Ledes from the Land of Enchantment

A State-Sanctioned Hospital Monopoly Raises Concerns

The Federal Trade Commission has long argued that competition makes the economy better. But some states have stopped the agency from blocking hospital mergers that create local or regional monopolies, and the results have been messy.

Two dozen states have at some point passed controversial legislation waiving anti-monopoly laws, allowing rival hospitals to merge and replacing competition with prolonged state oversight.

Six years ago, Tennessee and Virginia ushered in the largest state-sanctioned hospital monopoly in the nation with the creation of Ballad Health. For most of the 1.1 million residents in the Tri-Cities region of northeast Tennessee and southwest Virginia, the merged system became the only option for hospital care.

The argument for Ballad was that two hospital companies couldn’t survive in the region, and a merger would prevent them from closing or being bought up. But critics say fears a monopoly would jeopardize access to and quality of care have been realized. For example, since the merger, patients spend three times as long in Ballad emergency rooms before admission to hospitals, according to reports released by the Tennessee health department.

“I do not want to further risk my life and die at a Ballad hospital,” said Neal Osborne, a city council member in Bristol, Va. In an interview, Osborne said he spent 30 hours in a Ballad ER this year as he suffered diabetic crisis. “The wait times just to get in and see a doctor in the ER have grown exponentially.”

The legislation that created Ballad is known as a certificate of public advantage, or COPA. The FTC has repeatedly warned states to be wary of COPAs, which “only exist to protect a merger that would otherwise be illegal under antitrust law,” Rahul Rao, a deputy director of the Bureau of Competition at the agency, told KFF Health News in an interview last year.

There have been about 10 hospital mergers in the past three decades that depended on COPAs, and afterward, the feds saw rising prices, decreases in quality, reductions in access and a decrease in wages, Rao said.

Since Ballad’s COPA, the merged system has not met most quality-of-care goals set by the states in recent years. It has fallen short of charity care promises made to Tennessee by about $191 million over a five-year span. 

Ballad has attributed its quality struggles to the coronavirus pandemic, its charity shortfalls to Medicaid changes and its longer ER stays to staffing and discharge challenges it says are beyond its control.

Ballad said ER times for admitted patients have dropped to about 7.5 hours since its latest annual report.  

“On those issues Ballad Health can directly control, our performance has rebounded from 2022,” said a Ballad spokesperson, Molly Luton.

The FTC announced in 2019 that it would study the Ballad merger but has yet to issue a report.

Legislation was introduced this year to limit COPAs in Tennessee. But on Tuesday, a state legislative subcommittee voted to kill the bill without debate, refusing to hear testimony from Tri-Cities residents who drove five hours to Nashville for a chance to speak against Ballad.


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