Antitrust Lawyer Blog Commentary on Current Developments

Physician-Hospital Organization Plan Violates Antitrust Laws

The staff of the FTC stated on March 18 in an advisory opinion letter that the proposed plan by a physician-hospital organization that would involve collective bargaining with insurers over doctor fees likely would violate federal antitrust laws. The staff concluded that the price and other competitive restraints proposed by the network were not reasonably necessary to achieve any of its potential efficiencies.
Under the proposed program, Suburban Health Organization (“SHO”), an Indiana non-profit corporation, would be the exclusive bargaining and contracting agent with most insurers for 192 primary care physicians employed at SHO’s eight member hospitals. Under the proposed plan, SHO hospitals would deal only through SHO, at prices set by the group, when selling their employed physicians’ services to most insurers. The FTC staff advisory opinion letter states that the plan would eliminate price competition that otherwise would exist among the hospitals for the physicians’ services. Consequently, the staff analyzed whether the price agreement could be justified in light of the other aspects of SHO’s proposal to improve care and create efficiencies in the delivery of physician services.

Andre Barlow