ANTITRUST REGULATION: FTC MOVES BEYOND “SAFETY ZONES”
The Justice Department and the FTC appear to be changing theThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
way they determine if provider networks run afoul of antitrust
regulations, AMERICAN MEDICAL NEWS reports. Recently, the FTC
approved a nonexclusive physician network that included nearly
80% of its market, well beyond the 30% limit established by 1994
guidelines. This more liberal application of market control
parameters -- know as safety zones -- appears to stem from the
agencies' willingness to examine the efficiencies created by a
network rather than the absolute number of participating doctors.
EXCEPTION TO THE RULE?: On July 1, the FTC approved the
Allied Colon and Rectal Specialists network, which includes 78%
of colon and rectal surgical specialists in the Phoenix area.
According to AMERICAN MEDICAL NEWS, the move signals that the FTC
"won't challenge larger networks that still create efficiencies
and spur competition in their markets." According to a letter
sent to the venture by Anne Bingaman, the assistant attorney
general in charge of the antitrust division, the FTC used an
analysis of "the 10 most commonly performed colon and rectal
procedures" done by practitioners in the area to determine the
percentage of services provided by the network, instead of the
commonly used "head count" of participating doctors. However,
AMERICAN MEDICAL NEWS notes that this is contradictory to the
process recently used in similar antitrust cases in New Jersey
and California. Market networks there were denied approval due
to their "excessive market power" and "anticompetitive"
DIFFERENTIATION ON QUALITY: Ed Hirshfeld, vice president of
the American Medical Association Health Law Division, said that
the FTC used different criteria in analyzing the New Jersey and
California cases. He said this "creates some confusion over the
types of product markets they're allowing to be formed."
CONSIDERING EFFICIENCIES: The FTC and the Justice
Department have "formed a joint task force" to determine what
role the "expensive and difficult" process of evaluating
ventures' efficiencies should play in antitrust analysis. The
two agencies will also consider amending their 1992 Horizontal
Merger Guidelines to include efficiencies allowances in the
policy which helps hospitals and physician groups gain federal
approval for mergers (Johnson, 7/22).