October 21, 2025 • 44 mins
Bryan Perry, Senior Managing Director, FTI Consulting, Amanda Wait, Partner and Head of Antitrust, Michael Best & Friedrich LLP, and Elizabeth Odette, Assistant Attorney General and Manager of the Antitrust Division, Office of the Minnesota Attorney General, discuss the changing landscape of antitrust scrutiny of health care transactions. They cover substantive antitrust scrutiny and the enforcement perspective, practical guidance for anticipating and planning for antitrust review processes, and tips on managing simultaneous federal and state antitrust reviews. Bryan, Amanda, and Elizabeth spoke about this topic at AHLA’s 2025 Annual Meeting in San Diego, CA.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_02 (00:04):
This episode of AHLA Speaking of Health Law is
brought to you by AHLA membersand donors like you.
For more information, visitAmericanHealthlaw.org.
SPEAKER_00 (00:17):
Hello, my name is Brian Perry.
I'm an economist and a seniormanaging director with FTI
Consulting's Center forHealthcare Economics and Policy
in Washington, D.C.
My colleagues Amanda Wade,Elizabeth Ladette, and I had the
opportunity to discuss managinghealthcare transactions through
federal and state antitrustscrutiny at the AHLA annual
(00:38):
meeting in San Diego this year.
And we're pleased to share someof that discussion with you
today.
The healthcare industry is inthe crosshairs of antitrust
enforcement, but this scrutinyis not new.
What we are seeing, though, is achanging procedural and
substantive landscape in whichhealthcare transactions are
being reviewed.
So our goals for today'sdiscussion are to help you
(01:00):
anticipate substantive antitrustscrutiny and understand the
enforcement perspective, toprovide practical guidance for
anticipating and planning forantitrust review processes, and
to share some tips on managingjoint or simultaneous federal
and state antitrust reviews.
Before we dive into thesubstance of our discussion,
(01:22):
Amanda and Elizabeth, would youlike to introduce yourselves?
SPEAKER_03 (01:26):
Sure, I'll kick it off.
My name is Amanda Waite, and I'mpartner and head of antitrust at
Michael Best and Friedrich,based in Washington, D.C.
And uh formerly served at theFederal Trade Commission as a
staff attorney reviewingmergers.
So pleased to be here and greatto see you, Brian.
SPEAKER_01 (01:44):
And I'm Elizabeth Odette.
I am an Assistant AttorneyGeneral and Manager of the
Antitrust Division at theMinnesota Attorney General's
office.
I am also the Antitrust TaskForce Chair for the National
Association of AttorneysGeneral.
And so with those both of thosetitles, I just need to give a
quick disclaimer that uh mycomments and uh thoughts are my
own today and not that of theOffice of the Minnesota Attorney
(02:07):
General or NEG.
Great to be here.
SPEAKER_00 (02:10):
Wonderful.
Well, Amanda, let's begin withyou.
Can you give us an outline ofwhich transactions must be
notified to the federalgovernment and what information
must be included with thatfiling?
SPEAKER_03 (02:23):
Sure.
So this could be an entirewebinar on its own, but I'll
give just the highlights hereand talk about when you should
be thinking about filing andthen what do you have to do once
you've determined that you'vegot one.
So in terms of when should yoube thinking about filing, the
rule of thumb that I usuallyshare with clients is if you
have a transaction valued at$100million or more, you should
(02:47):
start thinking about whether afiling is required.
The technical answer is filingsare required to the federal
government, the Federal TradeCommission, and the US
Department of Justice'santitrust division under the
Hart Scott Rodino Act, when theymeet certain very specific
dollar thresholds and do notmeet one of the exceptions.
(03:08):
And those dollar thresholdschange from year to year.
So even if you know what thethreshold is this year, if you
have a transaction that hitskind of around that$100 million
mark, it's always prudent to goback and check.
The current thresholds for 2025are that if you have a
transaction that results in anentity, an acquiring entity
(03:30):
holding assets valued at morethan$126.4 million.
Um, and you have two partiesthat meet certain size
requirements, that transactionprobably has to be reported to
the agency.
The size of parties test that Imentioned earlier is that you
have to have at least one partyto the transaction that has
(03:53):
total assets or annual net salesof more than 100, I'm sorry,
252.9 million dollars.
And you have to have at leastone other party to the
transaction that also has totalassets or annual net sales in
excess of 25.3 million.
But like I said, those numberschange annually, usually in
(04:15):
February.
And so if you are havingtransactions around that$100
million mark, you should justcheck.
So there are also a number ofexceptions that apply under the
Hart Scott Rodino Act.
And those exceptions can taketransactions at much higher
dollar values and make them notreportable.
This is a very much in the weedsquestion.
(04:37):
And there's uh people who spendtheir whole lives thinking about
nothing other than whethertransactions are reportable,
hopefully only in theirprofessional lives and not in
their personal lives, too.
But this is an area where it'sjust prudent to check.
If you do determine that afiling is required at the
federal level under the HardScott Rodino Act, there are some
(04:58):
important changes that just wentinto effect back in February.
And we talked about these alittle bit at the annual meeting
as well.
We're now, you know, what, eightmonths into the new filing
regime?
And, you know, I'll lead offwith the it hasn't been as bad
as we thought it was gonna bepoint that I make to a lot of
clients.
The new filing requirements dorequire significantly more
(05:19):
information, but you know, itcan be done.
You just got to give yourself alittle bit more time and
dedicate some more resources togathering all the information
that's required.
And I won't go into all of theinformation that you have to
submit along with an HSR filingnow, but there's kind of two
important buckets.
The first one is narrativeinformation.
(05:40):
So if you've ever had to do afiling in Europe, for example,
writing descriptions of thecompetitive landscape and
descriptions of the transactionis not going to be a foreign
concept, but we now have to dothose kinds of narrative uh
submissions along with the USHSRfiling.
We have to provide diagrams ofthe deal structure if they
(06:00):
exist, discussions about thestrategic rationale and the
competitive landscape, amongothers.
And then on the document side, Ithink the tagline there is just
more documents from more people.
So there are more people thatyou have to search, there are
more types of documents that youhave to bring in.
Um while the US process hasgotten more burdensome in some
(06:23):
respects, um, it is, you know,lengthier and a little bit more
expensive and more burdensomenow.
It is completely doable.
You just have to get going alittle bit earlier on the
process.
Um, we're telling clients, youknow, don't sign those
agreements that say fivebusiness days to file anymore.
You know, please give us 20business days or so, and that
(06:43):
seems to be standard these days.
SPEAKER_00 (06:45):
Thanks, Amanda.
Elizabeth, we are alsoincreasingly seeing states
involved in mergerinvestigations.
Can you share how states likeyours come to get involved and
what the scope of thatinvolvement may look like?
SPEAKER_01 (07:01):
Yes, and I think one really important thing given
what Amanda just mentioned interms of the federal oversight,
is that to the extent that youcan be engaging federal and
state enforcers in alignment,that is ideal.
Um, if you are trying to do itad hoc, and as I'll discuss,
there are a lot of differentstate enforcement uh mechanisms
(07:25):
and how each state is involvedis going to vary.
But to the extent that you cando it in a in a parallel fashion
or in conjunction uh is thebest.
Uh, and don't assume that uhwhat you're giving to the
federal enforcers isn'tsomething that the states will
also want.
It kind of often there's a lotof overlap in what state
enforcers are looking for andwhat federal enforcers are
(07:47):
looking for, but also say it'sprobably to the benefit of uh
the entities involved in atransaction to have that state
enforcement perspective becausestates can um provide the
federal enforcers who arelooking at it from a very high
10,000-foot level, some more ofthe local information and in
some instances could beverifying how uh transaction um
(08:11):
entities are uh presenting umthe geographic and other uh
markets.
But uh state legislators hearfrom constituents, state AG's
offices hear from constituentson you know the personal
challenges that they face,healthcare costs is one of them.
And so in recent years we haveseen kind of, I wouldn't say an
explosion, but a steady increaseof state legislators passing
(08:35):
laws that have uh specifichealth care transaction
notification requirements.
Um but separate from that, uhsome states have their own state
agencies that do healthcareoversight.
And then as well, um City AG'soffices, even without the
healthcare transaction or othernotification laws, want to be
(08:56):
looking at certain transactionsfor antitrust and charities.
So it is just really importantto kind of consider states when
you're looking at a transaction.
