Schizophrenic Government Attitudes
Written by Editor   
Thursday, April 24, 2014 06:42 AM

When Idaho's largest hospital system bought the state's largest doctor practice in 2012, the groups expressed hope that the deal would spark a revolution in delivering better-quality care.  Instead, it ignited a costly legal battle with state and federal regulators and rival hospital systems. Officials at Boise-based St. Luke's Health System thought they had the Obama administration on their side because the federal health law encourages hospitals to collaborate with doctors to improve quality and lower costs.

But the Federal Trade Commission (FTC) filed suit, arguing that St. Luke's purchase of the 43-physician Saltzer Medical Group in Nampa was anti-competitive and would lead to higher prices for Idaho patients.  A federal judge agreed in January, and ordered to dissolve the merger.

While consolidation in the industry has been underway for decades, the pace has accelerated dramatically since the 2010 passage of the federal healthcare law.  "The Affordable Care Act is pushing consolidation and working together, but the Federal Trade Commission and the Justice Department seem to be saying, 'Wait a second, there are antitrust laws here'," said Robert Field, a law and health policy professor at Drexel University in Philadelphia. "The federal government has a schizophrenic attitude toward provider consolidation."

FTC officials, however, deny there is any broad conflict between the Affordable Care Act and antitrust laws.  "The issues are in those small number of cases where collaboration occurs in a way that gives participants excessive marketplace power," said Deborah Feinstein, director of the bureau of competition for the FTC.  She declined to say whether the FTC is stepping up antitrust enforcement, but noted that the agency is scrutinizing a number of consolidations. "We have seen over the last couple of years, hospital-doctor combinations that are troubling to us," Feinstein said, referring to hospitals that own doctors' practices buying more doctors. "And we are looking at it."

"The boundaries for antitrust enforcement have always been a bit vague. This confuses the industry because for the longest time it thought integrating physicians was fundamentally a sound business strategy." 

Joe Lupica, a consultant with Newpoint Healthcare Advisors in Phoenix, said the Nampa ruling showed a hospital's good intentions do not outweigh antitrust laws.  "Consolidation has not been an effective way of reducing costs or providing more effective care. People here have all the best intentions, but once you eliminate competition it's gone."