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FTC Staff Opposes Proposed Certificate of Public Advantage That Could Shield SUNY Upstate Medical University’s Acquisition of Crouse Health System from Antitrust Scrutiny

The Federal Trade Commission staff submitted a comment to the New York State Department of Health opposing a request by SUNY Upstate Medical University and Crouse Health System to grant a certificate of public advantage, also known as a COPA, which could shield the merger from antitrust laws and would likely lead to higher health care costs, lower quality and less access to care, and depressed wages for area hospital workers.

“Research has shown that Certificates of Public Advantage frequently lead to higher prices and lower quality care for patients and lower wage growth for nurses, pharmacy workers, and certain other non-medical skilled workers,” said Elizabeth Wilkins, Director of the FTC Office of Policy Planning. “We do not believe granting this COPA will benefit the people of the state of New York.”

SUNY Upstate Medical University and Crouse Health System announced the proposed merger in April 2022, then filed a COPA application in July. The New York State Department of Health has invited public comments on the application.

In Onondaga County, N.Y., where the effects of the proposed merger would likely be felt most acutely by area patients and hospital workers, the merged entity would have a combined share of nearly 67 percent of commercially insured inpatient hospital services. Moreover, the proposed merger between SUNY Upstate and Crouse would reduce the number of hospital options available for nearly all patients in Onondaga County from three to two.

According to the comment, an analysis by the FTC staff indicates that SUNY Upstate currently competes closely with Crouse, which benefits patients and also results in optimal wages and benefits for hospital employees. The comment goes on to state that there is insufficient evidence to conclude that any benefits of the merger would outweigh the potential harms, and it is doubtful that regulatory conditions imposed by the state under the COPA would offset the potential anticompetitive harm to patients.

The FTC staff also expressed concern about a lack of transparency surrounding the COPA process, noting that the application has not yet been made readily available to the public. FTC staff submitted a public version and non-public version of its comment, with claimed confidential material redacted from the public version.

In recent years, FTC staff has seen a resurgence in COPA laws. In 2017, the FTC announced a policy project to assess the impact of COPAs on prices, quality, access, and innovation for health care services. This project has included research of past COPAs, a public workshop highlighting practical experiences with COPAs and related policy considerations, and an ongoing study of those that have been recently approved. The studies of past COPAs have revealed significant increases in commercial inpatient prices, as well as declines in quality of care. More broadly, access to affordable healthcare is of the utmost importance to American consumers. Promoting competition in the healthcare sector is a key priority for the FTC, including preventing anticompetitive hospital mergers.

The Commission vote to submit the staff comment to the New York State Department of Health was 4-0-1 (with Commissioner Phillips abstaining).