Doctor-hospital network gets rare FTC approval to integrate

Experts say the opinion is a good indicator of what the commission views as acceptable, but they still warn of heavy antitrust scrutiny.

By Amy Lynn Sorrel, AMNews staff. Oct. 15, 2007.

In only the second opinion of its kind, the Federal Trade Commission has opened the door for a physician and hospital network to contract jointly with health plans under a clinical integration program.

In a Sept. 17 advisory opinion, the Health Care Division of the FTC Bureau of Competition said Greater Rochester Independent Practice Assn.'s plan showed no signs of illegal price fixing. Instead, the bureau found that the program had the potential to provide low-cost, high-quality care to patients in the Rochester, N.Y., area.

In addition, group negotiation appears "reasonably necessary" to reach that goal, the FTC letter stated.

Antitrust laws generally prohibit individual doctors from getting together to negotiate collectively their contracts with insurers. But guidelines issued by the FTC and the Justice Dept. in 1996 and 2004 outlined two ways that physicians can form legitimate joint ventures: through financial integration with risk-sharing agreements, or through clinical integration designed to streamline practice standards and lower costs.

Until now, the first and only favorable review the FTC had given to a clinical integration program was in 2002, to Denver area-based MedSouth. The government reaffirmed that decision in June after conducting an intermediate review.

Experts say the recent 30-page opinion on the Greater Rochester IPA's plan is chock-full of clues as to what the government might view as acceptable.

"Obviously the FTC took this as an opportunity to not only approve GRIPA, but to send a message explaining what the law is, when there are problems and some of the things you need to do to have a successful program," said John J. Miles, an antitrust expert with Washington, D.C.-based Ober Kaler and a former Dept. of Justice lawyer.