When Lina Khan became Chair of the Federal Trade Commission in 2021, antitrust enforcement in the hospital sector entered a period of unusual ambition. The Khan FTC challenged mergers that prior administrations had allowed to proceed, expanded the analytical framework for assessing competitive harm, and pursued cases that tested the boundaries of what existing antitrust law could accomplish in consolidated healthcare markets. The effort was genuine, sustained, and better resourced than what preceded it.
It was also insufficient. Not because the enforcement was poorly executed — several Khan-era challenges succeeded in blocking or unwinding transactions that would otherwise have proceeded. But because the structural mismatch between the antitrust framework and the healthcare market is not a problem that more aggressive enforcement within the existing framework can fully resolve. The hospital market has characteristics that antitrust law, as written and as interpreted by courts over decades, was not designed to address. The Khan era is the best available test of what enforcement ambition can accomplish within those constraints. The result is an answer to a question the reform debate needs: not whether enforcement failed for lack of trying, but whether the framework itself is adequate to the problem.
The market definition problem: FTC v. Advocate Health Care
The foundational challenge in hospital antitrust enforcement is market definition — determining the geographic boundaries of the market within which a merger’s competitive effects are assessed. The legal standard asks whether a merger substantially lessens competition. The answer depends entirely on how the market is drawn. A merger that produces a near-duopoly within a fifteen-mile radius looks different from a merger assessed within a fifty-mile radius that includes multiple additional competitors.
Hospital systems understand this. Their litigation strategy in antitrust challenges has consistently focused on expanding the defined market to dilute their post-merger share. The argument is that patients can and do travel to hospitals outside the immediate area — that the relevant market is not the community the merging hospitals actually serve but a broader geographic area that includes hospitals the merging parties’ patients rarely use.
FTC v. Advocate Health Care, decided by the Seventh Circuit Court of Appeals in 2016, is the clearest illustration of how market definition disputes determine outcomes. The FTC challenged the proposed merger of Advocate Health Care and NorthShore University HealthSystem in the Chicago area, arguing that the merger would substantially reduce competition in the North Shore suburbs of Chicago where both systems operated. The Seventh Circuit rejected the FTC’s proposed market definition, accepting Advocate’s argument that the relevant market extended further than the communities the merging hospitals primarily served. With a broader market definition, the merged entity’s share was insufficient to establish the competitive harm the FTC alleged.
The FTC lost the case on market definition before the merits of the competitive harm argument were fully tested. Advocate and NorthShore merged. The subsequent evidence — price increases at the merged system, reduced insurer leverage in the affected communities — validated the competitive concern the FTC had identified. The legal standard had failed to prevent the harm it was designed to prevent because the market definition framework gave the merging parties enough room to argue their way out of it.
The Herfindahl-Hirschman Index — the standard concentration metric used in merger review, calculated by summing the squares of each competitor’s market share — is only as useful as the market definition it is applied to. An HHI calculation that uses the right geographic market produces an accurate picture of post-merger concentration. An HHI calculation applied to a market drawn to include hospitals that patients do not actually use produces a number that understates concentration and obscures competitive harm. The Advocate case documented that hospital systems can reliably exploit the gap between those two calculations in court.
The consent decree problem: Lifespan and Care New England
Where the FTC cannot block a merger outright — because the legal standard is not met, because the market definition problem undermines the case, or because political or institutional constraints limit the challenge — it has sometimes accepted consent decrees: negotiated agreements that allow the merger to proceed subject to conditions designed to preserve competition. The Lifespan and Care New England case illustrates what consent decrees accomplish and what they do not.
Lifespan and Care New England are the two dominant hospital systems in Rhode Island. Their proposed merger, announced in 2019, would have combined the state’s largest health systems into a single entity controlling the substantial majority of Rhode Island’s hospital capacity. The FTC investigated and ultimately did not challenge the merger on antitrust grounds after the parties abandoned the combination in 2022 — but the years of regulatory uncertainty and the conditions that would have been required to address competitive concerns illustrated the limits of the consent decree approach.
Consent decrees in hospital merger cases typically require behavioral commitments: price caps for a defined period, prohibitions on certain contracting practices, requirements to maintain specific service lines. They do not address market structure — the merged entity retains the market position the merger created. Price caps expire. Behavioral commitments are difficult to monitor and enforce. The competitive harm the FTC identified as sufficient to require conditions is the same competitive harm that the merged entity will be able to exercise once the consent decree period ends.
The deeper problem is that consent decrees convert a structural remedy — blocking a merger that reduces competition — into a behavioral remedy that attempts to regulate the conduct of a dominant firm. The economic literature on behavioral remedies in merger cases is consistent: they are substantially less effective than structural remedies at preserving competition. A hospital system operating under a price cap for five years is not competing; it is waiting.