And it may be that it uminvolves transactions that are
under that threshold that Amandamentioned.
So as I mentioned, it's kind ofuh, you know, a blend of uh
state laws, but you know, onething to note is they often
(09:19):
involve both antitrust andcharities laws.
And that is something that canbe kind of unique for uh
antitrust enforcers and thosewho are looking at uh
transactions strictly from acompetition perspective, because
it can blend um more often inthe space where there's a
nonprofit entity involved, butnot always.
Some states still require somelook at public interest, even if
(09:42):
neither of the entities is anonprofit.
So, you know, for example,Colorado and Washington recently
passed a uh laws that give themthe ability to have uh
pre-merger notification of justmost transactions in general
that the uh federal governmentuh would receive as well.
(10:04):
They both also have specifichealthcare transaction
notification laws.
And those um you probably wantto connect with those state AG's
offices specifically to learnhow those two laws and the
requirements for them interactwith each other.
So uh as Amanda had talked abouttoo, involving antitrust counsel
(10:24):
early to kind of just get asense of which states should we
really be focused on.
Uh, know that the federalenforcers may be reaching out to
those states as well.
Um, contacting your stateattorney general's office with
uh your intended timeline ishelpful because that way you'll
have a greater chance that theAG's offices uh will have that
(10:46):
staff time and resourcesdedicated to when your
submission is ready, uh to whenyou would really like to have
their review completed andhaving them confirm that their
review is complete.
One thing to note is that thereis sometimes a confusion that
state AG's offices approve ordeny.
Um at least many, most stateAG's office enforcement involves
(11:10):
a review that's similar to thefederal enforcers, so that
there's a time period and ifthey find that there may be
antitrust or charities concernsthat they need to sue to uh try
to stop that uh transaction fromoccurring, very similar to the
federal government.
There are some separate uhagencies in states.
I'll give Oregon for an examplewhere there is a very specific
(11:33):
approve or uh deny.
But that's that's pretty rare.
A couple of things to thinkabout when you're preparing to
provide information to a stateuh AG's office or a state uh uh
entity that's looking at theseis that uh the proximity of the
parties, uh the proximity of thehospital or other facilities,
(11:56):
um, that that's going to besomething that we look more
closely at.
Uh whether uh the transactionwill substantially lessen
competition.
Uh there's often many concernsabout if these healthcare
entities combine, will it reduceservices in rural areas?
That's a big concern.
Um the nonprofit focus wouldinvolve uh whether the you know
(12:17):
charitable assets are going tocontinue to be used for their
charitable purpose.
And also uh, you know, just thequality as well in terms of the
overall uh improvement ordeterioration when that uh goes.
I mean, often you're looking forefficiencies.
And so you may be rightlycombining uh phone runes or you
(12:41):
know, referral uh you know uhresources.
Will that still maintain the uhquality for the patients that
it's impacting?
And then I think uh it's just uhone thing to note, I would say,
is private equity is a reallyhot topic these days.
State EG's offices know thatthere's nuance involved.
(13:04):
Uh there isn't a one size fitsall.
But I will say because there'ssome skepticism in the public
about the use of private equity,you may just get more questions
from regulators.
And that in part is just simplya matter of the State EG's
offices want to make sure wehave the right information to be
able to understand that the useis appropriate, not that we are
(13:26):
uh, you know, not wantingprivate equity to be at all
involved in in healthcaretransactions.
The uh federal uh forms thatAmanda mentioned have a checkbox
now so that you can uh basicallyjust give the waiver so that the
federal enforcers uh can shareinformation that you've provided
with the state AG's offices.
(13:47):
That is a really efficient wayto deal with it because
otherwise uh your lawyers willhave to um negotiate waivers for
each state that can get uhcomplicated uh and time
consuming for something thatultimately uh should be just a
conclusion that you want toreach is that everybody should
have the same information whenthey're looking at it.
It uh would speed up theprocess.
(14:09):
And then lastly, uh the youknow, as Amanda mentioned,
sometimes there could be uhinternational uh impact on the
transactions.
And so even though uh you'rethinking about state AG's
offices in a very local setting,um, there are some instances
where um the non-US USjurisdictions may be in
(14:31):
collaboration with them.
SPEAKER_00 (14:35):
Well, with that really helpful primer on the
antitrust uh environments forthe federal and uh in the
federal and state settings.
Uh Amanda, what would be somebest practices for preparing for
these antitrust reviews?
SPEAKER_03 (14:52):
Thanks.
Uh I'll start by just uhunderscoring one thing that
Elizabeth said because I thinkit is really important.
And this is the ensuring thatthe federal uh enforcers can
work cooperatively with theirstate counterparts.
That can really throw a wrenchin a deal if it's not done
correctly.
And you know, Elizabeth iscoming at it from an enforcer
(15:15):
perspective, and so obviouslythere are synergies to having
those waivers granted early fromher perspective.
And but I'll just emphasize, youknow, I've been in private
practice now for 18 yearsadvising clients on these
things.
And I can only think of maybeone example in the entire time
I've been on this side of thetable where I've advised a
(15:37):
client not to sign a waiver.
And it was only because of aspecific nuance of that specific
state's law that was going toimpact the way that the
information was being sharedback and forth.
And we found a workaround tothat.
So I've clients come to me allthe time and they say, Well, why
(15:57):
would we want to do that?
Don't we want to make them dotheir own work?
And I say, Well, you could, butthen you're gonna risk getting
two completely paral, twocompletely different tracked
investigations.
And inevitably, what couldhappen is your state enforcers
maybe focused on slightlydifferent issues than your
(16:18):
federal enforcers, and you'rejust about ready to wrap things
up in a nice neat little bow.
And one of the investigatingagencies finds out that the
other one has been investigatingsomething else, and now they
have to go look at it too.
And it just will slow everythingdown.
So I completely agree withElizabeth's comment that in
almost every case, you know,there are some exceptions, but
(16:40):
in almost every case,encouraging that cooperation
makes a lot of sense because ifsomebody's gonna find an issue
with your deal, it is better toknow that earlier and have time
to be able to address it ratherthan have it come out at the
last minute when you're gettingready to close.
Um, so the other thing I wouldsay, just in terms of you know,
best practices or practicaltips, is really in addition to
(17:05):
filing your HSR, getting readyfor your HSR early, I always
tell clients, you know, you'vegot to understand the risk of
your transaction early on aswell.
And you need to bring inantitrust counsel as soon as
possible so that they can take alook.
And I usually will tell clientsearly on, you know, I can tell
you whether this is probably ared light, a green light, or a
yellow light.
(17:25):
You know, is this a, you know,you're absolutely gonna get
questions on this deal.
It's it might even get blocked,red light, or is this a you're
probably not gonna have anyissues, green light, or it's
you're gonna have some questionsproceed with caution, yellow
light.
And knowing that very early onis critically important because
it impacts almost everythingthat you're doing from a
(17:47):
business and commercial sidethroughout the deal cycle as
well.
So, for example, the antitrustrisk that you have with a
transaction as advised by yourcouncil can impact your deal
terms.
And, you know, I'm oftentimesreading LOIs or I'm reading
draft definitive dealagreements, and there's
provisions in there about who'sgonna bear the antitrust risk
(18:11):
and what is your timing beforeyou get to an end date, when can
people walk away, when canpeople terminate?
And a key input into thoseconsiderations is how long do
you think the antitrust reviewis going to be?
If you think the antitrustreview is only gonna be 30 days,
you submit your HSR form, yousubmit your state forms if
(18:31):
they're required, you wait yourwaiting period, and then nobody
raises any questions or issuesand you're free to close, then
your termination date could be45 days, 60 days, you know,
whatever your other regulatoryrequirements might involve.
But if you think you're gonnaget a second request, that's a
whole different decision.
(18:52):
You might want your end date tobe shorter so that if you get a
second request, you can walk.
Um, depending on which side ofthe transaction you're on, you
might want your end date to belonger to hold the other side's
feet to the fire and make themgo through the second request
process and see if you can getit cleared.
Um, but you can't make thosedecisions from a commercial
perspective until you know whatthe risk is on the front end.
(19:14):
So that's just one example.
There are there are so manyother provisions and
considerations that come intoplay depending on where you fall
on that risk spectrum, thatgetting your antitrust risk
assessed very early on is veryimportant.
Um I would also say the otherthing to keep in mind is just
being very mindful of yourdocument creation process very
(19:36):
early on in the process.
