Pluralistic: 05 Jan 2022

Originally published at: Pluralistic: 05 Jan 2022 – Pluralistic: Daily links from Cory Doctorow


Today's links



A Hillrom Totalcare Spo2rt 2 Surface hospital bed; it has been modified so that a dancing version of Monopoly's Rich Uncle Pennybags is dancing on the headrest; he has removed his face and is waving it like a tamborine; his head is a grinning death-skull.

Hospital beds are a monopoly (permalink)

The great James Boyle tells an important parable about the coining of the term "ecology." Before the term came into wide use, the "ecology movement" as we know it was just a bunch of fragmented, seemingly disconnected issues.

https://thepublicdomain.org/thepublicdomain1.pdf

Like, if you're worried about owls and I'm worried about the ozone layer, it's not immediately apparent that we're fighting the same fight. It's not intuitive to link the fate of charismatic nocturnal avians to the gaseous composition of the upper atmosphere, right?

All that changes with "ecology." The introduction of that conceptual umbrella term turns 1,000 issues into one movement with 1,000 on-ramps. It welded thousands of fragmented activist causes into a single, solidaristic force to be reckoned with.

Which brings me to Big Tech.

For years, I've been fighting against Big Tech. There are a lot of potential allies in the fight to demonopolize our tech world, because tech is woven into so many facets of our lives: romance, employment, civics, culture, education, family life, etc. But as vast as that resistance might be, it's minuscule when compared to the legions who are harmed by all forms of monopoly.

Monopoly has infected every part of our economy. From running shoes to pro wrestling, shipping to finance, eyeglasses to semiconductors, textbooks to novels, candy to oil, movies to music, every part of our lives is being organized by a handful of massive, lawless monopolies who openly collude to rig the system against their customers, their workers, and their communities.

https://www.openmarketsinstitute.org/learn/monopoly-by-the-numbers

That's the bad news. But it's also the good news. It means that pro wrestling fans have common cause with bank tellers who get screwed by Wells Fargo, and that both are fighting the same fight as microbrewers and cheerleaders and meat-packers. It means that as powerful as these monopolies are, they face a potential resistance movement that encompasses nearly everyone, save the vanishingly small number of beneficiaries of monopoly (top executives, finance bros, and ultra-wealthy shareholders).

All we need to do is realize that owls and the ozone layer are part of the same fight. All we need to do is name a common enemy (monopoly) and a common cause (pluralism).

After all, monopolies didn't happen by accident. Since the Reagan years, orthodox economists have embraced the idea that monopolies are "efficient" and have demanded that regulators leave them be.

https://locusmag.com/2021/05/cory-doctorow-qualia/

That orthodoxy – part of the neoliberal revolution fomented by the Chicago School of economics – has been in retreat for years, and that phenomenon has accelerated through the pandemic as giant companies boosted their profits while the world burned. The seemingly impregnable edifice of monopolism may collapse like an avalanche: slowly, then all at once. Avalanches are triggered by the cumulative pressure of a myriad of tiny forces. Tiny forces like our individual voices, railing against the 1,000% increase in eyeglass prices or gigaships stuck in the Suez canal or the conversion of the internet into "five giant websites, each filled with text from the other four."

https://twitter.com/tveastman/status/1069674780826071040

Monopolists and their apologists and enablers do their best to stave this off, of course. They go to great lengths to obscure the degree to which our markets are structured by colluding CEOs of giant companies. They go to even greater lengths to make us think that each monopolized industry is a unique tale, driven by the distinct characteristics of its products. For example, tech monopolists like to pretend that their dominance is the inevitable product of "network effects":

https://www.eff.org/deeplinks/2021/08/facebooks-secret-war-switching-costs

One of the main tasks of antimonopolists is revealing the lie behind this exceptionalism – to show that all our monopolies follow the same playbook, executed by the same coterie of ultra-rich schemers. No one does this better than David Dayen, whose 2020 book "Monopolized" is a masterwork of compact, compelling storytelling that reveals the connected nature of every kind of monopoly:

https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu

Dayen is the executive editor of The American Prospect, where he carries on his excellent antimonopoly reporting. Today, he kicked off a new section in The Prospect called "Rollup," which tracks "obscure, under-the-radar monopolies."

https://prospect.org/topics/rollups/

Rollups is just the kind of thing we need: a way to hasten the antimonopoly movement's "ecology" moment by teaching us that no matter what kind of corporate fuckery you're laboring under, it has a common root in monopolism.

