FTC Chairman Offers Olive Branch, Options to AMA

On June 14, 2010, Federal Trade Commission Chairman, Jon Leibowitz, gave a speech to the American Medical Association in Chicago amid ongoing tension between the two groups with respect to antitrust regulation in the medical industry. In an effort to address the AMA’s concerns, and to bolster a more productive relationship between the organizations, Leibowitz offered an explanation of the FTC’s position on antitrust in the medical arena as well as some promising options for the future of healthcare regulation.

The Chairman began by acknowledging certain concerns vetted by doctors as a result of the FTC’s practices in recent investigations. One accused the FTC of causing a shortage of physicians, another said the agency’s actions “defy logic,” and yet another accused the FTC of promoting “a return to serfdom.” Leibowitz respectfully defended the Commission by pointing to FTC investigations of considerable import to the AMA and the public at large, such as the targeted enforcement of “bogus cancer cures” and the enactment of the national “Do Not Call” registry.

The Chairman went on to explain that the FTC and the AMA have a mutual interest in eliminating anticompetitive behavior in the healthcare industry. For example, both organizations share a vested interest in the elimination of antitrust exemptions for insurers, the reformation of Medicare reimbursement, and the removal of “pay-for-delay” practices. Leibowitz applauded the AMA’s dedication to speaking out against these “unsavory sweetheart deals” in the interest of promoting healthy competition and patients alike.

Recent passing of major healthcare legislation brings two projects to the table which, Leibowitz says, the FTC and AMA can to work together on in coming months: health information technology (HIT) and clinical integration. The Chairman acknowledged that HIT systems, which allow for the exchange of healthcare information, can be an important tool in improving healthcare and bringing down costs, but noted that they are not to be a “free pass [for providers] to fix prices.” Client privacy and data security are also significant concerns that the FTC and AMA will have to address in the design and implementation of advanced health information sharing.

Clinical integration, which Leibowitz described as “a framework for otherwise competing physicians to collaborate to reduce costs and provide improved healthcare,” comports more closely with the FTC’s traditional jurisdiction as it deals directly with organized and restricted competition in the market. However, Leibowitz noted that the FTC is not about to stand in the way of a bona fide joint venture formed with the intention and potential of improving healthcare and lowering costs to consumers. To facilitate the thought process, the Chairman outlined three guiding questions for doctors to consider when considering a merger: What are the likely benefits of the collaboration? Are the joint negotiations reasonably necessary to achieve those benefits? And will the combined group be so large that it can raise prices? Moreover, Leibowitz advocated the FTC’s proactive stance on such endeavors, plugging the availability of “advisory opinions” to clinics interested in researching their integration options.

New healthcare legislation also establishes pilot programs for Medicare, called “accountable care organizations” (ACOs), which incentivize organizations to meet HHS performance targets. While the details of the ACO program are to be announced, the FTC does not anticipate antitrust issues so long as the government purchases the services and unilaterally sets payment levels and terms. Additionally, Leibowitz announced that the FTC will hold a public workshop, which will focus on how ACOs play into competition policy, payment reform, and new models for delivering high-quality, cost-effective healthcare.

The FTC’s recognition of doctors’ concerns and its willingness to collaborate with the AMA on rising healthcare issues reflects the Obama administration’s unprecedented efforts to fix the ongoing healthcare crisis in America. Allowing federal agencies to take on a more functionalist (as opposed to formalist) mentality reduces the “man behind the curtain” effect and encourages proactively communication with business organizations rather than the traditional, reactive confrontation. Make no mistake, however; this diplomatic gesture is by no means indicative of a relaxation of the FTC’s predominant charge to defeat anticompetitive activity. Rather, the gesture signals the Commission’s efforts to mitigate future complications by making industry players aware of the resources available to them, and more importantly, to facilitate the advancement of medical technology and efficient, low-cost healthcare.

Ryan J. Maerz
(202) 589-1834
rmaerz@dbmlawgroup.com