Um, I just told a client thismorning that I need to read the
deck that their bankers puttogether so that they don't have
a world domination slide inthere because I see it all the
time.
You know, especially if you'rerepresenting the sell side of
the transaction, they hire somebankers, they're trying to get
this deal sold, they are puffingup the business that is getting
(19:58):
sold.
All the clients are sticky.
Um, all the relationships are,you know, um they're all
long-term relationships thatcan't be changed.
There's um, you know, minimalcompetition.
Um, you know, you see, you seethese phrases pop up because you
have people writing thesedocuments whose job is to make
(20:20):
the company seem reallyprofitable, and that you know,
customers and patients andothers don't have alternatives.
But those documents go in withyour HSR filing.
They go in with your statefilings, and those are some of
the very first documents thatare forming the impression that
reviewing agency staff have onyour transaction.
(20:41):
So those documents, you know,first of all, need to be
accurate.
Um, you know, sometimes I seethese documents come in,
especially if they're written bythird-party consultants.
And you know, I'll take themback to the client and say, you
know, is this really true?
And they're like, not really.
Like, let's make sure it's true.
If you're gonna, if you're gonnakind of put a document out there
(21:02):
that could potentially raise anantitrust question, like, let's
make sure it's actually truefirst.
Um, if it's true, we can dealwith that, but um, you know, you
don't want that kind of pufferyout there um in your in your
documents that could reallythrow a wrench in things.
Um a couple other just practicaltips.
Just make sure that your team,whoever it is internally within
(21:25):
the company who's under the tenton a deal is following document
preservation requirements asadvised by counsel.
That might just mean followingyour normal business policies,
but there might be instanceswhere heightened scrutiny or
heightened protections arerequired.
Make sure people are followingthose.
Um, and then in terms of timing,you know, make sure that you're
(21:48):
again aware of your risk becausethat impacts timing, but also
any other notifications that arecoming in from state AGs, they
don't all follow the 30-day ruleunder the HSR Act.
Some are 60 or even more.
And so make sure that you'reaware of how those timings are
going to play in on your deal aswell.
Um, and so I think those are theonly tips that I've got.
(22:11):
And you know, Ryan, you and Ihave worked on a lot of deals
together over the years.
I'm sure you've got some ideasfrom your side as an economist.
SPEAKER_00 (22:21):
Yeah, thank you.
Uh first I'll I'll echo uhAmanda's um perspective that uh
from the view of the economist,earlier is going to be better.
Um, having been brought in toadvise on uh the economics of
(22:41):
transactions, both right beforeuh a transaction is being
notified to agencies and wellahead, I can tell you that uh
there's more that can be doneand more development of economic
theory and analyses that can bedone if it's done early, well
(23:02):
ahead of a HSR filing or statenotification.
So sometimes I'm asked what uhwhat exactly do economists bring
to the table in a in atransaction, like uh in terms of
the antitrust review.
And I think that there are a fewthings, a few ways in which
(23:25):
economists can be helpful tocompanies as they're preparing
for this moment of uh of filingwith state or federal agencies.
First, um we we are useful inassisting in the identification
of data and relevant documentsthat agency economists are
(23:46):
likely to ask for as part oftheir review.
And so uh we get involved incollecting and developing the uh
the relevant information that isgoing to be asked for almost
surely by the FTC or the DOJ orstate AG's offices.
(24:08):
Once we've uh pulled thatinformation together, uh we tend
to do a preliminary antitrustrisk assessment.
Think of this as a preview ofwhat the economists in the
antitrust agencies are going todo when they get access to your
data.
So this is an early screeningfor potential antitrust issues
and potential offsettingpro-competitive benefits of the
(24:31):
transaction.
And then once we know the basiccontours of the economic impacts
of a transaction, or at leastthe potential impacts,
economists can help withdevelopment of economic analyses
and theories that will go to thestorytelling aspect of the
transaction.
(24:52):
The last thing I would highlightis that the uh the filing
requirements at the state andfederal level, as Amanda and
Elizabeth pointed out, arebecoming increasingly complex
and in some cases uh dataintensive.
And so uh we also tend to getinvolved in helping to prepare
(25:14):
the data, the same data that'sbeing used for the antitrust
risk assessment and screeningexercises tends to be similar
data that's going to be askedfor.
And so we can uh we often willbe involved in the early
preparation of getting thatmaterial ready for submission to
state and federal agencies.
SPEAKER_03 (25:36):
So, Brian, we've talked a lot about you know kind
of the nuts and bolts of all ofthis and you know, making sure
we've done the assessment earlyand gotten ready for our filings
and getting ready ready for ourstate filings.
But could you maybe walk usthrough what are the key issues
that the enforcers, either atthe federal or the state level,
are looking for?
(25:56):
And Elizabeth, maybe you canchime in on some of this as
well.
SPEAKER_00 (26:00):
Yes, I would I would welcome hearing from Elizabeth
on this as well.
But in in broad terms, the DOJand FTC and state agents tend to
be following a fairly similaranalysis.
You're going to start byidentifying relevant markets
affected by the transaction.
Which services, which products,and which geographies are at
(26:24):
issue?
Um where are there overlapsbetween the parties to the
transaction?
Where are there not overlaps?
Once those uh markets have beenidentified, then the the
enforcers are going to look forcompetitive effects, which is a
uh economic term for are yougoing to see price increases?
(26:48):
Are you going to see changes inoutput?
Are you going to see impacts toquality?
Also, you uh the the agenciesmay also be looking at whether
or not the transaction willdisadvantage rivals, potentially
in adjacent markets or in uhthat have vertical relationships
(27:09):
with the parties rather thanbeing strict horizontal
competitors.
And in a newer focus uh from theagencies, we're also seeing them
looking for competitive effectswhere a dominant firm may be
entrenching their dominance.
This could be by eliminating anascent competitor or raising
(27:31):
some barriers that makes itharder for uh a competitor to
enter the relevant market.
So uh with all of this, the thebottom line question that's
being asked, the ultimate focusis what is going, what are the
likely effects on price andoutput?
Now the agencies, uh the federalagencies have issued the uh
(27:54):
merger guidelines that uh givesome direction on what will be
considered uh potentiallyanti-competitive.
And these these guidelines comedown to how much concentration
in a market will increase.
So, for example, uh a merger maybe at risk if it results in a
(28:19):
market share, a combined marketshare of the two parties in one
of the relevant markets of 30%or more.
And there's also an index ofmarket concentration called the
Herfendahl Hirschmann Index orHHI.
And if that rises above acertain level in a market that
was already tending to beconcentrated, you would also uh
(28:41):
potentially have additionalscrutiny from the uh federal
agencies.
Um before I get into thespecific anti-competitive
theories that enforcers aregoing to look at, Elizabeth, is
there uh could you would youlike to comment on the
differences in the state sidehere or similarities?
SPEAKER_01 (29:03):
Yeah, I mean, I think you've covered most, I
mean the basic kind of areasthat folks are looking at.
I think um there has been acouple areas, and I think you'll
maybe get into more detail onthem, about uh, you know,
vertical integration is anotheruh issue that uh I think states
are looking at too.
Uh we're so focused on theregional and local impacts that
(29:25):
we want to really understand ifuh there are, for example,
vendor relationships in thosekind of key critical
infrastructure areas that couldbe considered um, you know,
problems for competition downthe chain.
It could be uh, you know, is isit a critical infrastructure in
tech within the healthcaresystem?
(29:46):
Is it a critical infrastructurein insurance?
But we want to understand someof those really big important
relationships and if there areany uh ownership or control
aspects there.
And then I think uh, you know, Ithink.
get this to this too, but laboris a really important piece of
regional and local uh review aswell.
And um how a larger transactionmight uh impact the ability of
(30:12):
those who work for thosehealthcare systems to be able to
have competition for theirlabor.
SPEAKER_00 (30:17):
Yeah Elizabeth you you raise a really important
point that we should highlightum healthcare transactions
especially on the provider sidetend to involve hyper-local
issues where you havesignificant employers in a
community significant uhportions of the healthcare
(30:39):
infrastructure for a communityand so it's it's not surprising
that uh local stakeholders aregoing to be uh raising questions
and concerns including stateAG's offices let me just go
through a few of the thetheories that uh an enforcer
(31:02):
might be looking at in atransaction between healthcare
entities so the first and andmost common theory is that a
combined entity between the twoparties have horizontal overlaps
that would eliminate directhead-to-head competition between
them.
