Health care mergers and acquisitions. How new federal laws prohibiting physician self-referrals affect integrated delivery systems.
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Note: Part I of this Article appears in the January 1994 issue of the JOURNAL OF HEALTH AND HOSPITAL LAW (V. 27, No. 1). Part II continues discussion of the potential effects of reform for the structure and financial security of various types of health care providers; identifies some possible effects of reform on health care facility operations; and describes proposed amendments to existing law appearing in various reform proposals.
Research on health care quality has become increasingly sophisticated, but the research has not had a major impact on competition law and policy. Five specific translational barriers (relevance/litigation dynamics, complexity, framing, judicial and administrative skepticism, and inadequate demand) are identified. If researchers on health care quality want to have an impact on competition law and policy they must confront and overcome these translational barriers.
Following the Supreme Court's recent decision not to hear the Rockford merger case, there appears to be a growing sentiment that hospital mergers should not be attempted because they are now fraught with uncertainty. "That conclusion," says Daniel B. Higgins, lead partner for the health care group at the law firm McCutchen, Doyle, Brown & Enersen, San Francisco, "reads Rockford too broadly."
In June of 1999, Texas became the first state to pass a law allowing physicians to collectively bargain with managed care plans for fee-related activities. Whether this law will give physicians renewed control over patient care remains to be seen. Notwithstanding the intention of its drafters, it is likely that the law and its proposed regulations may only provide physicians with costly and time-consuming procedures that present multiple risks instead of renewed power.
By default, the courts are inventing health law. The law governing the American health system arises from an unruly mix of statutes, regulations, and judge-crafted doctrines conceived, in the main, without medical care in mind. Courts are ill-equipped to put order to this chaos, and until recently they have been disinclined to try. But political gridlock and popular ire over managed care have pushed them into the breach, and the Supreme Court has become a proactive health policy player. How might judges make sense of health law's disparate doctrinal standards? Scholars from diverse ideological starting points have converged toward a single answer: the law should look to deploy medical resources in a systematically rational manner, so as to maximize the benefits that every dollar buys. This answer bases the orderly development of health care law upon our ability to reach stable understandings, in myriad circumstances, of what welfare maximization requires. In this Article, I contend that this goal is not achievable. Scientific ignorance, cognitive limitations, and normative disagreements yield shifting, incomplete, and contradictory understandings of social welfare in the health sphere. The chaotic state of health care law today reflects this unruliness. In making systemic welfare maximization the lodestar for health law, we risk falling so far short of aspirations for reasoned decision making as to invite disillusion about the possibilities for any sort of rationality in this field. Accordingly, I urge that we define health law's aims more modestly, based on acknowledgement that its rationality is discontinuous across substantive contexts and changeable with time. This concession to human limits, I argue, opens the way to health policy that mediates wisely between our desire for public action to maximize the well being of the many and our intimate wishes to be treated noninstrumentally, as separate ends. I conclude with an effort to identify the goals of health law, so constructed, should pursue and to suggest how a strategy of accommodation among these goals might apply to a variety of legal controversies.
When the federal circuit court decided not to grant an injunction to prevent a merger of one city's two major hospitals, the FTC filed an appeal--and a complaint with an administrative law judge. FTC lawyers say this action is within the realm of their responsibility; one hospital's CEO says that FTC complaint has a taint of vengefulness.
This article addresses important developments in the field of medicine and the law during the last year and highlights some of the significant areas of law affecting health care providers that should be considered. Actions against health care providers may include challenges to peer review immunity, allegations concerning the practice of medicine across state lines without a license, and even accusations of wrongfully assisting a patient to commit suicide. These areas are addressed in turn by this article. Finally, antitrust developments over the last year are briefly addressed as an emerging area of concern for providers forming complex practice networks in today's health care arena.