(Another excellent source of this cross-industry fuckery-revelation is Matt Stoller's Substack, BIG.)

https://mattstoller.substack.com/

The inaugural edition of Rollups tells the tale of a monopolist I'd never heard of: Hillrom, a giant corporation that has rigged the market for…hospital beds.

https://prospect.org/power/rollups-theres-a-hospital-bed-monopoly/

Dayen's story is based on filings in Linet v Hill-Rom Holdings, a new federal antitrust lawsuit just filed in the Northern District of Illinois:

https://www.scribd.com/document/550035591/Linet-v-Hill-Rom-Holdings

The lawsuit accuses Hillrom of cornering the hospital bed market, with a 70% market share that includes standard beds, ICU beds, birthing beds, and more. It details "a series of secret, exclusive deals" that lock in the (monopolized) hospital sector to buying its beds and accessories, forever.

As Dayen points out, the Hillrom playbook looks a lot like every monopolist's. The company bought its way to dominance, using its access to the capital market to acquire and kill or absorb its competitors. Its acquisitions include companies that produce bed-adjacent products, creating a kill-zone around hospital beds where competitors can't find purchase.

Monopoly begets monopoly. Hillrom started out as a division of Hillenbrand, a massive conglomerate that has monopolized the casket market and uses its dominance to lock in funeral directors (another highly monopolized market) and prey on bereaved families, gouging them on coffins.

https://thehustle.co/casket-industry-monopoly-batesville/

Hillenbrand spun out Hillrom in 2008. Now, Hillrom is a division of med-tech monopolist Baxter International, whose gadgets are tied to Hillrom beds and vice-versa – hospitals that invest in Hillrom beds are arm-twisted into buying Baxter med-tech, and hospitals that buy Baxter med-tech need to buy "compatible" Hillrom beds.

This Baxter/Hillenbrand hybrid produced a kind of superpredator in Hillrom, a company with monopolistic conduct in its very DNA. Hillrom jacked up the prices of its beds and accessories, but then offered 10% "discounts" to hospitals that agreed to buy 90% of their gear from Hillrom. As it acquired company after company, it used technological lock-in to ensure that Hillrom bed customers had to buy the diagnostics, monitoring, positioning and other products it got from 15 mergers over 18 years.

Hillrom's sales force routinely lies to hospitals to ensnare them in its web, stealing the tactics of sleazy card dealers everywhere. The quotes they provide to hospitals are for "bare bones" beds that are useless until they are kitted out with high-priced accessories whose prices are only revealed once the deal is done.

Hillrom has repeatedly settled antitrust suits over this conduct, paying out over $500,000,000 in the past quarter century. But a fine is a price: unlike breakups or other muscular antitrust interventions, cash settlements don't deter monopolies. Instead, they become part of the cost of business, priced into the next round of predatory tactics.

Thus it was that after a quarter-century of antitrust fines and settlements, the company doubled down on its illegal conduct. It established a "strategic salesforce" that targeted "integrated delivery networks" (giant, monopolistic hospital chains like HCA and Providence). This salesforce locked the giants into 5-7 year exclusive contracts ("corporate enterprise agreements") with Hillrom for ICU, birthing and standard beds. These agreements required the hospital chains to force their member hospitals to buy Hillrom beds, regardless of their own preferences (these Hillrom beds got Hillrom accessories, like nurse-call buttons).

As Dayen points out, hospitals buy new beds at 10-15 year intervals, and strive to standardize on a single manufacturer across wards or facilities. By insinuating itself into this cycle, Hillrom ensures that its 5-7 exclusive deals become perpetual.

