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Show Update on the DOJ/FTC Principles Relating to Health Care and Antitrust Enforcement by Debra L. Scammon, Ph.D. and Dan A. Fuller, Ph.D. Introduction On September 27, 1994 the U.S. Department of Justice and the Federal Trade Commission issued a revised set of statements regarding their antitrust enforcement policies and analytical principles relating to mergers and various joint activities in the health care area (U.S. Dept. of Justice, 1994). The nine statements elaborate and expand on the six statements which were issued jointly by the two federal agencies in September 1993 (U.S. Dept. of Justice, 1993). The purpose of this paper is to briefly summarize the 1994 statements which supersede the earlier ones. The 1994 statements address joint activities of hospitals, health care providers generally, physicians specifically, and "multiprovider networks." Generally, the statements outline "safety zones" within which the agencies will not pursue an investigation of joint activities. For activities which fall outside the safety zones, the statements articulate the principles upon which the agencies will rely in investigating the competitive impact of the agreements. The agencies emphasize that there is NOT a presumption that activities outside the safety zones are problematic from an antitrust point of view; the agencies will, however, use a rule of reason analysis in evaluating the potential for anti- and pro-competitive impacts of joint agreements and activities. Hospital Mergers The agencies have not modified or expanded the principles they intend to apply to hospital mergers. The statement provides a safety zone for small hospital mergers and explains the analysis the agencies will apply to hospital mergers that fall outside the safety zone. The agencies note that mergers outside the safety zone may have procompetitive impacts. Hospital Joint Ventures The 1993 statement on hospital joint ventures focused on agreements between hospitals to purchase new high-technology or other expensive equipment. The 1994 statements are expanded in two ways: 1) to include joint ventures that involve existing equipment, and 2) to include joint ventures that involve clinical or other expensive health care services. The reasoning in analyzing hospital joint ventures has not changed. The primary concern is that joint ventures are no broader than necessary ~ both in terms of the number of hospitals whose participation is needed to support the equipment or clinical service and in terms of the activities covered by the joint agreement. Of particular relevance is whether cooperation in a joint venture might spill over into other markets in which the joint venturers are competitors. Cost recovery for the investment in equipment or clinical expertise and their full utilization will be explored. Information examined may include the cost of the equipment, its expected useful life, the minimum number of procedures that must be done to meet a machine's financial break-even point, the expected number of procedures the equipment will be used for given the population served by the joint venture, and the expected price to be charged for the use of the equipment. A new statement, specifically for hospital joint ventures involving specialized clinical or other expensive health care services, is included in the 1994 guidance. The agencies note that many hospitals may consider entering into joint ventures to offer specialized clinical services because the development of such services involves investments that a single hospital may not be able to support. Collaborative agreements to recruit and train specialized personnel, for example, could create procompetitive efficiencies that benefit consumers, including the provision of services at a lower cost or the provision of a service that would not have been provided absent the joint venture. Because of lack of experience with this type of joint venture, the agencies have not established a safety zone for such activities. Providers' Collective Provision of Information to Purchasers of Health Care Services and Participation in Exchanges of Price and Cost Information The 1994 statements make two changes with regard to the collective provision of information and participation in exchanges of price and cost information. First, they expand the statements to cover the collective provision of information by any group of competing providers, not just physicians. Second, they address the collective provision of non-fee and fee-related informa- Utah's Health: An Annual Review 1995 1 |