Antitrust rules handcuff physician-led delivery models

Federal regulations are squeezing doctors out of leading ACOs and other innovative methods of providing care.

Posted Oct. 3, 2011.

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The Centers for Medicare & Medicaid Services says it wants new delivery models such as accountable care organizations to "raise the likelihood of preserving alternatives in the market, ultimately leading to the emergence of better procedures and treatments." But current antitrust enforcement effectively fails to allow for one possible alternative -- models led by private physician practices.

The Federal Trade Commission and the Dept. of Justice must set forth clear and common-sense rules that would make it feasible for private-practice physicians to organize and lead innovative delivery systems. Patients must be protected from anticompetitive practices, but they also must be given the opportunity to benefit from physician-led efforts to increase quality and reduce costs.

Physicians enter the situation already at a major disadvantage. For the most part, they are small-business people. About 78% of office-based physicians work in practices of nine doctors or fewer, and a majority are in practices of fewer than four doctors. As often happens with small-business people, when there is consolidation among the players they have to deal with, physicians are being squeezed.

On one end are health insurers, which have grown to such enormity, 80% of metropolitan areas are dominated by one or two companies, according to the 2010 update of the American Medical Association study "Competition in Health Insurance: A Comprehensive Study of U.S. Markets." With such a divide in market power between insurers and physicians, it's difficult for doctors to get paid reasonable rates.

On the other end are hospitals. Many markets are concentrated because of a wave of mergers starting in the 1990s. Now those hospitals are getting more aggressive in hiring more physicians and acquiring practices. Often, physicians -- already pressured by insurance payments going down as practice costs, especially for technology and regulatory compliance, go up -- feel they have no choice but to accept a hospital's offer. Otherwise, they risk being shut out by a powerful local health system.

Now, at this pivotal time in health care delivery, the antitrust laws complete the triangle in which many private practices find themselves trapped.

The AMA set forth its concerns in testimony submitted Sept. 9 to the U.S. House Ways and Means health subcommittee, which held a hearing on health industry consolidation. In its comments, the AMA said physician leadership ensures that medical decisions put patients' interests first, rather than being based on commercial interests. And making it easier to create innovative, physician-led models of care could end up reducing health costs, as well. In part, that will come from those models creating more competition in the health care marketplace.

A few physician-led systems have received conditional FTC antitrust clearance. But overall, the rules are unnecessarily restrictive and ultimately prohibitive to physician-led models. For most physicians, the risk is too high that banding together clinically so they may negotiate with payers on an innovative delivery model will lead to an antitrust violation.

Dominant health plans, hungry hospitals and an antiquated view on antitrust prevent all but the slimmest hope of leveling the health care playing field. That is not only the doctors' loss. As small-business people everywhere -- and as practicing physicians all the more so -- they have insight into the needs of the individuals they serve that large institutions can't be expected to duplicate. Yet unless practices are allowed to work together, physicians will not have the chance to prove it through new models of patient care.

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