Congress is looking at major changes in the Medicare system that will, if enacted, dramatically affect health care generally and hospitals specifically. I wanted to talk to you about these changes, how the FTC fits into the picture, and how I view the FTC's proper role in enforcing the antitrust laws in health care markets. As you know, the Commission, or the Antitrust Division of the Department of Justice, reviews hospital mergers. You also know that there has been continuing controversy over the role of antitrust enforcement in health care markets. I strongly believe that competition has played a positive role in improving the quality, if not the availability, of health care in this country.
Antitrust enforcement is important in ensuring that competition remains vigorous.
At the same time, your industry is continuing to experience unnecessary costs and inefficiencies. Consequently, the efficiency benefits of mergers may, in certain circumstances, outweigh the possible anticompetitive effects. Last year, the Commission and the Antitrust Division of the Department of Justice promulgated the Health Care Policy Statements, providing substantial guidance about antitrust enforcement in health care markets. In the merger area, we recognized that certain hospital mergers were highly likely to be beneficial overall, in the sense that efficiencies resulting from consolidation outweighed any anticompetitive effects. The statements set forth a safety zone for mergers between two general acute care hospitals where one hospital has an average of fewer than 100 licensed beds over the three most recent years and has an average daily inpatient census of fewer than 40 patients over the three most recent years.