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Focus on Regulation

New FTC Economist Signals Focus on Healthcare

FTC Chairwoman Edith Ramirez announced the appointment of Martin Gaynor as the Director of the Bureau of Economics to begin on October 1. Gaynor’s appointment signals that the FTC is not letting up in the attention it gives to competition issues in health care. Gaynor’s career has been dedicated primarily to studying the economics of health care. He is a professor of economics and public policy and holds the E.J. Barone Chair in Health Systems Management at Carnegie Melon University. He brings a wealth of knowledge and experience to the FTC in the area of health care economics and his views are likely to be important to the Commission as it makes policy and enforcement decisions relating to increasing health care consolidations.

Gaynor is also the Chairman of the Health Care Cost Institute’s Governing Board. The HCCI was established in 2011 with the goal of “providing complete, accurate, unbiased information about health care utilization and costs to better understand the US health care system.” To accomplish this goal, HCCI has been creating the first national claims database from private insurers, and making it available to academics and policymakers.

In September 2011, Gaynor testified before the U.S. House Ways and Means Committee on health care provider consolidation. In his testimony, he asserted that “providers in more concentrated markets charge higher prices to private payers, without accompanying gains in efficiency or quality.” He testified that these higher charges are passed on to consumers, rather than being absorbed by insurers or employers. In his 2011 testimony, Gaynor was largely referring to studies on hospital market concentration; at that time, he acknowledged that the evidence is inconclusive on the effect of consolidation in physician markets. However, more recently in a blog post from September 7, 2013, he said: “Doctors, hospitals, etc. aren’t efficient, and don’t serve customers well because they don’t have to. The reason for that is there aren’t enough rivals competing aggressively enough to force them to innovate.”

On antitrust enforcement, Gaynor has said that the government needs to: “strongly enforce the antitrust laws in health care.” Beyond the Affordable Care Act: A Framework for Getting Health Care Reform Right, The Health Care Blog (August 2013). He suggested the following reforms should be undertaken when addressing health care supply side issues:

• Strongly enforce antitrust laws in health care
• Ease barriers on new forms of health care organizations entering the market, such as retail clinics, freestanding surgery centers, specialty hospitals, telemedicine, etc.
• Free up entry into the medical profession
• Free up entry into specialties
• Reduce or eliminate public subsidies to medical education
• Regulate health insurers nationally, rather than on a state-by-state basis.

In addition, Gaynor previously pointed to blocking current consolidations as well as prosecuting consummated mergers where entities have exercised market power and not realized substantial efficiencies as effective tools to protecting competition. U.S. House Ways and Means Committee Testimony (September 2011).

Gaynor’s CV lists his extensive published works on the subject, and his opinions also can be found on his blog “Compassionate Economics“.