This essay questions the wisdom of adherence to an indulgent approach to vertical integration in health care. It first critiques the bases for antitrust law's traditional tolerance of vertical integration and describes contemporary economic learning that supports more robust antitrust enforcement. It goes on to dispute arguments urging extra caution in dealing with the health care sector and concludes with several justifications for close scrutiny of vertical health sector mergers.

Justice Stewart’s 1966 dictum about the inevitability of government success in challenging mergers under Section 7 of the Clayton Act held true for another fifteen years or so. In the early 1980s, however, federal enforcement agencies, the Department of Justice (DOJ) and the Federal Trade Commission (FTC), began to find the federal courts less hospitable to antitrust merger cases as more sophisticated economic inquiries and changing proof burdens complicated the task of identifying anticompetitive mergers. Indeed, since the early 1980s, the government has lost more litigated merger cases than it has won and has come under criticism from some quarters for becoming gun shy and not adequately policing the wave of consolidations that have occurred over the past decade.

Hospital mergers, however, are a different story. Until two years ago, the government rode a streak of important victories in federal courts and FTC administrative proceedings, and had obtained consent decrees from scores of hospitals that had announced plans to merge.