The Federal Trade Commission (FTC) is urging state lawmakers to avoid the use of Certificates of Public Advantage (COPA) for hospital mergers, warning the certificates increase costs for patients, slow wage growth for healthcare workers, and lead to compliance difficulties.

The agency issued a policy paper Monday detailing its research started in 2017 into the impact of COPAs. The certificates, which have grown in popularity in recent years, are designed to shield hospital mergers from federal antitrust laws in favor of state oversight, limiting the FTC’s capability to challenge mergers it deems to harm competition.

“Experience and research demonstrate that COPA oversight is an inadequate substitute for competition among hospitals and a burden on the states that must conduct it,” the FTC stated. “… FTC staff invites state lawmakers to work collaboratively with competition policy experts to minimize the negative effects of further anticompetitive hospital consolidation and avoid using COPAs.”

In a fact sheet, the FTC examined the impact of COPAs at select hospitals in North Carolina, Montana, and Maine. The agency said the COPAs led to substantial increases in commercial inpatient prices both during and after the expiration of the certificates, demonstrating the risk of “eventually having an unregulated monopolist.”

Other states that have approved hospital mergers through COPAs include Minnesota, South Carolina, Tennessee, Texas, Virginia, and West Virginia. Minnesota, Montana, and North Carolina no longer allow use of the certificates after repealing underlying legislation.

The FTC warned of the compliance risks of COPAs, with hospitals required to “devote significant resources to compliance” with the conditions of the certificates. This has led hospitals to “eventually lobby for repeal of COPA oversight or fewer COPA conditions—defeating the original purpose of the COPA,” the agency contended.

The FTC further cited research into how hospital consolidation negatively affects wage growth and benefits for employees, including nurses, pharmacy workers, and nonmedical-skilled workers.

“Despite hospital claims that COPAs will result in lower costs and improved population health outcomes, we are not aware of any proven benefits of COPAs,” said FTC Director of Policy Planning Elizabeth Wilkins in a press release. “We urge state lawmakers to consult local health insurers, employers, and workers regarding the potential impact of COPA legislation.”

Mergers in the healthcare sector are closely scrutinized by the FTC to ensure competition. The agency in June sued to block the proposed merger of HCA Healthcare and Steward Health Care System in Utah over anticompetitive concerns, leading the two hospital systems to abandon the deal in July.