Vol. 6, No. 1, Pg. 46. Consolidation, Cooperation and Collaboration in the Health Care Field.

• Author: By Natalma M. McKnew and James L. Rogers Jr.

South Carolina Lawyer

1994.

Vol. 6, No. 1, Pg. 46.

Consolidation, Cooperation and Collaboration in the Health Care Field

46Consolidation, Cooperation and Collaboration in the Health Care FieldBy Natalma M. McKnew and James L. Rogers Jr.On September 15, 1993, Hilary Rodham Clinton-flanked by United States Attorney General Janet Reno, Department of Justice (DOJ) Antitrust Chief Anne K. Bingaman and Federal Trade Commission (FTC) Chairwoman Janet D.Steigerheld a news conference to announce guidelines the DOJ and FTC (the Agencies) would follow in enforcing the federal government's antitrust laws in the health care industry.Officially titled "Statements of Antitrust Enforcement Policy in the Health Care Area"' (Policy Statements) , these guidelines are, to date, the federal government's only "industry-specific" attempt to define forms of consolidation, cooperation and collaboration that it will not challenge as violative of federal antitrust laws. Lawyers who represent health care providers in South Carolina should fmd the Policy Statements helpful in advising clients who are considering mergers, acquisitions or the formation of multi-specialty groups, physician networks and similar entities.

The Policy Statements do not, of course, control South Carolina's interpretation of its state antitrust laws, nor do they bind private litigants. Presumably, however, both state and federal courts would consider the Policy Statements persuasive in any context requiring those courts to define anti-competitive conduct in the health care industry.

The Policy Statements largely represent a summary of current antitrust enforcement policies in the Agencies, although in a remarkably more accessible and practical form.

The Policy Statements include six statements of antitrust enforcement policy concerning:

* hospital mergers,

* hospital joint ventures involving high technology or other expensive medical equipment;

* physicians' collective provision of information to purchasers of health care services;

* hospitals' participation in exchanges of price and cost information;

* joint purchasing arrangements among health care providers; and

* physician network joint ventures.

"The Policy Statements issued last fall make clear that, although the federal government may encourage collaborative health care efforts in some arenas, any collective undertaking by health care providers must proceed with at least one eye on the antitrust laws."

According to the preamble, the Policy Statements are designed "to resolve, as completely as possible, the problem of antitrust uncertainty that some have said may deter mergers or joint ventures that would lower health care costs."

The Policy Statements create "antitrust safety zones" in each of the six areas addressed. The Agencies only assure they will follow the Policy Statements and will not challenge conduct within the safety zones "absent extraordinary circumstances." Those circumstances are rarely under the control of individual health careproviders and involve external factors, assessed on a case-by-case basis, that may create a unique economic market in which the Policy Statements would not be followed.

Any entity with specific questions about areas addressed in the Policy Statements may write to the Agencies, outline its plans and request a "comfort letter" blessing those plans. The Policy Statements commit the Agencies to respond-in most cases within 90 days. This willingness to assure non-enforcement by the Agencies is a significant step in the evolution of the FTC's existing Business Review Procedure letter program.

This article provides a brief summary of the Policy Statements' approach to antitrust policy in the six health care industry areas.

Hospital Mergers and Acquisitions

* Antitrust...