Contracts Mergers Collaboration or Combination? ACOs Networks - PDF document

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 • ACOs • Collaborating with competitors on expensive services/technology • Mergers in the same market “If ACOs end up stifling rather than • Acquiring competing practice/facility 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/1112/01SanDiego/Linda/antitrust.ppt

Antitrust Laws 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 The antitrust laws protect conspiracy competition, not competitors. • Unreasonable restraint of trade Per Se Violations • Market Allocation • Price-Fixing Per Se vs. Rule of Reason • Group Boycott K:/Pres/Handout/EPI/1112/01SanDiego/Linda/antitrust.ppt

“Whether the restrictive practice Rule of reason analysis imposes an unreasonable restraint allows for review of justification on trade which outweighs the for actions taken. competitive benefits of the collaboration.” Sherman 2 Prohibits: Rule of Reason Analysis = • Monopolization Case-by-Case Very Fact-Specific. • Attempts to monopolize HAVE GOOD FACTS FIRST! 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/1112/01SanDiego/Linda/antitrust.ppt

Health Care’s Antitrust History Health Care’s Antitrust History • Ariz. v. Maricopa County Med. Society , • FTC vs. many medical staffs. 47 U.S. 332 (S. Ct. 1982) See e.g., In re Forbes Reg'l Health Sys. • Robinson v. Magovern , 521 F.Supp. 842 Med. Staff , 94 F.T.C. 1042 (1979) (HMO- (W.D. Pa. 1981), aff’d, 688 F.2d 824 (3d associated members); Health Care Mgmt. Cir. 1982) • Patrick v. Burget, 486 U.S. 94 Corp. , 107 F.T.C. 285 (1986) (podiatrists); North Carolina Orthopaedic Ass'n. , 108 (S. Ct. 1988), spawned HCQIA • Jefferson Parish Hosp. Dist. v. Hyde , F.T.C. 116 (1986) (podiatrists); Medical 466 U.S. 2 (S. Ct. 1984) Staff of Mem'l Med. Ctr. , 110 F.T.C. 541 (1988) (nurse midwives) “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 among the [physicians] to control costs and in Health Care (August 1996) assure quality. It may include: Much subsequent guidance. K:/Pres/Handout/EPI/1112/01SanDiego/Linda/antitrust.ppt

Certificates of Public Advantage See e.g., Wis. Stat. §150.85; Minn. Stat. §62R.06; Kan. Stat. Ann. §4955; N.D. Cent. Code What has race to “clinical §23-17.5-01; N.C. Gen. Stat. 90-21.24 integration” wrought? Perinatal Medical Group, Inc. Neonatology Group split v. Children’s Hospital Central Hospital contracted with larger California component (CCNG) E.D. Cal. 2009 and E.D. Cal. April 14, 2010 Dispute: Claimed 1. CCNG had exclusive contract for NICU • Sherman 1 – Medical Director and related services. • [No, Copperweld] Contract required CCNG to practice • Sherman 2 – exclusively at hospital and refer • Possession of monopoly power exclusively to Specialty Medical • Willful acquisition or maintenance 2. Drs. Rajani and Elliot maintained NICU of that power as distinguished privileges, but could admit patients only from consequence of superior if they provided 24/7/365 coverage product, business acumen, or historic accident K:/Pres/Handout/EPI/1112/01SanDiego/Linda/antitrust.ppt

In April 2010, court denied Witham v. Olympic Medical motion to dismiss. Center, 2009 WL 5205962 (W.D. Wash.) Settlement Discussions OMC’s market share for medical oncology Board certified internist 1990 ─ 0% practice limited to oncology. 2009 ─ 95% Claims Federal Trade Commission v. Phoebe • Intent to monopolize Putney Health System, Inc. • Unfair competition • Corporate practice of FTC v. ProMedica Health System medicine (raised by court) • Intentional interference K:/Pres/Handout/EPI/1112/01SanDiego/Linda/antitrust.ppt

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/1112/01SanDiego/Linda/antitrust.ppt