So in the provider space perhapsthey are competing with each
(31:26):
other for the same patients orthey're competing to offer the
same services in the samecommunity same geography.
Under this theory a transactionwould eliminate competition
between these direct competitorsand allow them to exercise more
(31:47):
market power in that market forexample by raising their prices
that they're charging topatients.
To prepare for that theory youwould like to assess what are
the potential what the potentialoverlaps between the two parties
are.
You would do that at thefacility level or service line
(32:08):
level if you're looking atproviders you may want to look
at different levels of acuity ofthe patients you may want to
look at freestanding facilitiesversus physician services versus
inpatient care versushospital-based outpatient care
and identify who are therelevant competitors in these
(32:29):
areas for each party to thetransaction because of the
complexity of contracting inhealthcare you'd also want to
look at the impact on payers andpayer contracts what facilities
are in uh which payers networkare do you see uh narrow
(32:50):
networks or tiered networks thatwould um that would be an
important driver of competitiveeffects and there is a is a an
adjacent theory to the purehorizontal direct head-to-head
competition overlap uh theorythat has been uh raised by
(33:13):
economists in the academicsetting and increasingly by
state and federal federalregulators uh though it is uh
still a fairly new theory aboutcross so-called cross-market
interactions between providersso in this uh setting imagine
(33:35):
that you have two health systemsthat don't actually compete with
each other head to head in aparticular geography hospital A
draws its patients from uh areaA and hospital B draws its
patients from area B and thoseareas are not overlapping
however the theory posits thatif those uh if those patients
(33:58):
are employed by the sameemployers andor if they're uh if
they are receiving purchasinginsurance health insurance from
the same payers that that couldcreate an overlap an interaction
a competitive strategic umdynamic whereby there could be
(34:20):
competitive effects even innon-overlapping strictly
non-overlapping areas uh so toassess this you'll also want to
look at in addition to where arethe patients coming from for
these providers for each perparty whether or not there's
overlap in the employers oftheir patients or in the
(34:41):
insurers that the uh in thepayer contracts uh the economic
literature on this while nascentdoes have some uh useful tests
that can be explored to assesswhether or not your transaction
is more or less likely to fitthe criteria where these cross
(35:01):
market effects are more or lesslikely.
Elizabeth mentioned labormarkets and so I I want to spend
some time talking through theconcerns there in a it may be
that uh two healthcare entitiesare significant employers for a
(35:23):
certain type of of labor forexample skilled nurses or
physicians that uh and and thata combination of those of the
parties would eliminate theopportunity for those employees
to uh compete uh or it wouldeliminate competition for those
(35:44):
employees' labor perhaps bysuppressing their their wages or
by deteriorating the workconditions for those employees
so here again you would want tolook and screen for whether or
not you have overlapping labormarkets for the employees of
both parties and who therelevant competitors are.
(36:06):
And I will I'll note that therelevant geography for the area
from which you draw yourpatients in may be quite
different from the relevantgeography geography from which
you are drawing employees in.
So those need to be examinedseparately the last thing I'll
mention is that quality of careand access to care is going to
(36:29):
be very relevant both to federaland local antitrust reviewers.
So if your if your transactionis going to uh is not going to
have any impact on pricing butis going to materially restrict
access to care for certainpopulations or deteriorate
(36:52):
quality of care for thosepatients that would still raise
anti-competitive concerns.
SPEAKER_03 (36:57):
On the flip side if the transaction is going to
enable in a way that istransaction specific
improvements in the quality ofcare, that would be a useful
story to develop as part of yourantitrust uh submissions
(37:18):
theories Amanda what else shouldcompanies be thinking about as
they prepare for a transactionwell um first do we want to see
if Elizabeth had anything shewanted to add on the theories of
harm Brian covered it well thankyou uh but I think uh he really
did highlight that for the stateenforcers we are going to be
(37:42):
looking at things more locallyand there may be uh for example
public meetings or other thingsthat could and this may get to
your point uh but that peopleshould be thinking about in
terms of what the review of astate uh more local enforcer
would look like versus thefederal enforcement yeah that's
a that's a great point Elizabethso to Brian's question about
what what else companies shouldbe thinking about um I'll
(38:06):
highlight two things first isyou know as as Brian and
Elizabeth have discussed kind ofthroughout the discussion today
healthcare transactions arehyperlocal and those local
stakeholder questions can comeup in a variety of different
ways.
Elizabeth mentioned potentiallyhaving public hearings on
(38:27):
transactions you can even justhave local stakeholders you know
whispering in the ear of the thestate AG or other government
officials sending informationover to support you know what
they think might happen if thetransaction does or does not go
forward.
And those local stakeholders cancan be on either side you can
(38:49):
have local support for yourtransaction or you can have
local opposition in some dealsyou have both.
You need to be prepared for thatand so planning ahead for not
only what is the review going tolook like and what might what
local stakeholder issues mightcome up, but proactively how are
you going to address those?
How are you going to suss thoseout?
(39:11):
Oftentimes with clients we havewe have the kind of rollout
communication strategy for atransaction where you know
there's a a timed list of whogets calls first and who gets
called second, who gets calledthird and exactly how is that
rolled out because you knowsometimes there are certain
(39:31):
people who just need to feelless like looped in on your on
your deal and have theopportunity to comment before it
kind of gets out there morepublic.
But it also gives the mergingparties the opportunity
potentially before the dealbecomes fully public to kind of
hear what some of the concernsmay be or what the support may
(39:52):
be and figure out you know howdo you incorporate that into an
antitrust or state AG charitiesreview.
So I think maintaining thatcommunication strategy but also
working into that appropriategovernment relations strategy or
other stakeholder strategy is isreally critically important.
(40:14):
And I would just say if a clientever comes to me and says you
know oh nobody's gonna noticethis deal this is a small deal
nobody's gonna care about thisthat's just not true.
Don't don't uh don't deludeyourself healthcare is not an
area where transactions flyunder the radar ever.
(40:36):
And if your strategy is to fileand duck and hope nobody comes
knocking that's that's probablynot a good strategy.
So just be ready.
The second quick like moreadministrative point that I'll
note here is that you know I seeclients they they sign their LOI
or they have their dealannouncement coming out pending
(40:58):
closing because there areusually in addition to antitrust
other barriers to close you knowin terms of regulatory filings
or insurance filings or otherthings that have to happen
first.
But the parties want to run offinto the sunset.
You know they're engaged they'rethey're so happy to be together
and they want to run off intothe sunset together.
And oftentimes the antitrustlawyers are the ones that are
(41:20):
like whoa whoa whoa tapping thebrakes not quite yet because the
parties even though they haveagreed to merge are not fully
integrated yet.
And so there are certaindecisions within the companies
that cannot be done jointlyuntil the filings are complete,
until the antitrust rule reviewis complete and until the deal
(41:41):
is actually closed.
So the rule of thumb is that allparties to a transaction must
continue to operateindependently and I say to
clients as much business asusual as you can until closing
and sometimes that does meanthat you're going to be bidding
against the other side forsomething.
(42:01):
And that's not just okay that iswhat the antitrust laws expect
and require so parties can planfor their integration and they
can absolutely be ready on dayone to hit go but before the
deal is actually closed theyhave to just stay in planning
mode and not in implementationmode.
SPEAKER_01 (42:24):
I have one thing to add before we wrap up um just in
terms of things to think aboutuh we are now in an age of data
um the world and you knowunderstands how data can be
collected, used uh and howpowerful it is uh in healthcare
that is clearly the case um soone thing I would say is to look
out when you are considering adeal is are there any ways in
(42:47):
which information is beingexchanged as competitors um in
areas that you compete in umthat could be questionable um
not all uh ways in which data isyou know aggregated and shared
are are illegal and you knowthis is similar to what we've
discussed before is you know butlike with private equity um it's
(43:07):
not all bad but um informationexchanges are something that is
being looked at more carefullynow and what you wouldn't want
to have happen is uh besurprised by something that you
are you know assuming is okay umto have more scrutiny over a
larger deal and open up a can ofworms um so looking at how
you're uh sharing information uhit would be important as well
(43:33):
well Elizabeth and Amanda thankyou for a fantastic discussion
and thank you for listeningtoday we really enjoyed our time
at the annual meeting this yearand we would love to see you
next year at the 2026 and AHLAannual meeting in New York.
SPEAKER_00 (43:47):
Thanks so much.
