Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Contracts Mergers Collaboration or Combination? ACOs Networks Integration or Collusion? Employed Beware of Antitrust Risks Physicians Bundled Payments Integration September 9, 2011 House Ways & Means Committee Just when you thought it was safe…. Hearing on Health Care Industry Consolidation Arrangements with Antitrust Risks • Collaborating with competitors on expensive services/technology • Mergers in the same market • Acquiring competing practice/facility “If ACOs end up stifling rather than • ACOs unleashing competition, we will really • Employing physicians and have let one of the great opportunities for • Requiring in-network referrals health care reform slip away.” • Limiting call/referral patterns • Setting artificially high standards to exclude Jon Leibowitz, FTC Chair others K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 1
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Bottom Line Just because it makes good business Assumption: Competition will sense doesn’t mean it’s legal. yield lower prices, increased output, and/or higher quality. Sherman 1 (15 U.S.C. §1) Prohibits: • Contract, combination, or conspiracy Per Se vs. Rule of Reason • Unreasonable restraint of trade Per Se Violations • Market Allocation Rule of reason analysis • Price-Fixing allows for review of justification • Group Boycott for actions taken. K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 2
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Rule of Reason Analysis = “Whether the restrictive practice Case-by-Case Very Fact-Specific. imposes an unreasonable restraint on trade which outweighs the competitive benefits of the HAVE GOOD FACTS FIRST! collaboration.” Sherman 2 Prohibits: Tell Your Story: • Monopolization • Quality • Attempts to monopolize • Access • Cost Antitrust Enforcement • Possession of monopoly power in the relevant market, AND • FTC • The willful acquisition or • DOJ maintenance of that power as distinguished from growth or • States’ Attorneys General development as a consequence of a • Private Citizens superior product, business acumen, or historic accident. K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 3
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks “Health Reform” Created Another Flurry of Antitrust Activity • Early ‘90s : “failed” Clinton Health Plan Industry protests • Insurers Won antitrust prosecutions. • Industry Response: Buy PCPs; Merge/Acquire; PHOs, PPOs, IPAs, MSOs, PMAs Result Clinical Integration: (FTC) “An active and ongoing program to evaluate and DOJ, FTC Statement of modify practice patterns…and create a high Antitrust Enforcement Policy degree of interdependence and cooperation in Health Care (August 1996) among the [physicians] to control costs and assure quality. It may include: Much subsequent guidance. Perinatal Medical Group, Inc. v. Children’s Hospital Central California What has race to “clinical integration” wrought? E.D. Cal. 2009 and E.D. Cal. April 14, 2010 K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 4
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Dispute: Neonatology Group split CCNG Exclusive NICU Contract: • Practice exclusively at hospital • Refer exclusively Hospital contracted with larger component (CCNG) Splitters: • Kept NICU privileges • Could admit only if 24/7 coverage Claimed In April 2010, court denied • Sherman 1 – motion to dismiss. • [No, Copperweld] • Sherman 2 – • Possession of monopoly power • Willful acquisition or maintenance Fall 2011: of that power as distinguished Settlement from consequence of superior product, business acumen, or historic accident Witham v. Olympic Medical Board certified internist Center, 2009 WL 5205962 practice limited to oncology. (W.D. Wash.) K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 5
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Claims OMC’s market share for • Intent to monopolize medical oncology • Unfair competition 1990 ─ 0% • Corporate practice of 2009 ─ 95% medicine (raised by court) • Intentional interference FTC vs.: Promedica – High-Cost Provider Phoebe Putney (Ga) Acquiring Promedica (Ohio) St. Luke’s – Low-Cost Provider Rockford (Ill) in $ Distress St. Luke’s E-mail: FTC Says “No.” “Incredible access to outstanding Multimillion-dollar pricing on managed-care litigation to follow. agreements.” K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 6
Collaboration or Combination? Integration or Collusion? Beware of Antitrust Risks Pa A.G.: Would create too much Challenged proposed negotiating clout. collaboration of five urology groups. If considering any of these collaborative strategies… First, develop your rationale: quality, cost, access The game goes on…. Do not meet with competitors without counsel Engage timely government, payors Remember loose lips invite/extend litigation K:/Pres/Handout/EPI/1112/03Naples/Linda/antitrust.ppt 7
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