Collaboration or Combination? Integration or Collusion? Beware of - - PDF document

Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks

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Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Mergers

Networks Employed Physicians Contracts ACOs Bundled Payments Integration Just when you thought it was safe….

September 9, 2011 House Ways & Means Committee Hearing on Health Care Industry Consolidation

“If ACOs end up stifling rather than unleashing competition, we will really have let one of the great opportunities for health care reform slip away.” Jon Leibowitz, FTC Chair

Arrangements with Antitrust Risks

• Collaborating with competitors on expensive

services/technology

• Mergers in the same market
• Acquiring competing practice/facility
• ACOs
• Employing physicians and
• Requiring in-network referrals
• Limiting call/referral patterns
• Setting artificially high standards to exclude
• thers

Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks

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Just because it makes good business sense doesn’t mean it’s legal.

Bottom Line

Assumption: Competition will yield lower prices, increased

• utput, and/or higher quality.

Sherman 1 (15 U.S.C. §1) Prohibits:

• Contract, combination, or

conspiracy

• Unreasonable restraint of

trade

Per Se vs. Rule of Reason Per Se Violations

• Market Allocation
• Price-Fixing
• Group Boycott

Rule of reason analysis allows for review of justification for actions taken.

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“Whether the restrictive practice imposes an unreasonable restraint

• n trade which outweighs the

competitive benefits of the collaboration.” Rule of Reason Analysis = Case-by-Case Very Fact-Specific. HAVE GOOD FACTS FIRST!

Tell Your Story:

• Quality
• Access
• Cost

Sherman 2 Prohibits:

• Monopolization
• Attempts to monopolize
• Possession of monopoly power in

the relevant market, AND

• The willful acquisition or

maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen,

• r historic accident.

Antitrust Enforcement

• FTC
• DOJ
• States’ Attorneys General
• Private Citizens

Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks

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“Health Reform” Created Another Flurry of Antitrust Activity

• Early ‘90s : “failed” Clinton

Health Plan

• Insurers Won
• Industry Response: Buy PCPs;

Merge/Acquire; PHOs, PPOs, IPAs, MSOs, PMAs

Industry protests antitrust prosecutions.

Result

DOJ, FTC Statement of Antitrust Enforcement Policy in Health Care (August 1996) Much subsequent guidance.

Clinical Integration: (FTC)

“An active and ongoing program to evaluate and modify practice patterns…and create a high degree of interdependence and cooperation among the [physicians] to control costs and assure quality. It may include:

What has race to “clinical integration” wrought? Perinatal Medical Group, Inc. v. Children’s Hospital Central California E.D. Cal. 2009 and E.D. Cal. April 14, 2010

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Neonatology Group split

Hospital contracted with larger component (CCNG)

Dispute: CCNG Exclusive NICU Contract:

• Practice exclusively at hospital
• Refer exclusively

Splitters:

• Kept NICU privileges
• Could admit only if 24/7 coverage

Claimed

• Sherman 1 –
• [No, Copperweld]
• Sherman 2 –
• Possession of monopoly power
• Willful acquisition or maintenance
• f that power as distinguished

from consequence of superior product, business acumen, or historic accident

In April 2010, court denied motion to dismiss. Fall 2011: Settlement

Witham v. Olympic Medical Center, 2009 WL 5205962 (W.D. Wash.) Board certified internist practice limited to oncology.

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OMC’s market share for medical oncology

1990 ─ 0% 2009 ─ 95%

Claims

• Intent to monopolize
• Unfair competition
• Corporate practice of

medicine (raised by court)

• Intentional interference

FTC vs.: Phoebe Putney (Ga) Promedica (Ohio) Rockford (Ill) Promedica – High-Cost Provider Acquiring

• St. Luke’s – Low-Cost Provider

in $ Distress

• St. Luke’s E-mail:

“Incredible access to outstanding pricing on managed-care agreements.”

FTC Says “No.” Multimillion-dollar litigation to follow.

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Pa A.G.: Challenged proposed collaboration of five urology groups. Would create too much negotiating clout.

If considering any of these collaborative strategies…

First, develop your rationale: quality, cost, access Do not meet with competitors without counsel Engage timely government, payors Remember loose lips invite/extend litigation

The game goes on….