SPEAKER_02 (43:49):
Thanks hope to see you both there we'll keep
talking thank you if you enjoyedthis episode be sure to
subscribe to AHLA Speaking ofHealth Law wherever you get your
podcast.
For more information about AHLAand the educational resources
(44:09):
available to the health lawcommunity visit americanhealth
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SPEAKER_00 (00:17):
Hello, my name is Brian Perry.
I'm an economist and a seniormanaging director with FTI
Consulting's Center forHealthcare Economics and Policy
in Washington, D.C.
My colleagues Amanda Wade,Elizabeth Ladette, and I had the
opportunity to discuss managinghealthcare transactions through
federal and state antitrustscrutiny at the AHLA annual
(00:38):
meeting in San Diego this year.
And we're pleased to share someof that discussion with you
today.
The healthcare industry is inthe crosshairs of antitrust
enforcement, but this scrutinyis not new.
What we are seeing, though, is achanging procedural and
substantive landscape in whichhealthcare transactions are
being reviewed.
So our goals for today'sdiscussion are to help you
(01:00):
anticipate substantive antitrustscrutiny and understand the
enforcement perspective, toprovide practical guidance for
anticipating and planning forantitrust review processes, and
to share some tips on managingjoint or simultaneous federal
and state antitrust reviews.
Before we dive into thesubstance of our discussion,
(01:22):
Amanda and Elizabeth, would youlike to introduce yourselves?
SPEAKER_03 (01:26):
Sure, I'll kick it off.
My name is Amanda Waite, and I'mpartner and head of antitrust at
Michael Best and Friedrich,based in Washington, D.C.
And uh formerly served at theFederal Trade Commission as a
staff attorney reviewingmergers.
So pleased to be here and greatto see you, Brian.
SPEAKER_01 (01:44):
And I'm Elizabeth Odette.
I am an Assistant AttorneyGeneral and Manager of the
Antitrust Division at theMinnesota Attorney General's
office.
I am also the Antitrust TaskForce Chair for the National
Association of AttorneysGeneral.
And so with those both of thosetitles, I just need to give a
quick disclaimer that uh mycomments and uh thoughts are my
own today and not that of theOffice of the Minnesota Attorney
(02:07):
General or NEG.
Great to be here.
SPEAKER_00 (02:10):
Wonderful.
Well, Amanda, let's begin withyou.
Can you give us an outline ofwhich transactions must be
notified to the federalgovernment and what information
must be included with thatfiling?
SPEAKER_03 (02:23):
Sure.
So this could be an entirewebinar on its own, but I'll
give just the highlights hereand talk about when you should
be thinking about filing andthen what do you have to do once
you've determined that you'vegot one.
So in terms of when should yoube thinking about filing, the
rule of thumb that I usuallyshare with clients is if you
have a transaction valued at$100million or more, you should
(02:47):
start thinking about whether afiling is required.
The technical answer is filingsare required to the federal
government, the Federal TradeCommission, and the US
Department of Justice'santitrust division under the
Hart Scott Rodino Act, when theymeet certain very specific
dollar thresholds and do notmeet one of the exceptions.
(03:08):
And those dollar thresholdschange from year to year.
So even if you know what thethreshold is this year, if you
have a transaction that hitskind of around that$100 million
mark, it's always prudent to goback and check.
The current thresholds for 2025are that if you have a
transaction that results in anentity, an acquiring entity
(03:30):
holding assets valued at morethan$126.4 million.
Um, and you have two partiesthat meet certain size
requirements, that transactionprobably has to be reported to
the agency.
The size of parties test that Imentioned earlier is that you
have to have at least one partyto the transaction that has
(03:53):
total assets or annual net salesof more than 100, I'm sorry,
252.9 million dollars.
And you have to have at leastone other party to the
transaction that also has totalassets or annual net sales in
excess of 25.3 million.
But like I said, those numberschange annually, usually in
(04:15):
February.
And so if you are havingtransactions around that$100
million mark, you should justcheck.
So there are also a number ofexceptions that apply under the
Hart Scott Rodino Act.
And those exceptions can taketransactions at much higher
dollar values and make them notreportable.
This is a very much in the weedsquestion.
(04:37):
And there's uh people who spendtheir whole lives thinking about
nothing other than whethertransactions are reportable,
hopefully only in theirprofessional lives and not in
their personal lives, too.
But this is an area where it'sjust prudent to check.
If you do determine that afiling is required at the
federal level under the HardScott Rodino Act, there are some
(04:58):
important changes that just wentinto effect back in February.
And we talked about these alittle bit at the annual meeting
as well.
We're now, you know, what, eightmonths into the new filing
regime?
And, you know, I'll lead offwith the it hasn't been as bad
as we thought it was gonna bepoint that I make to a lot of
clients.
The new filing requirements dorequire significantly more
(05:19):
information, but you know, itcan be done.
You just got to give yourself alittle bit more time and
dedicate some more resources togathering all the information
that's required.
And I won't go into all of theinformation that you have to
submit along with an HSR filingnow, but there's kind of two
important buckets.
The first one is narrativeinformation.
(05:40):
So if you've ever had to do afiling in Europe, for example,
writing descriptions of thecompetitive landscape and
descriptions of the transactionis not going to be a foreign
concept, but we now have to dothose kinds of narrative uh
submissions along with the USHSRfiling.
We have to provide diagrams ofthe deal structure if they
(06:00):
exist, discussions about thestrategic rationale and the
competitive landscape, amongothers.
And then on the document side, Ithink the tagline there is just
more documents from more people.
So there are more people thatyou have to search, there are
more types of documents that youhave to bring in.
Um while the US process hasgotten more burdensome in some
(06:23):
respects, um, it is, you know,lengthier and a little bit more
expensive and more burdensomenow.
It is completely doable.
You just have to get going alittle bit earlier on the
process.
Um, we're telling clients, youknow, don't sign those
agreements that say fivebusiness days to file anymore.
You know, please give us 20business days or so, and that
(06:43):
seems to be standard these days.
SPEAKER_00 (06:45):
Thanks, Amanda.
Elizabeth, we are alsoincreasingly seeing states
involved in mergerinvestigations.
Can you share how states likeyours come to get involved and
what the scope of thatinvolvement may look like?
SPEAKER_01 (07:01):
Yes, and I think one really important thing given
what Amanda just mentioned interms of the federal oversight,
is that to the extent that youcan be engaging federal and
state enforcers in alignment,that is ideal.
Um, if you are trying to do itad hoc, and as I'll discuss,
there are a lot of differentstate enforcement uh mechanisms
(07:25):
and how each state is involvedis going to vary.
But to the extent that you cando it in a in a parallel fashion
or in conjunction uh is thebest.
Uh, and don't assume that uhwhat you're giving to the
federal enforcers isn'tsomething that the states will
also want.
It kind of often there's a lotof overlap in what state
enforcers are looking for andwhat federal enforcers are
(07:47):
looking for, but also say it'sprobably to the benefit of uh
the entities involved in atransaction to have that state
enforcement perspective becausestates can um provide the
federal enforcers who arelooking at it from a very high
10,000-foot level, some more ofthe local information and in
some instances could beverifying how uh transaction um
(08:11):
entities are uh presenting umthe geographic and other uh
markets.
But uh state legislators hearfrom constituents, state AG's
offices hear from constituentson you know the personal
challenges that they face,healthcare costs is one of them.
And so in recent years we haveseen kind of, I wouldn't say an
explosion, but a steady increaseof state legislators passing
(08:35):
laws that have uh specifichealth care transaction
notification requirements.
Um but separate from that, uhsome states have their own state
agencies that do healthcareoversight.
And then as well, um City AG'soffices, even without the
healthcare transaction or othernotification laws, want to be
(08:56):
looking at certain transactionsfor antitrust and charities.
So it is just really importantto kind of consider states when
you're looking at a transaction.
And it may be that it uminvolves transactions that are
under that threshold that Amandamentioned.
So as I mentioned, it's kind ofuh, you know, a blend of uh
state laws, but you know, onething to note is they often
(09:19):
involve both antitrust andcharities laws.
And that is something that canbe kind of unique for uh
antitrust enforcers and thosewho are looking at uh
transactions strictly from acompetition perspective, because
it can blend um more often inthe space where there's a
nonprofit entity involved, butnot always.
Some states still require somelook at public interest, even if
(09:42):
neither of the entities is anonprofit.
