My Health Care Education: Physician Antitrust

Over this winter break, I went to my Uncle Neurphysiologist for some advice. As you may have gleaned from this story, I’m about ready to give up on the idea of practicing medicine and to start devoting my life to changing the laws under which physicians are forced to operate. So over dinner I tell him about everything I’ve been reading about malpractice courts, medicare reimbursement, HMOs, and so on. Then he tells me something that I could hardly believe:

“You know last week a group of physicians were in an online discussion forum that was meant for something or other, and the conversation inevitably went to those issues you’ve just described. A colleague of mine said that, ‘it was ridiculous that I am paid $$ for a procedure by XX company and $ for the same procedure by company X.” We all voiced similar complaints until a lawyer that was present in the forum and representing the hospital told us that we couldn’t talk about the prices of our services.”

“Why not?”

“He said it was against the FTC’s Antitrust laws.”

“How the hell is a room full of physicians knowing what each other makes violating antitrust?”

“You’d have to ask him.”

I couldn’t really believe it, but I had to know for sure. Since then I’ve been trying to find more and today I have. Here are some excerpts:

“In the late 1970s, the Supreme Court decided the antitrust laws should apply to “professionals” such as lawyers and physicians. In 1993, lawyers at the FTC and the DOJ’s Antitrust Division made up a set of rules governing how physicians and other health care providers should run their businesses. To avoid antitrust charges, independent physicians had to organize their practices according to a government-approved economic model. Experimentation or deviation from this model would subject doctors to criminal price-fixing charges on top of potential treble-damage civil lawsuits.”

The FTC and DOJ said strict rules were necessary to “protect competition” among physicians.”

“Each of these cases presents a similar scenario: A group of independent physicians band together to deal with the administrative and regulatory burdens imposed by managed care. The group negotiates contracts with various HMOs, PPOs, and employer-based plans. The payers soon become unhappy with their contracts—they think the doctors should have agreed to lower prices—and they petition the DOJ or FTC (but mostly the latter) to intervene. The FTC opens an investigation and demands the physician group turn over thousands of pages of documents at the group’s expense. Then without further investigation, the FTC tells the group to sign a “consent order” invalidating its existing contracts and restricting the group’s future ability to represent its members (in some cases, the group is disbanded altogether.) As a matter of FTC policy, the physicians are not afforded an opportunity to tell their side of the story.”

“In the health care market envisioned by antitrust regulators, physicians should “negotiate” contracts as individuals, never in a “coercive” group. Of course, no individual physician possesses any meaningful bargaining power when dealing with an HMO that represents thousands of buyers. That’s precisely the point, however: Competition, in the government’s view, means sellers accept whatever price the buyer offers, irrespective of the sellers’ costs or economic self-interest. In antitrust parlance, the buyers have an inalienable right to the “benefits of competition”, while the sellers are presumptive price-fixers eager to subvert the government’s carefully designed market scheme.”

“Both of these models shift risk from the insurer to the physician while simultaneously distorting the price paid by the ultimate consumer. It is illegal for consumers to know the true cost of health care and for the physicians to take any action that might enable services to be produced more efficiently. “

Read the full article by SM Oliva, President of Citizens for Voluntary Trade.

3 Responses to My Health Care Education: Physician Antitrust

  1. Jeff Kaplan says:

    Another very interesting blog; as stated I write in parallel, “Reforming Healthcare & Managed Care” on Soon to be posted there is the practical reality, taking action (so that we can get beyond “the government’s carefully designed market scheme.” Clearly, healthcare resources as well as reform options are limited:
    • Are we going to cut costs by reducing access? That will only increase costs in the long run because deferred or late care is usually more expensive.
    • Cut fees to doctors? They’ll only increase visits and procedures to compensate.
    • Raise quality (e.g., hire a social worker, extend mental health benefits, pay for health education)? Overhead goes up and as insurers balk, they raise premiums.
    • Cost-share with patients? They’ll split pills, not get their pills, put off that test, visit or shot; they might even suffer financial and then organic stress.
    • Cost-shift to doctors as in capitation? Here, the incentives to deliver good, affordable, accessible care are misaligned and doctors will subtly defer patient visits or refer a lot when they are not accountable for making the referrals.”

  2. Scotsman Ice Machine…

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  3. lynda says:

    Wow, I didn’t know that! thanks for sharing!

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