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A central legal question for the effectiveness of health system reform emerges: Is antitrust law a friend or foe of competition and cost savings? The National Organization for Women brought litigation claiming that antiabortion groups whose members block women's access to abortion clinics can be sued under the federal RICO Act.
Catholic health care facilities must consider the business and legal risks, canon law, and other constraints when planning a joint venture with physicians. Participants should first establish goals and compatibility, then determine the venture's type (property, service), form ("true," lease, contract), and structure (corporation, partnership, joint property ownership, trust). The administrator must decide whether the facility will participate directly in the venture or form a separate organization. Participants must determine their relationships with the venture, choosing among many options. The administrator should consider whether a venture raises any canon law issues, especially regarding ecclesiastical and secular assets, approval by the local bishop or Holy See, and need for consultation. Other pertinent legal issues include: Fraud and abuse. The venture should not appear as compensation to induce referrals. Physician referrals. Many states prohibit or restrict referrals by physician participants. Antitrust law. Participants may be liable for actions constituting on antitrust violation. Securities low. Organizers must clarify Securities and Exchange Commission registration exemptions and observe state "blue sky" laws. Tax issues. Catholic health care facilities must consider such factors as tax-exempt status, unrelated business income, taxable subsidiaries, and public charity status. Other considerations include tax ramifications for physicians; tax shelter registration; certificate of need (CON), licensing, and building standards; effects on reimbursement and pension plans; organizational and bond documents; corporate medical practice and fee-splitting questions; and labor and contractual issues.
The Federal government's current policy toward healthcare providers that voluntarily disclose improprieties has been ineffective because it offers no guarantee of immunity from prosecution. To be successful, a self-disclosure program must offer real incentives to providers to come forward. The government's self-disclosure programs with respect to tax, environmental, and antitrust laws provide models for an effective amnesty program. The success of these three programs, and particularly of the antitrust program, suggests that healthcare providers would be encouraged to come forward and disclose improprieties if, under certain specific conditions, the OIG and DOJ offered a guarantee of full amnesty to the entity and its officers, directors, and employees.
The market competition paradigm assumes that health plans will compete on many factors, including quality of care. Unfortunately, for many reasons health plans have not made a substantial effort to distinguish themselves on quality. The antitrust laws that are designed to protect competition allow selective collaboration among competitors for various purposes, including quality improvement. Within antitrust constraints, specific opportunities exist for competing health plans to collaborate to improve quality. Their success will depend on purchasers' ability to demand such collaborative efforts as part of their overall purchasing strategy.
Physicians excluded from hospitals by reason of exclusive contracts are increasingly challenging these arrangements under the antitrust laws. With the exception of the recent case of Hyde v. Jefferson Parish Hospital District No. 2, the cases reject antitrust attacks on exclusive contracts between hospitals and physicians.
The health care industry is one which traditionally has discouraged its members from engaging in competition. For years, many within the profession have espoused a guild mentality and have viewed professional societies as the proper centers of health care's economic universe. This guild mentality has recently been challenged by proponents of a market mentality, theoreticians who argue that limited combinations of health care providers called "health plans," which serve insurance as well as service functions, can make the health care industry more efficient. Proponents of the guild mentality have been dealt a severe blow by the Supreme Court and its decision in Arizona v. Maricopa County Medical Society. There the Court found the price-fixing by two Arizona medical societies to be illegal per se under applicable antitrust law. This Article outlines the background on competition and the guild mentality in the health care industry. After a brief discussion of the standards of antitrust analysis, the Article analyzes the Maricopa case, by first summarizing the Court's use of strict antitrust criteria, and then by extending the analysis to an application of a more lenient standard. Next, the Article compares the provider controlled independent practice association ("IPA")--one form of insurance plan proposed by market model advocates--with the Maricopa-type plan. Finally, the Article concludes that, not only is the special form of IPA that qualifies as a "health plan" an excellent way to promote efficiency in the health care industry, but also its procompetitive goals and effect allow it to survive even the strictest, Maricopa-type antitrust scrutiny.
