antitrust issues for hospitals association of washington public hospital districts davis wright...
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Antitrust Issues for HospitalsAntitrust Issues for Hospitals
Association of Washington Public Hospital Districts
Davis Wright Tremaine LLP
PresentersPresenters
Douglas RossDavis Wright Tremaine, LLP
Dick GoldsmithDirector, Legal Services and Health PolicyAWPHD
Webcast OutlineWebcast Outline
• Why worry about antitrust?
• What are the antitrust laws anyway?
• What are typical antitrust issues hospitals face?
• Are there any protections from the antitrust laws for hospitals?
• What about additional protections for public hospital districts?
Why Worry about Antitrust?Why Worry about Antitrust?
WashingtonWashington
• A group of surgical specialists in Yakima was sued by:– The Federal Trade Commission
– The State
– A class of patients and payers
– A former partner
• And both Yakima hospitals were sued by the former partner as well
OregonOregon
• McKenzie Hospital (114 beds) sued Sacred Heart (425 beds)
• Sacred Heart’s conduct• Acquisition of “feeder” hospitals, MDs• Bundling• Contracts with Regence
• Jury’s verdict• For Sacred Heart on all claims but one• Then awarded significant damages …
AlaskaAlaska
• Background– Providence: exclusive contract with
group of anesthesiologists
– Independent physician conducted procedure
– Group protested
• Lawsuit– Antitrust and other damages (over $1
million after trebling)
– Fees for plaintiff’s lawyers
MontanaMontana
• Blue Cross/Blue Shield sued
• Defendants– Only radiology group in Missoula
– Imaging center joint venture between group and hospital
• Alleged antitrust violation: joint venture
What Are the Antitrust Laws Anyway?
What Are the Antitrust Laws Anyway?
The Goal of the Antitrust LawsThe Goal of the Antitrust Laws
• Competition– Lower prices
– Higher quality
Anticompetitive ActivitiesAnticompetitive Activities
• Agreements that harm competition– Sherman Act, Section 1:
“contract, combination or conspiracy in restraint of trade”
• Single entity actions– Sherman Act, Section 2:
monopolization
• Mergers and joint ventures
• Price discrimination
Antitrust EnforcementAntitrust Enforcement
• Federal – Federal Trade Commission– Antitrust Division, Department of
Justice
• State
• Private – Class actions– Treble damages– Fees
Test Your KnowledgeTest Your Knowledge
• Discussion: American Airlines and Braniff
PollPoll
• Is the previous example a violation of antitrust laws?– Yes
– No
– Not sure
What Are Typical Antitrust Issues
Hospitals Face?
What Are Typical Antitrust Issues
Hospitals Face?
Antitrust IssuesAntitrust Issues
• Medical staff issues– MultiCare Health System– PeaceHealth St. John Medical Center
• Price fixing or market division– Central Washington Hospital
• Exclusive agreements with physicians– Kadlec Medical Center
• Joint ventures with physicians– Missoula
Antitrust Issues (cont.)Antitrust Issues (cont.)
• Hospital referrals – affiliated DME, home health care services– Providence St. Peter Hospital
• Payer contracting – provider networks– Yakima
• Mergers and acquisitions– St. Joseph Hospital (Bellingham)
– Providence Everett Medical Center
Other Antitrust IssuesOther Antitrust Issues
• Group purchasing
• Fee, wage, salary surveys
• Drug purchasing
Joint Provider ContractingJoint Provider Contracting
PayerPayerPayerPayer
Network
Joint Provider ContractingJoint Provider Contracting
• Competitors collectively contract with a payer– Possible price fixing
• Provider contracting on a risk basis– Take and share substantial financial
risk
– Integration: may set price jointly
Joint Provider Contracting:The Messenger Model
Joint Provider Contracting:The Messenger Model
• Use: if no risk sharing– Fee-for-service
– Per diem
– Case rates
• Transmit offers between payer and each of the providers
• Requirements:– Each provider determines own fees
– Each provider determines whether to accept payer’s offer
Joint Ventures with PhysiciansJoint Ventures with Physicians
OutpatientSurgery Center
Clinic33%
Hospital67%
Hospital67%
Joint Ventures with PhysiciansJoint Ventures with Physicians
OutpatientSurgery Center
Hospital50%
Clinic50%
Are There Any Protections from the Antitrust Laws for
Hospitals?
Are There Any Protections from the Antitrust Laws for
Hospitals?
Health Care Quality Improvement Act (HCQIA)
Health Care Quality Improvement Act (HCQIA)
• Credentialing and peer review
• Response to Astoria case (1980s)
• Purpose: encourage self-regulation and provide immunity
HCQIA ImmunityHCQIA Immunity
• Action must be: – In reasonable belief that furthers
quality health care
– After a reasonable effort to obtain the facts
– After notice and hearing
– Warranted by the facts
Other ProtectionsOther Protections
• Petitioning the government– Example: opposing a CON
application• Northwest Kidney Centers
• State Action– Can apply to private entities
Protections for Non-Profit Institutions
Protections for Non-Profit Institutions
• Exempt from price discrimination laws (Robinson-Patman)– For sales or purchases for their
“own use”
– Typically: pharmaceuticals
Antitrust Immunity ProcessAntitrust Immunity Process
• RCW 43.72.300– Used four times (mid-90s)
– No procedures in place
What about Additional Protections for Public Hospital
Districts?
What about Additional Protections for Public Hospital
Districts?
Local Government Antitrust ActLocal Government Antitrust Act
• Bars recovery of damages in antitrust cases from local governments and officials acting in official capacity– 15 U.S.C Sections 34-36
• Actions for injunctions not blocked
Rural Public Hospital DistrictsRural Public Hospital Districts
• Cooperative agreements and contracts– Between rural PHDs
– To provide for health care needs
– RCW 70.44.450
• Rural PHD– No city > 30,000 population
Rural Public Hospital Districts (cont.)
Rural Public Hospital Districts (cont.)
• Permitted activities include:– Allocation of health care services
– Combined purchases and allocations of medical equipment
– Joint agreements for health care service delivery and payment
– Other arrangements permitted under the Interlocal Cooperation Act• Chapter 39.34 RCW
ConclusionConclusion
For More InformationFor More Information
Doug Ross
Davis Wright Tremaine, LLP
Dick Goldsmith
AWPHD
Questions?Questions?
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