Bacon's Rebellion

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Herring Intervenes to Protect Hospital Competition… in Pennsylvania

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James A. Bacon
in ,

by James A. Bacon

It’s encouraging to see that Mark Herring has taken a forceful action against an “anticompetitive hospital merger” in his final days as Attorney General. Too bad the targets of his judicial intervention are in New Jersey, not Virginia.

Herring has joined a bipartisan coalition of 26 attorneys general filing an amicus brief in federal court in support of a lower court ruling that would stop a merger of Penn States Hershey Medical Center and Pinnacle Health. As a press release from Herring’s office explains, states have a strong interest in ensuring the affordability, accessibility, and quality of health care.

“The public interest is best served by protecting vibrant competition in local healthcare markets,” asserts the press release. “States have experienced a wave of consolidation in healthcare that has resulted in higher prices without any substantial improvements in quality for consumers.”
In a rarity, I find myself in total agreement with Herring, at least in the abstract. But, curiously, I cannot recall the AG ever intervening in Virginia’s medical marketplace to preserve competition. The press release does not refer to any cases in which he did so. Virginia’s giant healthcare systems have been allowed to merge, consolidate, acquire and expand, creating regional healthcare delivery monopolies with impunity over the past eight years of Herring’s tenure (and longer).

I have no explanation for Herring’s inconsistent application of principles, but I don’t suppose it matters one way or the other with his term due to expire in two months.

I have high hopes that Attorney General-elect Jason Miyares will take a more aggressive pro-competition, pro-consumer stance. I expect that he, as a Republican, will prove supportive of free markets as a general ideal. But Republicans have been known to compromise free-market principles when confronted with the pleadings and campaign contributions of special interest groups. Bacon’s Rebellion will keep a close eye on the new AG.

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23 responses to “Herring Intervenes to Protect Hospital Competition… in Pennsylvania”

  1. LarrytheG Avatar
    LarrytheG

    re: ” But Republicans have been known to compromise free-market principles when confronted with the pleadings and campaign contributions of special interest groups.”

    which is an interesting thing if someone’s political views are to support free markets and oppose govt control of those markets… no?

    Do free-market folks support govt intervention, regulations, and manipulation of free markets rather than let those markets do what many Conservatives/Libertarians say to let them do?

    1. Jesse Avatar
      Jesse

      Not even the most free market oriented economists (and I consider myself one) believe that there should be no government intervention. The only questions are when, how and what. Market failures, like monopolies, exist. It’s important to note that monopolies, like hospital monopolies, are market FAILURES, not the free market. My complaint is not that the government intervenes, but that often government intervention exacerbates the market failure. And often the exacerbation of the market failure is intentional, as in land use regulation that intentionally excludes certain groups of people, exacerbating equity concerns. Economic theory acknowledges that efficiency and equity must be addressed. Finally, there is no such thing as a totally free market. The government has intervened in every market.

      1. LarrytheG Avatar
        LarrytheG

        Is the claim that Hospitals are govt-granted monopolies true? Did Hospitals get to where they are with Govt support or did they get there more like Walmart did?

        The problem with Libertarianism is way more than the examples you cite and often purposely muddled depending on circumstances debated.

        TRUE govt-granted and sanctioned monopolies CAN be explicit exceptions but that’s not where Libertarianism goes beserk IMHO. Just take the Central Bank and the gold standard for two, and zoning for three and the provisioning of water and sewer for four and public roads that provide access to property so it actually has development value for five.

        Compare to 3rd world countries which have far less govt and far more true libertarianism to really see how those differences actually play out in “markets”.

        low literacy (few public schools), dirt roads, no electricity, no water/sewer, high death rates, low GDP per capital – all things that are part of Govt realm in developed countries.

        Not a single “Libertarian” developed country in the world , right?

      2. James A. Bacon Avatar
        James A. Bacon

        Jesse, you hit the nail on the head. Health systems used the regulatory apparatus of the Certificate of Public Need process at the state level (and a wide variety of laws at the federal level) to restrict competition, even as they use their political and regulatory clout to expand their monopolies vertically and horizontally. We have nothing resembling a free market system in healthcare delivery.

