California State Capitol building in Sacramento. (Photo: Jason Doiy/ALM)
A California bill that would strengthen and expand the oversight of the state attorney general over new health care mergers, acquisitions, and other transactions has passed the Assembly and is headed to the Senate.
Assembly Bill 2080, known as the Health Care Consolidation and Contracting Fairness Act of 2022, builds on the attorney general's existing oversight authority over nonprofit hospital mergers to include all health system transactions in order to review the impact such transactions would have on communities, access to and quality of care, costs, and market competition.
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Health plans intending to acquire or obtain control of an entity also would be required to seek approval from the California Department of Managed Health Care — which could then deny the transaction if it is deemed to substantially reduce competition.
"As mergers reshape the health system we all rely on right under our feet, these for-profit deals should get proper public scrutiny and input on their impact, cost, quality, equity, and access," Anthony Wright, executive director of Health Access California (one of the organizations sponsoring AB 2080) said in April, when debate on the bill began. "The oversight is important since mergers can decrease competition for consumers or result in the cutting of services, the lowering [of] the quality and accessibility of care, and increasing prices. Health care consolidation is one of the major drivers of increasing health care costs – which have been rising much faster than inflation for many years."
Among the bill's supporters is the California Public Interest Research Group (CALPIRG).
"When big health systems buy up other hospitals, and even purchase our physician offices or urgent care centers, costs go up — taking more money out of the pockets of consumers, without an improvement in care," CALPIRG State Director Jenn Engstrom said in a statement after AB 2080 passed the State Assembly. "If communities are faced with essentially one hospital system, they're held hostage to the high prices those systems charge."
Nevertheless, the bill has proven to be controversial, with opposition primarily focused on granting sole review authority to the attorney general.
"Opposition has raised concern about the attorney general's review process, and I've amended the bill to try to address their concerns," bill sponsor Jim Wood (D-Santa Rosa) told StateOfReform.com. "They don't like it. But they won't provide feedback. As a matter of fact, they wouldn't even provide any amendment language of how the review process could be improved."
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