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Labor Markets in Healthcare Transactions: A Work in Progress

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While competition in labor markets once may have been considered outside the antitrust mainstream, it is now a major focus among antitrust enforcers and policymakers alike. In just the last few years, the Biden Administration, the U.S. Department of Justice, the Federal Trade Commission, and the U.S. Treasury Department have all weighed in on the importance of competition in labor markets. Historically, labor was often treated as an afterthought in agency merger reviews, if considered at all. Frequently lumped in with other “deal synergies,” reductions in headcount were line items among the transaction benefits touted by merging parties as a means for the merged firm to lower its costs. Until recently, improved labor costs were commonly highlighted as a key driver in many deals, and presented to the antitrust agencies as a reason to expect the deal to make the combined firm more competitive. Merging parties now take that approach with the agencies with caution as the agencies’ shift in focus now puts labor competition in play for mergers across all industries, particularly in healthcare, where deals are often closely scrutinized and agency staff has demonstrated a willingness to investigate and challenge even small or “under the radar” transactions.

Still, the agencies are wading into relatively uncharted waters and it is fair to ask: what grounds do the U.S. antitrust agencies have for challenging a merger where competition for employees might be reduced? And what, if any, steps can merging parties take to head off a potential fight with agency staff over the impact their transaction will have on labor markets? In “Labor Markets in Healthcare Transactions: A Work in Progress,” Peter Herrick, Lisl Dunlop, and Matthew Hayden attempt to answer those questions, at least preliminarily, and peer down the road ahead.