Last week, Amazon closed a deal to buy a chain of health care clinics run by provider One Medical. Amazon sees health care as an area ripe for disruption and opportunity. The Federal Trade Commission, on the other hand, has been keeping a close watch on this for potential antitrust violations.
While the FTC decided not to block this merger, antitrust officials are still investigating it. And they’re likely to continue scrutinizing these kinds of health care-Big Tech deals, according to Erik Gordon, a professor at the University of Michigan’s Ross School of Business. He spoke with “Marketplace Morning Report” host David Brancaccio and the following is an edited transcript of their conversation.
David Brancaccio: So consolidation in the health care area. OK: If Hospital A wants to merge with Hospital Y across the street, you can imagine why antitrust regulators might want to ask some questions. And that’s one kind of consolidation, but only one kind.
Erik Gordon: Yes. And there are several new kinds of consolidations that are troubling to antitrust law. We’re not quite sure how to handle it. For example, suppose the hospitals aren’t across the street from each other. Suppose one is, well, in Maryland and the other one is in Pennsylvania. That’s a cross-market merger. What about doctors who are going out looking for jobs? If those hospitals merge, they won’t bid against each other to pay doctors higher pay. They’ll also have a lot more power to deal with insurance companies. And hospitals are in this life-and-death battle with insurance companies about getting insurance companies to pay more.
Brancaccio: Another one that’s in the news here: Amazon, right? Not a hospital chain. It’s a streaming TV company, a cloud computing company, it’s certainly a large retailer. Why would antitrust regulators be interested if it, for instance, wanted to buy a chain of clinics where people go to see a doctor or a nurse?
Gordon: There are a couple of things that you worry about with Amazon. One, Amazon can get its hands on patient data. And you know how Amazon likes data? Can they use that data to their advantage to sell more prescriptions of their mail-order drugs than their competitors? Amazon has an online pharmacy. Can it use its new clinics to funnel patients to its pharmacy and not competing pharmacies?
Brancaccio: Amazon is, among other things, an innovator. They do things very differently. And it’s not like health care doesn’t need some new ideas in America.
Gordon: That’s the flip side. In antitrust, you’re always trying to balance the benefits of a combination versus the potential risks to competition. And you’re right. I mean, health care, they’re the foot-draggers. With Amazon, the innovation takes place in about 10 minutes.
Brancaccio: The head of the Federal Trade Commission, her name is Lina Khan, indicates she might push for some antitrust cases that she’s aware could lose under current law. Why would she bother?
Gordon: That’s not intuitive. I mean, lawyers don’t like to go to court to lose. But it’s could be strategic because it could do two things. One, it could prod Congress to change the law to pass another statute. And even if Congress doesn’t jump in, enough companies might say, “It’s just not worth wrestling in court, spending millions of dollars on lawyers risking a possible loss. Maybe we just won’t merge.”
We reached out to Amazon for a statement. According to an Amazon spokesperson, “One Medical continues to offer choice and flexibility. Members can choose to fill their medications with any pharmacy they prefer, including Amazon Pharmacy.” Amazon also said it, “protects some of the most sensitive data in the world and have been very good stewards of that. The amount of data and the way with which Amazon protects that data across our AWS, Devices, and Stores businesses shows that we are as good as and responsible as anyone in the world at protecting customers’ data.”
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