PHILADELPHIA — The Federal Trade Commission (FTC) is interested in hearing from physicians about their experiences with private equity involvement in healthcare as well as other marketplace issues, FTC chair Lina Khan said Wednesday at the annual meeting of the American College of Emergency Physicians.
“It’s difficult to overstate how valuable your stories, your experiences are,” said Khan, who addressed the audience remotely from Washington on Wednesday. “This is an area where FTC is still catching up, trying to learn as much as we can. We rely on continuing to hear from you on what the precise effects are. You play an essential role in this entire ecosystem.”
The agency is also “focusing on ‘roll-up schemes’ that allow private equity firms to consolidate power and jack up prices,” said Khan. “So for example, last month, the FTC sued a New York based private equity firm, USAP [U.S. Anesthesia Partners], because we allege they illegally bought out the largest anesthesiology practice in Texas in order to eliminate competition and hike up rates that ultimately Texas patients and businesses are paying.”
Overall, “since taking office at the FTC, two major areas of focus for me have been promoting fair competition in labor markets, and promoting fair competition in healthcare markets,” Khan said. For instance, “last January, we proposed a rule banning non-compete agreements and non-compete clauses from people’s employment contracts,” Khan said, referring to clauses that forbid employees who leave a job from going to work for a competing local business.
“In response we received over 25,000 comments for people across the economy, from security guards and fast-food workers to engineers and journalists,” she added. “In particular we heard from a lot of healthcare workers — I believe we got the most from healthcare workers compared to any other sector.”
Healthcare workers “shared stories — really sad and heartbreaking stories about how non-compete clauses upended their lives, keeping them stuck in jobs and having to forego better job opportunities, or otherwise uprooting their families because non-compete clauses lock out jobs with local employers,” Khan continued. “We also heard about how the proliferation of non-competes — particularly during COVID — actually impeded doctors from being able to be mobile and go around hospitals where care was really needed. So we saw how non-competes may have impeded patient care during the pandemic.” The agency is still working to finalize the rule, according to Khan.
One part of the proposed rule addresses non-compete “workarounds,” Khan said during a question-and-answer session. “For example, we also heard about these training repayment agreements where companies will say, ‘Well, I invested in your training and if you leave before 2 years, you have to pay me back,'” she said. “There are some cases in which that might be reasonable, but there might be other cases in which it may be designed to actually trap people and disincentivize them from leaving,” such as when a company invests $5,000 in training but requires payback of $50,000 or $100,000.
In such cases, “there is such a huge asymmetry between what they’re investing and what they’re going to get back and it’s reasonable to ask, ‘Hey, it is really designed to function as a non-compete and also deter people from walking away because it is so coercive?'” said Khan. “So we are going to be looking at some of those types of partnerships as well as trying to prevent companies from sidestepping the spirit of the rule by resorting to other agreements that might not technically be non-competes but in practice are functioning like it.”
Reinvigorating enforcement of regulations around mergers has also been a focus for the agency, said Khan. “In the last 2 years alone, we successfully stopped three hospital mergers — one in New Jersey, one in Rhode Island, and one in Utah — because we determined that these deals would have worsened healthcare for patients. In one of these deals, we also assessed whether the transaction would have actually harmed nurses as well. So we look at the consumer side but also the worker side — the effects on doctors, nurses, and other healthcare workers.”
Laura Wooster, MPH, senior vice president for advocacy and practice affairs at the American College of Emergency Physicians, applauded Khan’s remarks regarding labor issues. “One thing that we are appreciative of is that when they assess mergers and the markets, they’re now looking at the impact on labor,” she said in an interview.
“So instead of just ‘Let’s assess this potential merger to see if it stifles economic competition in the marketplace,’ which is how they’ve always done it, [now it’s] ‘Let’s look at how it affects competition for labor,'” she said. “In this case, laborers are the emergency physicians, and we have heard from them on numerous occasions how a lot of times consolidation does make it harder for them to find new jobs.”
Asked how emergency physicians are affected by non-compete agreements, Wooster said that although the specialty isn’t necessarily hit very hard, it seems particularly unnecessary to have those agreements for emergency physicians at all. “Say a cardiologist has an outpatient practice at a large hospital system. If they leave that hospital system, their patients will follow them if they’re staying within the geographic area,” she said. “So it’s a bit more understandable why the hospital might put them under a non-compete, because they [don’t want to] lose all these patients who follow this cardiologist. But emergency physicians generally only see a patient once, hopefully, so nobody follows that emergency physician when they leave.”