        1. LarrytheG Avatar
          LarrytheG

          The COPN is mostly a bogus conservative crutch. There are many states without COPN where the larger hospitals still take over and they do so the same way that WalMart or UPS or Google does… the old-fashioned way.

          ” In 1987, the federal government repealed the CON mandate, and throughout the 1980s, states began retiring their CON programs. By 1990, Arizona, California, Colorado, Idaho, Kansas, Minnesota, New Mexico, South Dakota, Texas, Utah, Wisconsin, and Wyoming (a total of 12 states) repealed their CON programs.”

          https://medium.com/concentrated-benefits/how-state-certificate-of-need-con-laws-impact-access-to-health-care-b8d3ec84242f

          Ironically this cites a Mercatus “study” that goes on to make the COPN case but totally ignores California which does not have COPN and is 7 times bigger than Virginia.

          And California has the same problem with mega hospitals taking over.

          “How a hospital system grew to gain market power and drove up California health care costs”

          https://www.cbsnews.com/news/california-sutter-health-hospital-chain-high-prices-lawsuit-60-minutes-2020-12-13/

          They did this WITHOUT COPN!

          And note, it’s a Liberal DEM that is proposing sanctions against the hospital for ” Sutter will admit no wrongdoing, but will pay $575 million and agree to stop blocking patients’ access to less expensive hospitals and requiring “all-or-nothing” contracts. ”

          Nothing to do with COPN but a lot to do with business practices that involve the govt stepping in to restrict the “unfettered free market”.

  2. emjak Avatar
    emjak

    This is not the first time AG Herring has been moonlighting in out-of-state litigation that has no apparent connection to Virginia. See article at https://www.baconsrebellion.com/herring-is-moonlighting-in-election-law-litigation/ Seems AG Herring is more interested in virtue signaling than focusing on the interests of Virginians.

    Let’s hope AG-elect Miyares does a better job by involving himself in litigation that has a bearing on Virginians and Virginia state interests.

  3. DJRippert Avatar
    DJRippert

    No doubt Herring is bolstering his resume for post-AG use. After all, the man will be unemployed in a couple of months.

    1. LarrytheG Avatar
      LarrytheG

      Such “unemployed” folks who understand the machinations of govt from an inside perspective will
      never want for employment. Law firms and Consultants are probably fighting over him.

      1. DJRippert Avatar
        DJRippert

        I’m sure they are. But a bit of additional publicity while a lame duck can only help increase the value of the offers he will receive.

        1. LarrytheG Avatar
          LarrytheG

          probably…. but with his inside knowledge of how Virginia “works”, it’s invaluable information to those on the outside trying to navigate Virginia..

          He could be the worst AG ever (and some will say so) but it’s his inside knowledge that has tremendous value.

  4. tmtfairfax Avatar
    tmtfairfax

    My big problem with Herring is not his ideology; it’s that he’s not a very good lawyer. I’ve read a number of briefs he’s signed. They lack proper legal analysis. For example, he’s supported Network Neutrality based, in significant part, on the premise that states can regulate interstate commerce in the form of the Internet. This is despite the uncontroverted fact that IP technology can regularly send packets from a single “message” all over the county and decades of cases holding that the federal government, and not the states, has the constitutional authority to regulate interstate commerce. While the feds can delegate authority to the states, the latter cannot grab it.

    1. LarrytheG Avatar
      LarrytheG

      I think Herrings view of net neutrality is not alone by a long shot including other countries…

      no?

      BTW – let me ask you – in terms of Constitutionality – is this issue actually addressed in the Constitution explicitly enough that we really not don’t modern-day interpretations…. just follow the “text” ?

      1. WayneS Avatar
        WayneS

        ARTICLE 1
        SECTION 8

        The Congress shall have Power…

        To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

        1. Nancy Naive Avatar
          Nancy Naive

          Yeah, but they don’t. And while it says they can, it doesn’t say nobody else can… lest ‘twould’ve been the Exclusivity Clause.

      2. tmtfairfax Avatar
        tmtfairfax

        What do other nation’s legal systems have to do with the U.S’s system of sovereign states and a sovereign federal government? Most countries don’t have this system and there is but a single government regulating internal commerce. No so, obviously, in the United States.

