AMA voices objections to United deals

The Association decries the lack of challenges to health plan mergers while doctors get more scrutiny.

By — Posted Aug. 8, 2005

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The American Medical Association sent a 10-page letter to Attorney General Alberto Gonzales to express what it called its "strong opposition" to UnitedHealth Group's proposed acquisition of PacifiCare Health Systems and its "concerns about the impact" of United's proposed deal to acquire Florida-based Neighborhood Health Plans.

The AMA, in a letter dated July 20, wrote Gonzales that United, the nation's second-largest private-pay health plan, and WellPoint, the nation's largest, are "clearly bent on market domination," and that their market power siphons money away from patient care to corporate profits.

Specifically, the letter listed four objections to the $8.1 billion United/PacifiCare merger, as well as similar concerns for the Neighborhood Health Plans acquisition: a potential for monopoly pricing; higher barriers to entry for competing plans; monopsony power over physicians; and the plans' already poor relationships with physicians.

United has said its mergers would be beneficial to all, including physicians. The deals are under review by federal and state regulators.

However, the AMA and others recently have been involved in efforts against United. The AMA and state and local medical societies have spoken out against the company's pay-for-performance plan, criticizing it as cost-based and not a true measure of physician quality. United says it has made adjustments to the plan that will allow more physicians to benefit from it, but objections remain.

The Texas Medical Assn. on July 21 posted on its Web site an e-mail that TMA President Robert T. Gunby Jr., MD, sent to members saying that, no matter what anyone from United might say, the organization does not support the plan.

The AMA's letter to Gonzales noted that federal regulators have reviewed 400 plan mergers over the last 10 years and took action in only one -- Aetna's purchase of Prudential's health plans in 1999. Aetna was allowed to buy Prudential, but had to sell off Prudential plans in markets where both companies already had a presence.

Meanwhile, the AMA wrote, federal antitrust enforcers have responded to higher health care costs by "devoting an inordinate amount of resources to 'finding and bringing' cases against physicians -- the least-consolidated component of the health care industry."

The AMA has testified in the past to the Federal Trade Commission and the Justice Dept. on this point, saying that physicians needed antitrust relief because they were facing larger and larger health plans. However, the regulators last year issued a report saying collective bargaining by physicians would have a negative impact on health care competition.

The letter to Gonzales, signed by AMA Executive Vice President and CEO Michael D. Maves, MD, included an offer of AMA assistance in investigating the mergers.

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