Federal Trade Commission may study Ballad Health’s impacts

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The Federal Trade Commission is considering launching a study about the impact of the agreement that created Ballad Health.

Ballad Health CEO Alan Levine said a study would be premature but several panelists at an FTC workshop said more information on Certificates of Public Advantage is imperative to inform future policy decisions. 

Stephanie Wilkinson, attorney advisor for the FTC’s Office of Policy Planning, said the study has not been authorized and it would take several years to gather meaningful data.

The proposal comes after concerns about Ballad Health’s COPA were raised at a recent FTC workshop, “A Health Check on COPAs.” 

The FTC adamantly opposed the merger of Wellmont Health System and Mountain States Health Alliance for years before it was approved by Virginia and Tennessee in January 2018. 

We know that there is a large body of empirical research that suggests that competition is beneficial in healthcare markets, that it can result in better prices and improved quality for patients, Wilkinson said. There is very little known about COPAs and whether or not that type of regulatory framework is better. That’s what we’re trying to figure out. 

Wilkinson said studies of past COPAs have focused on cost impacts to inpatient care, due to available data. She said a potential study of Ballad would attempt to analyze impacts to outpatient costs, access, quality and innovation. 

Every participant on Ballad’s FTC workshop panel agreed it’s too soon to know what the effects of the agreement have been. 

Dan Pohlgeers, representing Sunesis Medical Consulting and Ballad’s Local Advisory Council, was among those skeptical that the merger has been positive. 

There needed to be clear and convincing evidence of a public advantage and I don’t know that threshold has been met yet, he said. I think that’s something that needs continued oversight. 

Cost of Care

Pohlgeers accused Ballad of shifting outpatient services to inpatient settings to raise prices for patients.

“There is zero evidence that pricing has gone up more because of the merger, said Levine. 

A letter to Levine from Washington County Mayor Joe Grandy suggests that may be true.

Grandy said that, in fiscal year 2017-18, employees saw a reduction in their health insurance premiums and Washington County saw a reduction in healthcare costs of nearly 10 percent. In fiscal year 2018-19, he said premiums held steady. 

Grandy also said in-patient stays and the average length of stay have decreased, compared to 2015.

LEARN MORE: Some cancer patients will pay higher bills at new Ballad Health facility

Pohlgeers pointed to a decision by Ballad Health to move Kingsport Hematology and Oncology to the campus of Indian Path Community Hospital as an example of the hospital system raising costs. 

In March, News Channel 11 reported that some cancer patients would have to pay a facility fee to receive the same services at the new location. 

“Assigning blame to Ballad for something that’s going on all over the country is not fair, said Levine, who said he’s among the many who thinks this widespread policy should change. 

Levine said facility fees help hospitals recover the cost of charity care for the uninsured or underinsured. He said being attached to a hospital campus allows them to take advantage of a federal drug discount program. 

“If it wasn’t for the 340B program there would be hundreds of people in this region that would not be getting cancer care, he said.

Access to Care

Critics also contend that Ballad Health is restricting access to care in the region. 

MORE: Why rural first responders fear Ballad Health trauma care consolidation

At the FTC workshop, Holston Medical Group President Scott Fowler criticized Ballad’s decision to consolidate level one trauma services at Johnson City Medical Center and downgrade services at Kingsport’s Holston Valley Medical Center. 

“I believe the geography would demand that those types of services be centrally located to the region, said Fowler. “Let’s put them where they really should be. 

Levine said savings from consolidation are critical to keep rural hospitals open long-term. Ballad is required to maintain these facilities for five years under the COPA

MORE: Ballad Health merger is preventing rural hospital closures in region, CEO says

“If you can’t consolidate and you can’t achieve those synergies the ability to keep these rural hospitals open goes away, Levine said. “That’s why the state agreed to let us do this. 

The state’s approval went against the advice of the FTC. A public comment by the agency, submitted to the Tennessee Department of Health in January 2017, reads, in part:

“The commitment is ambiguous, leaves room for the elimination of many services and makes no commitment with respect to physician or nursing staffing levels or anything else. Moreover, the parties make this ambiguous commitment for only five years. This commitment should be of little comfort to the residents of rural communities served by Mountain States and Wellmont today, particularly when there may be an alternative purchaser that would be willing to make a stronger commitment to maintain these rural hospitals as hospitals.

Improving Population Health 

Perhaps the clearest benefit of the Ballad Health merger detailed at the FTC workshop was the health system’s commitment to reinvest $308 million of savings towards improving long-standing population health problems in the region. 

Ballad’s progress on dozens of metrics is being tracked by what regulators call objective indices. Benchmarks were set in March but Ballad won’t receive its first grade until next spring. 

FURTHER READING: Report outlines how Ballad Health’s progress will be evaluated by the state

“The fact that the state of Tennessee and the Commonwealth of Virginia were unable to score this COPA means that they were unable to determine that this COPA has been a clear and convincing benefit to the public, said citizen advocate Dani Cook. “If you can’t determine that then it should not progress.

At Holston Valley Medical Center, a 50-plus day protest has resulted in a petition with more than 23 thousand signatures. Cook said advocates want Ballad to delay further merging their assets until the COPA has been graded. 

Robert Berenson, a health policy expert at the Urban Institute, said this step would be very difficult to undo. “It’s not easy to unscramble the eggs once you’ve merged two entities, and they’ve integrated to some extent, he said. 

Levine said delaying this process is out of the question. 

This is the first of a three-part series on the Federal Trade Commission’s workshop. Stay with News Channel 11 this week as we continue to unpack the complicated COPA policy that oversees our region’s healthcare. 

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