Health systems attempting to fulfill the mandate\u00a0of integrating hospitals and physicians may find themselves accused of going too far.\u00a0 Although the Affordable Care Act, shared savings, gainsharing and other alternative payment methodologies\u00a0have made integration of physicians, hospitals and other providers an operational goal, success in reaching that goal may be challenged by private antitrust actions.<\/p>\n
In a recent Florida federal court decision, the antitrust complaint of “several of Southern Brevard County’s physicians and physicians practice groups” was held to have stated a monopolization claim against Health First, Inc. and three of its wholly-owned subsidiaries — \u00a0an insurer, a hospital and a physician practice group.\u00a0 Essentially, by fully integrating its business, and incentivizing in-network referrals and managed care pricing, Health First became vulnerable to claims of tying, exclusive dealing, price discrimination and monopolization.<\/p>\n
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Because the decision was written in the context of denial of\u00a0a motion to dismiss, the allegations of the complaint were taken as true, and may have described truly predatory conduct.\u00a0\u00a0On the other hand,\u00a0Health First may be vindicated when\u00a0the actual conduct and market analysis are ultimately before the Court.\u00a0 Nevertheless, conduct such as excluding plaintiffs from a provider network, discontinuing referrals to plaintiff physicians, and “systematically” approaching physicians to join a Health First practice appear to have been the type of actions that supported the district court’s decision.<\/p>\n
From a litigation strategy standpoint, the case counsels caution before moving to dismiss an antitrust complaint.\u00a0 Typically, the allegations of buzz-words\u00a0 like\u00a0“anticompetitive”, “exclusive agreement”, “reduction in quality”, will be sufficient to survive a motion to dismiss in the absence of the healthcare market context — provided at least by an answer to the complaint.\u00a0 Thus, a motion for judgment on the pleadings may be a better avenue to challenging the sufficiency of the complaint.<\/p>\n
More difficult to combat is the fundamental incompatibility of the antitrust laws with the healthcare marketplace.\u00a0 It has been true for many years that squeezing healthcare into typical antitrust formulations makes for unusual if not irrational results.\u00a0 Price-fixing allegations against providers attempting to negotiate with commercial payers, for example, significantly strengthened the hands of\u00a0payers in a way that failed to produce the benefits of a competitive marketplace.<\/p>\n
At a time, such as now, when new payment methodologies consistently favor more highly integrated delivery of care to place responsibility for high quality and an efficient cost structure on a single entity, the antitrust laws will have to respond.\u00a0 Of note, the Antitrust Division of the Department of Justice and the Federal Trade Commission will hold the second in a series of public workshops called “Examining Health Care Competition” on February 24-25.<\/p>\n
In the meantime, courts charged with applying antitrust precedent to rapidly changing healthcare structures will likely continue to reach contradictory results unless the full healthcare context is used to explain the actual impact of what appears to be, but may not be, anticompetitive conduct.<\/p>\n
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Health systems attempting to fulfill the mandate\u00a0of integrating hospitals and physicians may find themselves accused of going too far.\u00a0 Although the Affordable Care Act, shared savings, gainsharing and other alternative payment methodologies\u00a0have made integration of physicians, hospitals and other providers an operational goal, success in reaching that goal may be challenged by private antitrust actions. … <\/p>\n