Under new pressures for cost containment, hospitals are increasingly asserting interests that conflict with those of physicians. Professor Havighurst argues that legal rules under which practitioners have challenged denials of hospital admitting privileges should be clarified in order that hospitals can more effectively carry out their new cost-containment and other responsibilities. He invokes antitrust law's "essential-facilities" doctrine to protect those abused by their competitors on a hospital staff, but he contends that, if a hospital participates in decisionmaking as an independent actor--even though it acts in concert with its physicians--, antitrust courts should lower the level of scrutiny to a point at which most challenges can be dismissed summarily. He analogizes restraints imposed by hospitals on competition between health professionals to vertical restraints of other kinds, and draws conclusions critical of doctrine traditionally applicable to the latter.
Antitrust law dates back to the Sherman Act of 1890. However, it is only in the last 10 years that these provisions and their enforcement have been actively aimed at the healthcare industry. Recently, with growing merger activity in health care, antitrust litigation has been increasing. Therefore, it is important to understand the antitrust considerations arising from merger activity and how it could affect the healthcare organization.
In current discussions of "procompetitive" approaches to health policy, the enforcement of antitrust laws in health care markets is a strategy that has attracted increasing attention: the filing of consumer-oriented health suits provides a means to "redress" the typically imbalanced "political market" in health policy. This study examines an important aspect of the antitrust enforcement process, the decision by a state attorney general to undertake an aggressive antitrust enforcement program in the health area. Three variables were found to explain this decision: the political needs of a "politician-supplier," the organizational resources of a strategic institutional position, and the availability of a relatively favorable policy arena. An assessment of the future role of state attorneys general in this area suggests that their health antitrust initiatives will increase, but that various political and resource constraints are likely to inhibit their aggressiveness in pursuing these actions.
In 1986, the Seventh Circuit Court of Appeals in Ball Memorial Hospital v. Mutual Hospital Insurance denied an injunction sought under the antitrust laws by the plaintiffs, eighty acute care hospitals, which would have precluded Blue Cross and Blue Shield of Indiana from implementing a Preferred Provider Organization. The Ball court used a conservative economic analysis to deny the injunction and failed to consider many industry-specific factors. This Note examines these factors and challenges the Ball court's position by arguing that antitrust scrutiny of alternative health care delivery markets must go beyond the court's narrow approach.
Three recent U.S. Supreme Court antitrust rulings that influence the health-care delivery system are examined. Historically four defenses protected the health-care system from antitrust law. They are the learned-profession exemption, the fact that health-care systems have little effect on interstate commerce, the state-action defense, and the business-of-insurance exemption under the McCarran-Ferguson Act. These defenses and Supreme Court cases that have weakened or eliminated them are described. The cases are Arizona v. Maricopa County Medical Society, Union Labor Life Insurance Co. v. Pireno, and Blue Shield of Virginia v. McCready. Health-care providers will be subject to increased antitrust scrutiny as a result of these cases.
Concerns about legal implications affect many decisions of the average radiologist, and physicians do not always appreciate the validity of these concerns. However, such concerns often influence radiologists' decisions more than is warranted. An improved understanding of the law and its ramifications may serve to prevent adverse legal effects found in the everyday practice of radiology. Legal issues influence radiology in many ways. Two important ways the law affects the practice of radiology relate to the business affairs of radiologists and to the radiologist's duty to perform to a standard of care. Legal issues relate to the business aspects of radiology through radiologists' relationship to their group practice and the radiology group's relation to the outside world. Radiology groups use legal services for issues such as employment contracts, hospital privileges, group relations, and bylaws. They make decisions with major legal implications when they establish their standard business practices. These decisions range from business procedures that ensure a timely delivery of service to the choice and implementation of quality assurance systems to how to ensure that patients are informed of the results of a radiologic examination. Legal matters affect many business decisions radiology groups make. Antitrust law is concerned about issues such as cost sharing, price sharing, mergers, acquisitions, and practice patterns. Laws limit the right to practice radiology. Billing practices, conflicts of interest, self-referral, right to refuse care, employment practices--all have substantial legal implications. These issues are a concern of every practicing radiologist. Changes in our health care system may cause new legal obligations. An appreciation of the relationship radiologists must have with payors and patients is increasingly important in preventing medical-legal problems. These additional duties and responsibilities occur when many physicians and the public at large seem to feel they are already overburdened with legal duties and responsibilities. A lack of familiarity with the legitimate relationship of the law to everyday life may greatly affect radiologists' job satisfaction. Many acts physicians perform in the practice of radiology have legal implications not often recognized by the practicing radiologist. This monograph seeks to enhance radiologists' understanding of some common and important legal issues related to their practice of medicine. We hope that this monograph will help radiologists appreciate the legal implications of their behavior. The opinions expressed in this monograph are those of the authors and should not be inferred to represent the official views of any government agency.(ABSTRACT TRUNCATED AT 400 WORDS)
Recent technological advances in orthopaedic surgery have propelled both the volume of surgical cases and their complexity, resulting in increased costs, which should naturally result in higher incomes for surgeons. However, the transition from a fee-for-service model of physician compensation to a managed care model has resulted in major shifts in economic resource allocation. An economic model of this market based on imperfect competition shows that these changes have shifted market power from surgeons to the managed care organizations. Our model predicts that practicing surgeons will retire earlier, medical students will begin to select other specialties, and innovation will be slowed. Antitrust laws limit surgeons' ability to combat this trend through meaningful collective bargaining, creating the potential for future shortages as the baby boom generation reaches retirement age and the demand for orthopaedic services increases dramatically.
