2022).

56 See FTC COPA Study, supra note 18. 

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

58 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. 

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

60 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. 

61 See Texas Health and Human Services, Certificate of Public Advantage, https://www.hhs.texas.gov/providers/healthcare-facilities-regulation/certificate-public-advantage (last accessed Aug. 4, 2022).

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

63 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.
Certificate of Public Advantage (“COPA”) laws attempt to immunize hospital mergers from antitrust laws 

by replacing competition with state oversight. COPAs facilitate hospital consolidation, which is a key 

driver of higher healthcare costs without improvements in quality of care. Indeed, hospitals only seek 

COPAs for specific mergers that would otherwise violate antitrust laws and often result in monopolies. 

FTC staff urges states to avoid using COPAs and invites state lawmakers to work collaboratively with 

competition policy experts to minimize the harmful effects of further hospital consolidation on local 

patients, employers, and hospital employees.

⊲ Mission Health COPA (NC): Substantial increases in commercial 

inpatient prices during early COPA years (at least 20%), during 

later COPA years (average 25%), and after COPA was repealed 

(at least 38%). Demonstrates price regulations during COPA 

were ineffective, as well as the risk of eventually having an 

unregulated monopolist.

⊲ Benefis Health COPA (MT): Substantial increases in commercial 

inpatient prices after COPA was repealed (at least 20%). 

Demonstrates the risk of eventually having an unregulated 

monopolist.

⊲ MaineHealth COPA (ME): Substantial increases in commercial inpatient prices at unregulated 

hospital during COPA (at least 38%), as well as after COPA expired at both hospitals – for a total price 

increase of at least 50% during the COPA and post-COPA period. Demonstrates the risk of selectively 

regulating hospitals within a larger system, as well as the risk of eventually having an unregulated 

monopolist. Measurable decline in quality at the acquired hospital after the COPA expired. 

COPAs rarely work as promised. 

Here are the reasons to be skeptical:

⊲ COPAs exacerbate the widespread problem of hospital consolidation. Studies show various harms 

can arise from hospital consolidation, including higher prices for patients without improvements 

in quality of care, reduced patient access to healthcare services, hospital resistance to valuebased delivery and payment models intended to help reduce costs, and lower wages for hospital 

employees as a result of fewer employment options. Antitrust enforcers have successfully challenged 

anticompetitive hospital mergers likely to cause such harms, and COPAs undermine these efforts.

⊲ COPAs can reduce hospital employee wage growth. Hospitals are major employers in most 

communities. When mergers result in high levels of hospital concentration, local labor markets suffer 

because fewer hospitals compete for workers. A recent study shows that such mergers can lead 

to lower wages for workers whose employment prospects are closely linked to hospitals, such as 

nurses and pharmacy workers. COPAs are sought for hospital mergers involving the highest levels of 

concentration and therefore can reduce employee wages.

Federal Trade Commission

Key COPA Facts

 FTC.gov/COPA

Studies show that several 

hospital mergers subject 

to COPAs have resulted in 

higher prices and reduced 

quality of care, despite 

regulatory commitments 

designed to mitigate these 

anticompetitive effects.
⊲ COPA monitoring and compliance are difficult. Effective COPA oversight requires significant 

state expertise and resources. Over time, regulatory fatigue, staff turnover, and changes in funding 

priorities at state agencies can lead to less vigorous supervision. Hospitals also must devote 

significant resources to compliance with COPA conditions, which leads them to eventually lobby for 

repeal of COPA oversight or fewer COPA conditions – defeating the original purpose of the COPA.

⊲ COPAs are susceptible to regulatory evasion. COPA regulation is rarely, if ever, comprehensive 

enough to address all of the ways hospitals can exercise market power. Competition allows for 

greater flexibility when responding to market dynamics and has been proven to produce better 

results for consumers.

⊲ COPAs are only temporary. Most COPAs do not last in perpetuity. They are eventually repealed, 

revoked, or terminated. Once state oversight ends, the community is often left with a hospital 

monopoly that can exercise its market power without constraint. 

Hospitals make several unproven claims

when seeking COPAs to form monopolies:

Claim Fact

This merger will

eliminate “wasteful 

duplication” associated 

with competition.

Competition benefits patients, employers, and hospital 

employees – it is not unnecessary or wasteful. Competition 

can incentivize hospitals to invest in facilities, technology, and 

equipment that improve patient access to healthcare services and 

quality of care.

This merger will reduce 

healthcare costs and 

generate efficiencies.

Many hospital mergers do not achieve projected cost savings

and efficiencies.

Vulnerable rural

hospitals will close 

without this merger.

Facilities often close even with a merger. Antitrust enforcers 

already consider hospital financial conditions when evaluating 

mergers. If a rural hospital is truly failing financially and the 

proposed merger is the only way for it to remain viable, then the 

FTC is unlikely to challenge the merger and antitrust immunity is 

not necessary.

This merger will 

improve quality of 

patient care and overall 

population health. 

Studies show that hospital mergers in highly concentrated 

markets are unlikely to improve quality and instead are 

associated with quality declines. There are many ways hospitals 

can achieve these laudable goals without a merger, and the 

antitrust laws do not prevent hospitals from engaging in initiatives 

to improve the quality of patient care and population health. 

This merger will enhance 

access to healthcare 

facilities and create jobs.

Many of the cost savings projected by merging hospitals are 

the direct result of planned facility consolidation, elimination of 

services, and job reductions.
FTC Staff Submission (Public) – October 7, 2022 

FTC Public Comment

Attachment B 

FTC Staff Submission (Public) – October 7, 2022 

FTC Public Comment

Attachment C 

 
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Number Hospital Name Number Hospital Name

1 Faxton St. Luke's Healthcare 14 Oswego Hospital

2 River Hospital 15 Rome Memorial Hospital

3 Auburn Community Hospital 16 Clifton-Fine Hospital

4 Canton-Potsdam Hospital 17 St. Joseph's Hospital Health Center

5 Carthage Area Hospital 18 Richard H. Hutchings Psychiatric Center

6 Guthrie Cortland Regional Medical Center 19 Syracuse Veterans Affairs Medical Center

7 Gouverneur Hospital 20 St. Elizabeth Medical Center

8 Community Memorial Hospital 21 Mohawk Valley Psychiatric Center

9 Cayuga Medical Center at Ithaca 22 Samaritan Medical Center

10 Central New York Psychiatric Center 23 Upstate University Hospital

11 Claxton-Hepburn Medical Center 24 SUNY Upstate Community Hospital

12 St. Lawrence Psychiatric Center 25 Crouse Health

13 Oneida Healthcare 26 Crouse Commonwealth Place