5 Key Antitrust Takeaways from Holland & Knight's Panel at Nashville Healthcare Sessions 2024

2024 has been an eventful year for federal and state antitrust enforcement in healthcare with many in the industry wondering where do we go from here in 2025. Holland & Knight sponsored a breakout panel discussion at the recent Nashville Healthcare Sessions to bring down the temperature and provide an opportunity for the industry to learn about the latest developments directly from current and former federal officials and antitrust professionals.

Holland & Knight Partner Brent Hill, leader of the firm's Healthcare Section, led the panel discussion that included Holland & Knight Partners Bill Katz and Henry Leventis – a former U.S. Attorney for the Middle District of Tennessee – and Rohan Pai, Acting Assistant Director, Mergers IV Division of the Federal Trade Commission's (FTC) Bureau of Competition. The room was at capacity and witnessed an engaging discussion that included audience participation, panelists providing practical advice and a figurative "microphone drop."

The panel's message affirmed much of the guidance that Holland & Knight has provided in written publications and interviews throughout the year – mainly, that there is a positive outlook ahead for the healthcare industry in 2025 and that businesses need to be proactive in addressing these new antitrust developments.

Key Takeaways

If you missed the discussion, here are five key takeaways:

1. There Is Not a Target on Private Equity: The FTC focuses on anti-competitive behavior by any business in the healthcare industry and looks at private equity-backed businesses the same as it does nonprofit organizations, health systems and other strategic companies. The U.S. Department of Justice (DOJ) handles payer integration and other qui tams that might involve private equity-backed businesses. While federal prosecutors are aware of public discourse when exercising their prosecutorial discretion, there is not a concerted, behind-the-scenes effort targeting private equity-backed businesses. Prosecutors are looking for bad actors, whomever they are and in whatever industry that may be doing business.
   
   From the FTC's perspective, the only unique attribute about private equity-backed businesses is that they are clearly profit-maximizing and do not try to justify their conduct based on charitable or other goals. The information-gathering requests by the FTC and other agencies earlier this year also were not intended to gather evidence for future investigations. They were meant to be exactly what they are: efforts to gather information from the public to make informed decisions about future policy issues. The FTC already has at its disposal a variety of tools, such as subpoena power and customer complaints, to obtain whatever information it might need to open or pursue an investigation of alleged anti-competitive activity by private equity-backed or other businesses within the FTC's purview.

2. But Private Equity Should Take Proactive Antitrust Measures: There is no grand plan to remove private equity from the healthcare industry, but the FTC will scrutinize the actions of private equity investors related to their portfolio companies (PortCos) and the investment theses for their deals. Even though Welsh Carson was dismissed from the U.S. Anesthesia Partners case, that dismissal was largely on procedural grounds, so the door remains open for future cases against private equity investors if the FTC has concerns about anti-competitive conduct. See Holland & Knight's previous alert for a proactive plan to mitigate these concerns. One of the recommended measures involves building out an investment thesis that showcases a transaction's positive effects on access to and quality of care, electronic health record connectivity, the labor market and compliance investment. The thesis should be supported with organizational documentation showing a historical narrative and, if possible, white papers and other research and data, since the FTC will investigate and test the claims made in the thesis.
3. Read the 2023 Merger Guidelines and New HSR Rules: Along with the DOJ, the FTC invested a considerable amount of time updating the Merger Guidelines (Guidelines) that were issued in late 2023. The Guidelines reflect the current thinking of the FTC and DOJ regarding merger enforcement and explain the steps taken by the agencies when analyzing mergers. Along with more detailed legal and economic analyses, the Guidelines also include a section targeted at non-lawyers to help them understand what the FTC and DOJ do when analyzing mergers. The agencies' current thinking is therefore public and allows merging parties to understand where the regulatory goalposts are located when trying to get a deal done. Additionally, following the panel discussion, the FTC and DOJ announced the issuance of revised premerger notification rules implementing the Hart-Scott-Rodino (HSR) Act. As with the Guidelines, merging parties should read these new rules and look for additional guidance that Holland & Knight will be providing in a future alert.
4. Respond to FTC Requests and Ask Questions: Less than 1 percent of transactions reportable to the FTC and DOJ under the HSR Act are challenged. The agencies just don't have the resources to challenge every deal. Having said that, parties who receive requests for information after making a HSR filing should answer those questions in a timely and comprehensive manner. Parties should also ask questions of the FTC to better understand the agency's concerns and why certain information is being requested. Good communication will help the FTC obtain the information, clarify any misunderstandings and ultimately lead to a faster resolution of the FTC's investigation.
5. Pay Attention to the States: Holland & Knight has extensively covered the proliferation of the state laws applicable to healthcare transactions, including the effect of California Gov. Gavin Newsom's veto of Assembly Bill (AB) 3129 and other stalled bills on future legislation. (See Holland & Knight's previous alert, "Healthcare Private Equity Transactions Under Scrutiny: Midyear Review," Aug. 1. 2024.) Those effects played out on Oct. 7, 2024, when the Pennsylvania Senate reviewed a revised version of House Bill (HB) 2344, which narrowed the bill's scope to the reporting of transactions between healthcare facilities and reduced the waiting period for transactions from 90 days to 45 days. The revised bill would also sunset in four years and includes a requirement for a detailed report on the statute's effectiveness after three years. Finally, the revised bill confirms that materials submitted for review cannot be used for other prosecutions by the Pennsylvania Attorney General. This change is likely to address fears in the industry that the statute will be used for fishing expeditions to initiate other investigations.
   
   Industry participants should monitor and be prepared for new state developments in 2025 and should not hesitate to join any discussions or lobbying efforts to help ensure that any proposed legislation is appropriately balanced. To that end, the National Academy for State Health Policy (NASHP) released this summer an amended model act for state healthcare transaction laws and has recently reengaged in an advocacy campaign. For context, NASHP last released a draft model act in 2021 and many of the states that implemented laws thereafter appeared to have incorporated elements from it.

Conclusion

It is expected that there will be additional developments in federal and state antitrust scrutiny and a similar reaction to this year's release from NASHP and encourage you to contact us to discuss how to respond to expected developments for 2025. For more information or questions, please feel free to contact the authors or our team of Holland & Knight attorneys. Please also see our HK Navigator to stay up to date on the latest developments in this space nationwide.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.