What cross-market mergers revealed
The Khan-era enforcement push confronted a problem that the Advocate case had foreshadowed but not resolved: cross-market mergers. Hospital systems acquiring facilities in different geographic markets do not produce the same direct competitive overlap that same-market mergers do. The traditional antitrust framework, focused on competitors in a defined market, has limited tools for assessing mergers that increase a system’s overall market footprint without directly eliminating a local competitor.
The price effects of cross-market mergers — documented in the Cooper et al. research examined in the pricing article — operate through a different mechanism than same-market consolidation. A system with facilities across multiple markets gains leverage with insurers that operate across those same markets: the credible threat to withdraw from the insurer’s network systemwide is more powerful than the threat from a single-market system. That leverage produces higher prices across the system’s footprint. It is a real competitive harm. It is also one that existing antitrust doctrine, built around market-by-market competitive analysis, was not designed to capture.
The Khan FTC attempted to develop legal theories that would allow cross-market merger effects to be incorporated into antitrust analysis. The effort produced limited case law before the change in administration. The cross-market merger problem remains an open gap in the enforcement framework — documented in the research, recognized by enforcement officials, and largely unaddressed in the legal tools available to challenge it.
The vertical integration gap
The physician practice acquisition dynamic documented in the vertical integration and independent physicians articles represents the enforcement gap that has proved most consequential at the community level. Individual physician practice acquisitions — a system acquiring a three-physician primary care group, a cardiology practice, an imaging center — typically fall below the Hart-Scott-Rodino merger filing thresholds that trigger mandatory FTC review. They are invisible to the federal enforcement apparatus regardless of their cumulative effect on market structure.
State attorneys general have jurisdiction to challenge anticompetitive conduct under state antitrust laws, and several states have attempted to assert that jurisdiction over healthcare consolidation. The results have been mixed — state enforcement resources are limited, the legal standards vary, and the same market definition problems that plague federal enforcement apply at the state level. Certificate of need laws, which require regulatory approval for certain facility changes, address a different set of questions than antitrust law and do not fill the enforcement gap.
The noncompete clauses that lock employed physicians into system arrangements — flagged in the independent physicians article — were the subject of the FTC’s 2024 rulemaking that would have substantially restricted their use. The rule was challenged in federal court and blocked pending litigation. The enforcement attempt illustrated both the regulatory ambition of the Khan era and its limits: a rule that would have addressed a significant structural feature of the consolidated physician employment market was halted before taking effect.
What the enforcement record means
The antitrust enforcement record in the hospital sector is not a record of indifference. It is a record of a legal framework applied with increasing ambition to a market whose structural features consistently exceed what that framework was designed to address.
The market definition problem is not solvable within current doctrine without courts accepting a substantially different framework for assessing geographic markets in healthcare — one that reflects how patients actually use hospitals rather than how far they theoretically could travel. That doctrinal shift has not occurred, and there is no guarantee it will.
The cross-market merger problem requires either new legal authority or a doctrinal evolution that existing case law has not supported. The vertical integration gap requires either lower filing thresholds — which would impose substantial compliance costs on transactions that raise no competitive concerns — or a fundamentally different regulatory approach to cumulative market effects.
The conclusion the enforcement record supports is that antitrust enforcement, however aggressively pursued, is not a sufficient response to hospital market consolidation as it has developed. It is a necessary component of any serious regulatory approach. It is not, by itself, adequate to the scale of the market power the consolidation documented in this hub has produced.
What would be adequate — the reform proposals that go beyond enforcement to address the structural conditions that enforcement has proven unable to constrain — is the subject of the article that follows.
All Hospital Consolidation Articles
00 — Hospital Consolidation Hub
01 — How Hospital Consolidation Works — and What It Produces
02 — Horizontal Merger: When Hospitals Buy Hospitals
03 — Vertical Integration: When Systems Acquire Everything
04 — Private Equity in Healthcare: What Happens When Hospitals Become Assets
05 — How Consolidation Drives Up Prices
06 — What Consolidation Does to Quality and Staffing
07 — How Consolidated Systems Squeeze Independent Physicians
08 — Rural Hospital Closures and the Consolidation Connection
09 — Why Antitrust Enforcement Failed the Hospital Market
10 — What Would Change It: Consolidation, Competition, and the Reform Debate
11 — What Single-Payer Resolves — and What It Doesn’t: The Evidence From This Hub
12 — Join the conversation in the Health Care Forum
This article was researched and drafted with AI assistance under human review. See our full AI and editorial practices.