So, you know, for example,Colorado and Washington recently
passed a uh laws that give themthe ability to have uh
pre-merger notification of justmost transactions in general
that the uh federal governmentuh would receive as well.
(10:04):
They both also have specifichealthcare transaction
notification laws.
And those um you probably wantto connect with those state AG's
offices specifically to learnhow those two laws and the
requirements for them interactwith each other.
So uh as Amanda had talked abouttoo, involving antitrust counsel
(10:24):
early to kind of just get asense of which states should we
really be focused on.
Uh, know that the federalenforcers may be reaching out to
those states as well.
Um, contacting your stateattorney general's office with
uh your intended timeline ishelpful because that way you'll
have a greater chance that theAG's offices uh will have that
(10:46):
staff time and resourcesdedicated to when your
submission is ready, uh to whenyou would really like to have
their review completed andhaving them confirm that their
review is complete.
One thing to note is that thereis sometimes a confusion that
state AG's offices approve ordeny.
Um at least many, most stateAG's office enforcement involves
(11:10):
a review that's similar to thefederal enforcers, so that
there's a time period and ifthey find that there may be
antitrust or charities concernsthat they need to sue to uh try
to stop that uh transaction fromoccurring, very similar to the
federal government.
There are some separate uhagencies in states.
I'll give Oregon for an examplewhere there is a very specific
(11:33):
approve or uh deny.
But that's that's pretty rare.
A couple of things to thinkabout when you're preparing to
provide information to a stateuh AG's office or a state uh uh
entity that's looking at theseis that uh the proximity of the
parties, uh the proximity of thehospital or other facilities,
(11:56):
um, that that's going to besomething that we look more
closely at.
Uh whether uh the transactionwill substantially lessen
competition.
Uh there's often many concernsabout if these healthcare
entities combine, will it reduceservices in rural areas?
That's a big concern.
Um the nonprofit focus wouldinvolve uh whether the you know
(12:17):
charitable assets are going tocontinue to be used for their
charitable purpose.
And also uh, you know, just thequality as well in terms of the
overall uh improvement ordeterioration when that uh goes.
I mean, often you're looking forefficiencies.
And so you may be rightlycombining uh phone runes or you
(12:41):
know, referral uh you know uhresources.
Will that still maintain the uhquality for the patients that
it's impacting?
And then I think uh it's just uhone thing to note, I would say,
is private equity is a reallyhot topic these days.
State EG's offices know thatthere's nuance involved.
(13:04):
Uh there isn't a one size fitsall.
But I will say because there'ssome skepticism in the public
about the use of private equity,you may just get more questions
from regulators.
And that in part is just simplya matter of the State EG's
offices want to make sure wehave the right information to be
able to understand that the useis appropriate, not that we are
(13:26):
uh, you know, not wantingprivate equity to be at all
involved in in healthcaretransactions.
The uh federal uh forms thatAmanda mentioned have a checkbox
now so that you can uh basicallyjust give the waiver so that the
federal enforcers uh can shareinformation that you've provided
with the state AG's offices.
(13:47):
That is a really efficient wayto deal with it because
otherwise uh your lawyers willhave to um negotiate waivers for
each state that can get uhcomplicated uh and time
consuming for something thatultimately uh should be just a
conclusion that you want toreach is that everybody should
have the same information whenthey're looking at it.
It uh would speed up theprocess.
(14:09):
And then lastly, uh the youknow, as Amanda mentioned,
sometimes there could be uhinternational uh impact on the
transactions.
And so even though uh you'rethinking about state AG's
offices in a very local setting,um, there are some instances
where um the non-US USjurisdictions may be in
(14:31):
collaboration with them.
SPEAKER_00 (14:35):
Well, with that really helpful primer on the
antitrust uh environments forthe federal and uh in the
federal and state settings.
Uh Amanda, what would be somebest practices for preparing for
these antitrust reviews?
SPEAKER_03 (14:52):
Thanks.
Uh I'll start by just uhunderscoring one thing that
Elizabeth said because I thinkit is really important.
And this is the ensuring thatthe federal uh enforcers can
work cooperatively with theirstate counterparts.
That can really throw a wrenchin a deal if it's not done
correctly.
And you know, Elizabeth iscoming at it from an enforcer
(15:15):
perspective, and so obviouslythere are synergies to having
those waivers granted early fromher perspective.
And but I'll just emphasize, youknow, I've been in private
practice now for 18 yearsadvising clients on these
things.
And I can only think of maybeone example in the entire time
I've been on this side of thetable where I've advised a
(15:37):
client not to sign a waiver.
And it was only because of aspecific nuance of that specific
state's law that was going toimpact the way that the
information was being sharedback and forth.
And we found a workaround tothat.
So I've clients come to me allthe time and they say, Well, why
(15:57):
would we want to do that?
Don't we want to make them dotheir own work?
And I say, Well, you could, butthen you're gonna risk getting
two completely paral, twocompletely different tracked
investigations.
And inevitably, what couldhappen is your state enforcers
maybe focused on slightlydifferent issues than your
(16:18):
federal enforcers, and you'rejust about ready to wrap things
up in a nice neat little bow.
And one of the investigatingagencies finds out that the
other one has been investigatingsomething else, and now they
have to go look at it too.
And it just will slow everythingdown.
So I completely agree withElizabeth's comment that in
almost every case, you know,there are some exceptions, but
(16:40):
in almost every case,encouraging that cooperation
makes a lot of sense because ifsomebody's gonna find an issue
with your deal, it is better toknow that earlier and have time
to be able to address it ratherthan have it come out at the
last minute when you're gettingready to close.
Um, so the other thing I wouldsay, just in terms of you know,
best practices or practicaltips, is really in addition to
(17:05):
filing your HSR, getting readyfor your HSR early, I always
tell clients, you know, you'vegot to understand the risk of
your transaction early on aswell.
And you need to bring inantitrust counsel as soon as
possible so that they can take alook.
And I usually will tell clientsearly on, you know, I can tell
you whether this is probably ared light, a green light, or a
yellow light.
(17:25):
You know, is this a, you know,you're absolutely gonna get
questions on this deal.
It's it might even get blocked,red light, or is this a you're
probably not gonna have anyissues, green light, or it's
you're gonna have some questionsproceed with caution, yellow
light.
And knowing that very early onis critically important because
it impacts almost everythingthat you're doing from a
(17:47):
business and commercial sidethroughout the deal cycle as
well.
So, for example, the antitrustrisk that you have with a
transaction as advised by yourcouncil can impact your deal
terms.
And, you know, I'm oftentimesreading LOIs or I'm reading
draft definitive dealagreements, and there's
provisions in there about who'sgonna bear the antitrust risk
(18:11):
and what is your timing beforeyou get to an end date, when can
people walk away, when canpeople terminate?
And a key input into thoseconsiderations is how long do
you think the antitrust reviewis going to be?
If you think the antitrustreview is only gonna be 30 days,
you submit your HSR form, yousubmit your state forms if
(18:31):
they're required, you wait yourwaiting period, and then nobody
raises any questions or issuesand you're free to close, then
your termination date could be45 days, 60 days, you know,
whatever your other regulatoryrequirements might involve.
But if you think you're gonnaget a second request, that's a
whole different decision.
(18:52):
You might want your end date tobe shorter so that if you get a
second request, you can walk.
Um, depending on which side ofthe transaction you're on, you
might want your end date to belonger to hold the other side's
feet to the fire and make themgo through the second request
process and see if you can getit cleared.
Um, but you can't make thosedecisions from a commercial
perspective until you know whatthe risk is on the front end.
(19:14):
So that's just one example.
There are there are so manyother provisions and
considerations that come intoplay depending on where you fall
on that risk spectrum, thatgetting your antitrust risk
assessed very early on is veryimportant.
Um I would also say the otherthing to keep in mind is just
being very mindful of yourdocument creation process very
(19:36):
early on in the process.
Um, I just told a client thismorning that I need to read the
deck that their bankers puttogether so that they don't have
a world domination slide inthere because I see it all the
time.
You know, especially if you'rerepresenting the sell side of
the transaction, they hire somebankers, they're trying to get
this deal sold, they are puffingup the business that is getting
(19:58):
sold.
All the clients are sticky.
Um, all the relationships are,you know, um they're all
long-term relationships thatcan't be changed.
There's um, you know, minimalcompetition.
Um, you know, you see, you seethese phrases pop up because you
have people writing thesedocuments whose job is to make
(20:20):
the company seem reallyprofitable, and that you know,
customers and patients andothers don't have alternatives.