Hillrom's vast patent portfolio expands that perpetual dominance, by thwarting rivals who want to make interoperable products – say, systems that integrate with Hillrom's nurse-call system. Nurse-call systems are hardwired and hospitals that want to change vendors have to rip their walls apart, so locking nurse-call to both beds and nurse-station gear is a way for Hillrom to ram its blood-funnel down the throat of any hospital it can latch onto.

All of this comes from the briefs filed by Linet, a Hillrom competitor. Linet, in turn, gleaned much of it from Hillrom execs' boasts on Linkedin and other "open sources." Hillrom itself is a secretive, brooding giant that refuses to discuss its commercial operations, and binds its customers over to nondisclosure as well.

Hillrom's target is "control of the entire hospital room." Its vertical monopoly – which expanded into infusion pumps in 2021 – prompted Baxter, the monopolist that controlled the infusion pump market, to buy the company for $10.5B. Baxter neutralized the competitive threat from Hillrom, and transformed itself into a "super bundler" that could further the conquest of the hospital room.

If Baxter rings a bell, you might be thinking of stories about nationwide shortages of plastic IV bags. Baxter is the monopolist that cornered the market on these bags, relocated all their production to tax-free Puerto Rican facilities, which were wiped out by Hurricane Maria:

https://prospect.org/culture/books/monopolies-are-why-salt-and-water-in-a-bag-became-scarce-dayen-monopolized-book/

The past two years have been full of stories about esoteric "supply chain failures." Most of us are fuzzy on what a "supply chain failure" is, but Hillrom is a supply chain failure in the making. Every component of your hospital room is being locked into Hillrom's production, meaning that any idiotic choice they make (like moving all production to a low-lying, hurricane-emperilled Caribbean island) will ripple through every part of every hospital room.

This is a whole new level of "hospital bed shortage" – not just a lack of staff or space, but a finance-optimized, brittle, concentrated supply chain that holds every sick person, every laboring mother, every surgical patient hostage.

The only thing worse than letting these ghouls extract massive profits from our sick and dying would be to squander the opportunity for action. This is part of our antimonopoly "ecology" moment. If you're outraged by the beer giants terrorizing your local craft brewer, or by Disney ripping off Star Wars novelists, or by your cable company's terrible service and sky-high prices, then this is your cause. The same tactics that fueled all those monopolies – and other monopolies – created the Baxter-Hillrom Industrial Complex.

There is an historic opportunity here. The FTC is now under the direction of Lina Khan, a powerhouse anti-monopolist. She's warned Baxter-Hillrom that she might unwind their merger, part of the trillions in mergers that corporate America raced through in a bid to avoid her oversight.

https://www.law360.com/articles/1433267/hill-rom-baxter-get-ftc-warning-letters-for-12-4b-deal

Khan should absolutely do this, especially if unwinding the merger is a costly, painful process for Baxter-Hillrom. As I told Kara Swisher and Scott Galloway for their end-of-year edition of the Pivot podcast, the FTC should make examples of these swaggering corporate bullies:

https://open.spotify.com/episode/53rBE0EybbjZI1uiKRV001

(Image: Hill-Rom, modified, fair use)



This day in history (permalink)

#15yrsago Doonesbury: the GW Bush years https://memex.craphound.com/2007/01/05/doonesbury-the-gw-bush-years/

#5yrsago Around the world, old, rural voters count more than young people in cities https://users.polisci.umn.edu/~dsamuels/BJPS2001.pdf

#5yrsago America’s gargantuan new corporate landlords evict the shit out of Americans https://www.bloomberg.com/news/articles/2017-01-03/wall-street-america-s-new-landlord-kicks-tenants-to-the-curb

#5yrsago 4chan’s trumpist trolls are exploiting the Ghost Ship fire to narc out other DIY venues https://www.vice.com/en/article/d7jwdj/4chan-trolls-diy-spaces-oakland-fire

#1yrago Pavilions replacing union workers with "gig workers" https://pluralistic.net/2021/01/05/manorialism-feudalism-cycle/#prop22

#1yrago Digital manorialism vs neofeudalism https://pluralistic.net/2021/01/05/manorialism-feudalism-cycle/#to-the-manor



Colophon (permalink)

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