Top Ten Practical Antitrust Compliance Tips for Health Care Providers (and Other Entities)

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To minimize the antitrust risk your hospital, physician group, health plan, or other health care organization faces in its day-to-day operations, such as contracting with providers and payors, or strategic activities, such as mergers and acquisitions, there are a number of practical tips and considerations that you should keep in mind. These tips will reduce the likelihood of inadvertent violations of the antitrust laws, and ultimately put your organization in the best position to defend any investigation by the Federal Trade Commission (FTC), Department of Justice Antitrust Division (DOJ), or a state Attorney General (AG) that might result from your activities. This advice will not apply to every situation all of the time, however, as the antitrust analysis is fact-specific and will vary from one situation to another. As a result, we recommend consulting with counsel regarding your particular situation.

Top Ten Tips

  1. When initially considering a merger, joint venture or simply a new contracting strategy, ensure that the potential efficiencies or business justifications for the merger or new practice are well-planned and play a primary role in motivating your organization’s decision to move forward.
  2. As part of those efficiencies or justifications, emphasize the quality-of-care improvements that will result from the merger, venture or new practice (but don’t forget any cost reductions too). Improvements in quality of patient care are key in this Accountable Care Act era, and they are highly persuasive when making your case to the FTC, DOJ or AGs.
  3. Carefully document your efficiency plans as early in the process as possible, including quantifying any “before and after” quality measures using outcome criteria that are becoming increasingly important under “value-based-purchasing” payment methodologies used by Medicare/Medicaid, and in turn, more credible to the FTC, DOJ and AGs as a justification for any merger or contracting practice.
  4. Recognize and account for the role of your organization’s market position, typically measured by its market share, in the evaluation of any merger, contracting with provider or payors, or other conduct in which you engage. The actions of a firm with a high market share, or a merger resulting in a high share, will be viewed much more critically (and if the share is sufficiently high to constitute a “monopoly” share, will even be subject to additional antitrust liability under Section 2 of the Sherman Act), than those of a firm with little or no market power.
  5. But also recognize that certain conduct such as price-fixing or market allocation agreements (which can result from conduct as seemingly simple as non-integrated providers using a common fee schedule, or two competing hospitals agreeing to divide certain services), can be per se, or automatically, unlawful regardless of your organization’s market share or its justifications for the practice.
  6. Implement an antitrust compliance program, with written guidelines and regular training, to educate your employees and avoid inadvertent – or deliberate – violations.
  7. Implement a document retention/destruction policy that applies to your organization’s electronic records as well as paper documents, and vigorously apply the policy. Unnecessarily retaining documents always increases the cost of defending a government investigation, and it can increase your antitrust risk and liability.
  8. Particularly in the merger context, engage any other affected parties, such as payors or even competing providers, early in the process to obtain their input, reaction and ideally their buy-in for the merger or new practice.
  9. Similarly, decide early in the process whether to engage the FTC, DOJ, or AG regarding your organization’s planned merger or new practice. Obtaining some signal that the government will not challenge the practice can provide a great deal of comfort going forward; on the other hand, you must be prepared to determine how to respond if the answer from the agency is negative or ambiguous. This decision will vary greatly from case to case, and will depend in large part on your organization’s tolerance for risk.
  10. In any dispute that arises with another private party such as a competitor or payor, consider alternative dispute resolution mechanisms such as arbitration or mediation, which can reduce public exposure, be less expensive, and in some circumstances reduce the antagonism and ill-will resulting from the dispute where that may be an important consideration (such as hospital-medical staff disputes).