Recent developments in the courts have indicated an increased vulnerability of the tobacco industry to civil lawsuits brought because of tobacco-related illness. Much of the recent public discussion has dealt with how to attack the public health problem of childhood smoking, and the judicial system may also be of help in this effort. Antitrust law may be of particular benefit in dealing with tobacco promotion to children.
Physicians should recognize that a more competitive health-care market would provide the best defense against government regulation. Aside from group-practice health-maintenance organizations, the cost-containment steps that might be taken in such a market are not well understood. In particular, little attention has been paid to how private health insurers might redefine their coverage to limit the cost-increasing effects of third-party payment. Insurer-provider agreements negotiated in a competitive environment would seem to be especially promising. Competing insurance plans would be variously organized and operated according to provider and consumer preferences. Traditional doctor-patient relations as well as fee-for-service payment could be preserved. The antitrust laws, while curbing concerted effort to prevent change, should assure that physicians are not exploited by dominant buyers. Lucrative opportunities already exist for enterprising and efficient providers.
Distortions in market processes for pharmaceuticals raise the important policy problem of devising measures to improve industry performance. This paper first reviews the basic issues involved in formulating economic policy regarding the pharmaceutical industry. Methods for reducing structural market power and undesirable promotional expenditures are examined, and the impacts of four oft-suggested policy "reforms"--removal of trade names, removal of patents, relaxation of requirements for certification of new drug products, and increased enforcement of antitrust laws--are then analyzed. Finally, problems requiring additional research are identified.
The authors examine the impact of legal decisions over the past 100 years on the practice of radiology. Eleven cases are reviewed that have national implications for radiology. Five themes emerged. (a) Radiology is a medical service, to be billed as such, rather than a hospital service. (b) Physicians and their organizations are subject to federal antitrust laws and regulations. (c) Applicability of state regulations to radiology practices depends on legislative intent and actual circumstances. (d) Hospitals and physician groups are entitled to make exclusive contracts for valid business purposes. Radiologists losing such contracts are entitled to due process before being deprived of staff privileges. (e) Physicians practicing in managed care plans remain liable for untoward patient results of adherence to plan protocols even if conformity to those protocols is a requirement for participation. As the practice of medicine becomes more complex, radiologists face additional legal challenges fashioned for a business environment.
The council on Wage and Price Stability recently has discovered evidence suggesting "an unackonwledged potential of the private sector to exert influence and control in the area of health care cost inflation." This article examines the limitations on private-sector cost-control efforts and suggests actions which would permit and encourage private decision makers to be more effective. In particular, private health insurers' potential role in cost control is explored, and some promising insurer strategies are adumbrated. Carefully designed coverage limitations and plan-initiated reviews to exclude nonessential care from coverage are suggested, together with wider use of fixed indemnity payments or negotiated fees and charges (instead of paying unusual and customary rates or incurred costs). Among the steps needed to permit insurers to provide this added service to cost-conscious customers is enforcement of the antitrust laws to prevent doctors' organized resistance to unwanted measures. In general, it is argued that private-sector efforts are likely to be more effective than government-sponsored controls as well as more appropriate in a pluralistic society.