But those documents go in withyour HSR filing.
They go in with your statefilings, and those are some of
the very first documents thatare forming the impression that
reviewing agency staff have onyour transaction.
(20:41):
So those documents, you know,first of all, need to be
accurate.
Um, you know, sometimes I seethese documents come in,
especially if they're written bythird-party consultants.
And you know, I'll take themback to the client and say, you
know, is this really true?
And they're like, not really.
Like, let's make sure it's true.
If you're gonna, if you're gonnakind of put a document out there
(21:02):
that could potentially raise anantitrust question, like, let's
make sure it's actually truefirst.
Um, if it's true, we can dealwith that, but um, you know, you
don't want that kind of pufferyout there um in your in your
documents that could reallythrow a wrench in things.
Um a couple other just practicaltips.
Just make sure that your team,whoever it is internally within
(21:25):
the company who's under the tenton a deal is following document
preservation requirements asadvised by counsel.
That might just mean followingyour normal business policies,
but there might be instanceswhere heightened scrutiny or
heightened protections arerequired.
Make sure people are followingthose.
Um, and then in terms of timing,you know, make sure that you're
(21:48):
again aware of your risk becausethat impacts timing, but also
any other notifications that arecoming in from state AGs, they
don't all follow the 30-day ruleunder the HSR Act.
Some are 60 or even more.
And so make sure that you'reaware of how those timings are
going to play in on your deal aswell.
Um, and so I think those are theonly tips that I've got.
(22:11):
And you know, Ryan, you and Ihave worked on a lot of deals
together over the years.
I'm sure you've got some ideasfrom your side as an economist.
SPEAKER_00 (22:21):
Yeah, thank you.
Uh first I'll I'll echo uhAmanda's um perspective that uh
from the view of the economist,earlier is going to be better.
Um, having been brought in toadvise on uh the economics of
(22:41):
transactions, both right beforeuh a transaction is being
notified to agencies and wellahead, I can tell you that uh
there's more that can be doneand more development of economic
theory and analyses that can bedone if it's done early, well
(23:02):
ahead of a HSR filing or statenotification.
So sometimes I'm asked what uhwhat exactly do economists bring
to the table in a in atransaction, like uh in terms of
the antitrust review.
And I think that there are a fewthings, a few ways in which
(23:25):
economists can be helpful tocompanies as they're preparing
for this moment of uh of filingwith state or federal agencies.
First, um we we are useful inassisting in the identification
of data and relevant documentsthat agency economists are
(23:46):
likely to ask for as part oftheir review.
And so uh we get involved incollecting and developing the uh
the relevant information that isgoing to be asked for almost
surely by the FTC or the DOJ orstate AG's offices.
(24:08):
Once we've uh pulled thatinformation together, uh we tend
to do a preliminary antitrustrisk assessment.
Think of this as a preview ofwhat the economists in the
antitrust agencies are going todo when they get access to your
data.
So this is an early screeningfor potential antitrust issues
and potential offsettingpro-competitive benefits of the
(24:31):
transaction.
And then once we know the basiccontours of the economic impacts
of a transaction, or at leastthe potential impacts,
economists can help withdevelopment of economic analyses
and theories that will go to thestorytelling aspect of the
transaction.
(24:52):
The last thing I would highlightis that the uh the filing
requirements at the state andfederal level, as Amanda and
Elizabeth pointed out, arebecoming increasingly complex
and in some cases uh dataintensive.
And so uh we also tend to getinvolved in helping to prepare
(25:14):
the data, the same data that'sbeing used for the antitrust
risk assessment and screeningexercises tends to be similar
data that's going to be askedfor.
And so we can uh we often willbe involved in the early
preparation of getting thatmaterial ready for submission to
state and federal agencies.
SPEAKER_03 (25:36):
So, Brian, we've talked a lot about you know kind
of the nuts and bolts of all ofthis and you know, making sure
we've done the assessment earlyand gotten ready for our filings
and getting ready ready for ourstate filings.
But could you maybe walk usthrough what are the key issues
that the enforcers, either atthe federal or the state level,
are looking for?
(25:56):
And Elizabeth, maybe you canchime in on some of this as
well.
SPEAKER_00 (26:00):
Yes, I would I would welcome hearing from Elizabeth
on this as well.
But in in broad terms, the DOJand FTC and state agents tend to
be following a fairly similaranalysis.
You're going to start byidentifying relevant markets
affected by the transaction.
Which services, which products,and which geographies are at
(26:24):
issue?
Um where are there overlapsbetween the parties to the
transaction?
Where are there not overlaps?
Once those uh markets have beenidentified, then the the
enforcers are going to look forcompetitive effects, which is a
uh economic term for are yougoing to see price increases?
(26:48):
Are you going to see changes inoutput?
Are you going to see impacts toquality?
Also, you uh the the agenciesmay also be looking at whether
or not the transaction willdisadvantage rivals, potentially
in adjacent markets or in uhthat have vertical relationships
(27:09):
with the parties rather thanbeing strict horizontal
competitors.
And in a newer focus uh from theagencies, we're also seeing them
looking for competitive effectswhere a dominant firm may be
entrenching their dominance.
This could be by eliminating anascent competitor or raising
(27:31):
some barriers that makes itharder for uh a competitor to
enter the relevant market.
So uh with all of this, the thebottom line question that's
being asked, the ultimate focusis what is going, what are the
likely effects on price andoutput?
Now the agencies, uh the federalagencies have issued the uh
(27:54):
merger guidelines that uh givesome direction on what will be
considered uh potentiallyanti-competitive.
And these these guidelines comedown to how much concentration
in a market will increase.
So, for example, uh a merger maybe at risk if it results in a
(28:19):
market share, a combined marketshare of the two parties in one
of the relevant markets of 30%or more.
And there's also an index ofmarket concentration called the
Herfendahl Hirschmann Index orHHI.
And if that rises above acertain level in a market that
was already tending to beconcentrated, you would also uh
(28:41):
potentially have additionalscrutiny from the uh federal
agencies.
Um before I get into thespecific anti-competitive
theories that enforcers aregoing to look at, Elizabeth, is
there uh could you would youlike to comment on the
differences in the state sidehere or similarities?
SPEAKER_01 (29:03):
Yeah, I mean, I think you've covered most, I
mean the basic kind of areasthat folks are looking at.
I think um there has been acouple areas, and I think you'll
maybe get into more detail onthem, about uh, you know,
vertical integration is anotheruh issue that uh I think states
are looking at too.
Uh we're so focused on theregional and local impacts that
(29:25):
we want to really understand ifuh there are, for example,
vendor relationships in thosekind of key critical
infrastructure areas that couldbe considered um, you know,
problems for competition downthe chain.
It could be uh, you know, is isit a critical infrastructure in
tech within the healthcaresystem?
(29:46):
Is it a critical infrastructurein insurance?
But we want to understand someof those really big important
relationships and if there areany uh ownership or control
aspects there.
And then I think uh, you know, Ithink.
get this to this too, but laboris a really important piece of
regional and local uh review aswell.
And um how a larger transactionmight uh impact the ability of
(30:12):
those who work for thosehealthcare systems to be able to
have competition for theirlabor.
SPEAKER_00 (30:17):
Yeah Elizabeth you you raise a really important
point that we should highlightum healthcare transactions
especially on the provider sidetend to involve hyper-local
issues where you havesignificant employers in a
community significant uhportions of the healthcare
(30:39):
infrastructure for a communityand so it's it's not surprising
that uh local stakeholders aregoing to be uh raising questions
and concerns including stateAG's offices let me just go
through a few of the thetheories that uh an enforcer
(31:02):
might be looking at in atransaction between healthcare
entities so the first and andmost common theory is that a
combined entity between the twoparties have horizontal overlaps
that would eliminate directhead-to-head competition between
them.
So in the provider space perhapsthey are competing with each
(31:26):
other for the same patients orthey're competing to offer the
same services in the samecommunity same geography.
Under this theory a transactionwould eliminate competition
between these direct competitorsand allow them to exercise more
(31:47):
market power in that market forexample by raising their prices
that they're charging topatients.
To prepare for that theory youwould like to assess what are
the potential what the potentialoverlaps between the two parties
are.