Competition law (encompassing both antitrust and consumer protection) is the forgotten stepchild of health care quality. This paper introduces readers to competition law and policy, describes its institutional features and analytic framework, surveys the ways in which competition law has influenced quality-based competition, and outlines some areas in need of further development. Competition law protects the competitive process--not individual competitors. It guides the structural features of the health care system and the conduct of providers as they navigate it. Competition law does not privilege quality over other competitive goals but honors consumers' preferences with respect to trade-offs among quality, price, and other attributes of goods and services.
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint that accompanies the consent agreement and the terms of the consent order--embodied in the consent agreement--that would settle these allegations.
Health care attorneys say more guidance is needed for their clients as they structure integrated health networks, so they can avoid violating laws governing fraud and abuse, physician referrals, competitiveness and tax-exempt status. Unfortunately, for the time being, there's still relatively scant advice federal agencies can give hospitals, physician groups and other provider organizations in these areas. An overview of the issues, and views from regulators and experts.
While certain efficiencies and cost savings have been achieved, Managed Care Organizations (MCOs) have risk exposures never before considered. MCOs provide a number of services for their clients. Specifically, they are involved in credentialing, network development, utilization review, and the hiring and firing of physicians and other allied medical professionals subject to rather complex and detailed contractual arrangements. The insurance industry has responded to the increase in claim exposure associated with the aforementioned activities by providing any number of insurance products. Depending on the insurance provider, a number of different coverages are available. The final decision as to which coverage to purchase will be governed by the risks associated with a particular MCO, contractual protections, available cash flow, protections under federal and state laws. The point of this article is to apprise MCOs of the claims now starting to develop against MCOs as well as alternative insurance products that can be purchased in order to protect both the firm's assets as well as those of individual directors and officers.
Law is intimately related to economics. As the economic relationships in a market change, the legal landscape evolves accordingly. Even if no health care reform is enacted at the federal level, ever-increasing portions of today's managed indemnity sector will convert to plans constraining enrollee choice and seeking to deliver cost-effective care through risk-sharing relationships (both corporate and contractual) with providers. This is inevitable, given employer and federal government pricing demands, and it is changing the face of health care law. If federal reform is enacted and/or the systems adopted in Minnesota, Maryland, Washington, and Florida (to name a few) are replicated elsewhere, the legal concerns of physicians and other providers will shift even more dramatically. In this article, some of the legal fall-out from these economic developments is discussed.
The first section of this paper highlights five critical legal developments over the past half-century that, while not reflecting considered policy judgments about how the health care industry should operate, put American health care on some surprising paths. The second part then observes five fundamental policy contradictions discernible in health care law today, each of which reflects severe ambivalence in public attitudes toward health care. Although such confusion in the law is interesting in itself, the main purpose of the paper is to propose, in section three, the creation of a permanent high-level forum, perhaps in the Institute of Medicine, where leaders from the health and legal worlds could meet regularly with a view to helping the legal system resolve some of the policy confusion that exists.
With the advent of regulatory requirements regarding infection-control procedures, the business of sterilization monitoring is becoming ever more popular across the country. Therefore, monitoring services, many of which are associated with an academic institution, are providing such services for dental practitioners. The relationship between the service and its clients, as well as the types of service the sterilization monitoring service provides, presents some interesting legal issues. The documentation of services provided, including record keeping, requires compliance with various state confidentiality and privacy laws. The service must also be concerned about potentially misrepresenting itself to its clients about the services it offers. Additionally, the service must avoid making warranties that its clients may detrimentally rely on to escape sanctions by applicable regulatory agencies. Finally, the service must concern itself with general business regulations, including those specific policies and rules that apply to the academic institution with which it is associated.
The relationship between third-party payers and dermatologists is generally governed by a written contract. That relationship can be more beneficial to the dermatologist, and chances of liability may be decreased, both for breach of contract and for malpractice, if the dermatologist pays close attention to the language in the contract. All contracts are generally negotiable; detrimental language in the contract often may be removed or changed. This article presents information to help prepare dermatologists to review and negotiate contracts.