        The FCC has always determined the jurisdiction of a call or other communication by looking at the two endpoints of the call. A call or communication within a state is within the jurisdiction of the state, while a call that crosses state lines is only in the FCC’s jurisdiction. For a communication over a circuit-switched network, it’s easy to find the end points of the circuit and determine the jurisdiction. Larry calls me from his house to my house using old fashioned TDM technology over fixed lines. Both end points are in Virginia. The call is intrastate.

        But if Larry called me today on my home number, the call is interstate because my home service is VoIP. Before the call reaches my house, it has to be converted from TDM to IP packets that may go to California and Oregon or Ohio before it reaches me. The FCC and courts have held this is interstate in nature.

        Ditto for the post I’m making. Bef0re it appears on Jim’s computer screen, the packets may go anywhere before they are reassembled and Jim can see my posting.

        1. LarrytheG Avatar
          LarrytheG

          I thought net neutrality was about charging different fees for moving the same bits so that some would pay more while others less…

          no?

          does it matter the path the bits take so one path will cost more than another?

          1. tmtfairfax Avatar
            tmtfairfax

            Net neutrality is charging the same rate for all IP traffic. But the reality of FCC history is that for decades carriers have offered more capacity and faster speeds for higher prices. For example, a voice grade circuit provided more capacity and faster speed than a telegraph grade circuit. DS-3s cost more than DS-1 circuits but provide much more capacity and speed. Optical circuits cost than electronic ones but have more capacity them. So, do we toss this away? And how do you police Internet customers from not ordering higher capacity circuits for their traffic? Only an idiot would allow two separate prices for the same service.

            And the FCC has worked for decades to eliminate existing price anomalies, so why would they create more?

            The 1996 Telecommunications Act adopted competition as the national policy. Yet, the proponents of net neutrality want regulation. Explain that.

            And the proponents want to eliminate special discounts for individual customers (zero rating for carrier-provided programming such as Netflix that customers get when they sign up with a new carrier or renew their subscriptions). Yet, even under regulation, the FCC has allowed businesses to pay the toll charges for callers, i.e., toll free calling.

          2. LarrytheG Avatar
            LarrytheG

            how did all of this work before with just voice and no data?

            Was it “net neutral” ?

            I don’t think different levels of service should all charge the same price. if that happened, the providers would provide the lowest level service they could.

            I thought the argument was about digital/data being treated like a utility for basic service and then companies could layer additional/extra cost services on top of that basic level.

            I probably don’t uderstand it …

    2. Nancy Naive Avatar
      Nancy Naive

      That’s assuming he wrote them. And, if he didn’t, then that makes him a very good lawyer. Money for nuthin’.

      1. tmtfairfax Avatar
        tmtfairfax

        Herring tried to woke himself into a third term. Didn’t work.

  5. John Harvie Avatar
    John Harvie

    Sentara may be one of the most anticompetetive in the country. He could have stayed home to do his lawyering.

  6. Nancy Naive Avatar
    Nancy Naive

    Well, if’n you’d lived in SEVA in the 1970s you’d have understood the joke about the PA license plate motto, “You’ve Got a Friend in Pennsylvania,” to wit: “No, we don’t. They all moved here!”

    Maybe, ol’ Herring is thinking if he fixes PA’s health systems, now that they’re all in their 80s, they’ll go back.

  7. LarrytheG Avatar
    LarrytheG

    It’s still a bit of a conundrum when folks who say the govt should stay out of markets then turn around and advocate that govt interfere with markets, especially those in the Conservative and Libertarian realms.

    Dems have no trouble having the govt get involved in markets… to the extent that GOPpers typically oppose Govt regulation and related out the wazoo.

    One might also argue that Sentera out-competed their competitors… just like Google and Facebook and Walmart have.

    Yes, you might get a cheaper MRI with more competition but did you get a good quality MRI? Was the doctor that analyzed the MRI a highly-qualified board-certified doctor or the bottom of the barrel, last in his/her class and did all the competitors have to reduce prices to compete an inthe process get cheaper equipment, not maintain it and get cheaper medical personnel?

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