You would do that at thefacility level or service line
(32:08):
level if you're looking atproviders you may want to look
at different levels of acuity ofthe patients you may want to
look at freestanding facilitiesversus physician services versus
inpatient care versushospital-based outpatient care
and identify who are therelevant competitors in these
(32:29):
areas for each party to thetransaction because of the
complexity of contracting inhealthcare you'd also want to
look at the impact on payers andpayer contracts what facilities
are in uh which payers networkare do you see uh narrow
(32:50):
networks or tiered networks thatwould um that would be an
important driver of competitiveeffects and there is a is a an
adjacent theory to the purehorizontal direct head-to-head
competition overlap uh theorythat has been uh raised by
(33:13):
economists in the academicsetting and increasingly by
state and federal federalregulators uh though it is uh
still a fairly new theory aboutcross so-called cross-market
interactions between providersso in this uh setting imagine
(33:35):
that you have two health systemsthat don't actually compete with
each other head to head in aparticular geography hospital A
draws its patients from uh areaA and hospital B draws its
patients from area B and thoseareas are not overlapping
however the theory posits thatif those uh if those patients
(33:58):
are employed by the sameemployers andor if they're uh if
they are receiving purchasinginsurance health insurance from
the same payers that that couldcreate an overlap an interaction
a competitive strategic umdynamic whereby there could be
(34:20):
competitive effects even innon-overlapping strictly
non-overlapping areas uh so toassess this you'll also want to
look at in addition to where arethe patients coming from for
these providers for each perparty whether or not there's
overlap in the employers oftheir patients or in the
(34:41):
insurers that the uh in thepayer contracts uh the economic
literature on this while nascentdoes have some uh useful tests
that can be explored to assesswhether or not your transaction
is more or less likely to fitthe criteria where these cross
(35:01):
market effects are more or lesslikely.
Elizabeth mentioned labormarkets and so I I want to spend
some time talking through theconcerns there in a it may be
that uh two healthcare entitiesare significant employers for a
(35:23):
certain type of of labor forexample skilled nurses or
physicians that uh and and thata combination of those of the
parties would eliminate theopportunity for those employees
to uh compete uh or it wouldeliminate competition for those
(35:44):
employees' labor perhaps bysuppressing their their wages or
by deteriorating the workconditions for those employees
so here again you would want tolook and screen for whether or
not you have overlapping labormarkets for the employees of
both parties and who therelevant competitors are.
(36:06):
And I will I'll note that therelevant geography for the area
from which you draw yourpatients in may be quite
different from the relevantgeography geography from which
you are drawing employees in.
So those need to be examinedseparately the last thing I'll
mention is that quality of careand access to care is going to
(36:29):
be very relevant both to federaland local antitrust reviewers.
So if your if your transactionis going to uh is not going to
have any impact on pricing butis going to materially restrict
access to care for certainpopulations or deteriorate
(36:52):
quality of care for thosepatients that would still raise
anti-competitive concerns.
SPEAKER_03 (36:57):
On the flip side if the transaction is going to
enable in a way that istransaction specific
improvements in the quality ofcare, that would be a useful
story to develop as part of yourantitrust uh submissions
(37:18):
theories Amanda what else shouldcompanies be thinking about as
they prepare for a transactionwell um first do we want to see
if Elizabeth had anything shewanted to add on the theories of
harm Brian covered it well thankyou uh but I think uh he really
did highlight that for the stateenforcers we are going to be
(37:42):
looking at things more locallyand there may be uh for example
public meetings or other thingsthat could and this may get to
your point uh but that peopleshould be thinking about in
terms of what the review of astate uh more local enforcer
would look like versus thefederal enforcement yeah that's
a that's a great point Elizabethso to Brian's question about
what what else companies shouldbe thinking about um I'll
(38:06):
highlight two things first isyou know as as Brian and
Elizabeth have discussed kind ofthroughout the discussion today
healthcare transactions arehyperlocal and those local
stakeholder questions can comeup in a variety of different
ways.
Elizabeth mentioned potentiallyhaving public hearings on
(38:27):
transactions you can even justhave local stakeholders you know
whispering in the ear of the thestate AG or other government
officials sending informationover to support you know what
they think might happen if thetransaction does or does not go
forward.
And those local stakeholders cancan be on either side you can
(38:49):
have local support for yourtransaction or you can have
local opposition in some dealsyou have both.
You need to be prepared for thatand so planning ahead for not
only what is the review going tolook like and what might what
local stakeholder issues mightcome up, but proactively how are
you going to address those?
How are you going to suss thoseout?
(39:11):
Oftentimes with clients we havewe have the kind of rollout
communication strategy for atransaction where you know
there's a a timed list of whogets calls first and who gets
called second, who gets calledthird and exactly how is that
rolled out because you knowsometimes there are certain
(39:31):
people who just need to feelless like looped in on your on
your deal and have theopportunity to comment before it
kind of gets out there morepublic.
But it also gives the mergingparties the opportunity
potentially before the dealbecomes fully public to kind of
hear what some of the concernsmay be or what the support may
(39:52):
be and figure out you know howdo you incorporate that into an
antitrust or state AG charitiesreview.
So I think maintaining thatcommunication strategy but also
working into that appropriategovernment relations strategy or
other stakeholder strategy is isreally critically important.
(40:14):
And I would just say if a clientever comes to me and says you
know oh nobody's gonna noticethis deal this is a small deal
nobody's gonna care about thisthat's just not true.
Don't don't uh don't deludeyourself healthcare is not an
area where transactions flyunder the radar ever.
(40:36):
And if your strategy is to fileand duck and hope nobody comes
knocking that's that's probablynot a good strategy.
So just be ready.
The second quick like moreadministrative point that I'll
note here is that you know I seeclients they they sign their LOI
or they have their dealannouncement coming out pending
(40:58):
closing because there areusually in addition to antitrust
other barriers to close you knowin terms of regulatory filings
or insurance filings or otherthings that have to happen
first.
But the parties want to run offinto the sunset.
You know they're engaged they'rethey're so happy to be together
and they want to run off intothe sunset together.
And oftentimes the antitrustlawyers are the ones that are
(41:20):
like whoa whoa whoa tapping thebrakes not quite yet because the
parties even though they haveagreed to merge are not fully
integrated yet.
And so there are certaindecisions within the companies
that cannot be done jointlyuntil the filings are complete,
until the antitrust rule reviewis complete and until the deal
(41:41):
is actually closed.
So the rule of thumb is that allparties to a transaction must
continue to operateindependently and I say to
clients as much business asusual as you can until closing
and sometimes that does meanthat you're going to be bidding
against the other side forsomething.
(42:01):
And that's not just okay that iswhat the antitrust laws expect
and require so parties can planfor their integration and they
can absolutely be ready on dayone to hit go but before the
deal is actually closed theyhave to just stay in planning
mode and not in implementationmode.
SPEAKER_01 (42:24):
I have one thing to add before we wrap up um just in
terms of things to think aboutuh we are now in an age of data
um the world and you knowunderstands how data can be
collected, used uh and howpowerful it is uh in healthcare
that is clearly the case um soone thing I would say is to look
out when you are considering adeal is are there any ways in
(42:47):
which information is beingexchanged as competitors um in
areas that you compete in umthat could be questionable um
not all uh ways in which data isyou know aggregated and shared
are are illegal and you knowthis is similar to what we've
discussed before is you know butlike with private equity um it's
(43:07):
not all bad but um informationexchanges are something that is
being looked at more carefullynow and what you wouldn't want
to have happen is uh besurprised by something that you
are you know assuming is okay umto have more scrutiny over a
larger deal and open up a can ofworms um so looking at how
you're uh sharing information uhit would be important as well
(43:33):
well Elizabeth and Amanda thankyou for a fantastic discussion
and thank you for listeningtoday we really enjoyed our time
at the annual meeting this yearand we would love to see you
next year at the 2026 and AHLAannual meeting in New York.
SPEAKER_00 (43:47):
Thanks so much.
SPEAKER_02 (43:49):
Thanks hope to see you both there we'll keep
talking thank you if you enjoyedthis episode be sure to
subscribe to AHLA Speaking ofHealth Law wherever you get your
podcast.
For more information about AHLAand the educational resources
(44:09):
available to the health lawcommunity visit americanhealth
law dot org and stay updated onbreaking healthcare industry on
the HP outlets or AHLA HealthLaw Daily Podcast exclusively
for AHLA comprehensive members.
Subscribe at podcast eightsquare podcast goes to
Americanhealth law dot org slashdaily podcast
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