In the second installment of highlights from Rob McCann’s remarks on “Minimizing the Risk of Antitrust Liability” at the American Conference Institute’s Advanced Forum on Healthcare Provider Disputes, we feature Rob’s observations on exclusive contracting, clinical integration, and managing documents.
Rob spoke to an audience of health care executives and legal counsel on recent developments and future trends in private and public antitrust enforcement from a risk management perspective.
Exclusive contracts between hospitals/health systems and health plans have become a red flag with antitrust regulators. The question to ask yourself is, “Do I have a business need to contract with buyers on an exclusive basis, or are these arrangements advantageous mainly because they hurt my competitors?”
Challenges to exclusive arrangements between hospitals and physicians (e.g., hospital-based specialists) are increasing as more hospitals employ their “exclusive contractors.”
However, this type of challenge historically has been unsuccessful and the legal analysis should not change if hospital-based specialists are employees of the hospital. Nonetheless, a decision to close a hospital service should be carefully managed and well-documented.
- In particular, it remains important in all cases to document a sound business case for an exclusive arrangement. Does it improve clinical management? Does it improve the ability to monitor the quality of patient care? It is equally important to periodically evaluate whether the hospital’s exclusive arrangements are, in fact, furthering the hospital’s intended objectives.
Approaching clinical integration as a strategy to increase provider leverage against payors is a formula for failure. It is not only a misunderstanding of the antitrust issues but, more importantly, it calls into question the ability of the participants to meet the competitive challenges of the marketplace.
Being “clinically integrated” does not mean that an arrangement is “legal.” It simply means that the participants can take advantage of a Rule of Reason analysis. In a Rule of Reason analysis, market share, exclusivity, and the commitment to – and effectiveness of – clinical quality and efficiency are critical elements.
- In the current environment, there is flexibility to implement a CI program, as evidenced by the FTC’s advice to the PHO in Norman, Oklahoma, but the provider commitment to the goals of clinical integration must be demonstrable even if the provider network is not yet fully implementing its CI initiatives.
Antitrust Risk Management and “Bad” Documents
Your own documents are the best evidence of what you intend or expect to be the outcome of your business conduct. It is no secret that the FTC and DOJ rely heavily on party documents to build a case.
The best approach is to assume that every document produced in relation to a transaction or discussing any competitive activity (whether or not related to the transaction in question) will be read by the FTC. Keep your documents objective and avoid flippant comments that will be read out of context after the fact. This is a cultural shift that organizations need to make.
- The biggest source of documentary headaches today is e-mail. E-mails are not private and are never truly deleted. In our electronic world, it is easy to forget that the telephone is sometimes a better way to communicate.
To read Part 1 of this Insight (concerning physician integration), click here. For more information about antitrust compliance, or to learn more about our client services, please contact any member of the Drinker Biddle Health Industry Team.