Dancing With the Federal Trade Commission
Fam Pract Manag. 1998 Jul-Aug;5(7):17-18.
This issue of Family Practice Management includes an article by David Ettinger, JD, titled “The Truth About Antitrust.” If the Federal Trade Commission (FTC) is anywhere in your mind, you should look the article over. It is refreshing yet uncommon to hear a lawyer give a partial green light to pushing the limits on the FTC antitrust guidelines. Most lawyers are loath to advise anything but total avoidance.
Until recently, Mesa County Physicians IPA in western Colorado had taken a fairly cavalier attitude toward the FTC. We had even joked that a letter from the FTC would indicate that our organization was doing an effective job. Two years ago, we received that very letter, and we are only now settling our antitrust lawsuit with the FTC. I offer some first-hand experiences.
Our 190-member IPA has a 25-year history of innovation in a rural setting.1 We started a very successful nonprofit HMO in 1974. We have always had at least 85 percent of the area physicians in our organization, and 100 percent of the primary care physicians. We have done some very special things for the community by looking after the Medicaid population,2 the uninsured and the indigent and by addressing several other unmet medical needs. We are clinically integrated, we have reduced medical care costs and we have not been greedy as a group. We are nonexclusive and have offered our large panel of physicians to other medical insurers at their request to help them compete with the local HMO.
Nonetheless, two years ago we were accused of “harming” some unnamed medical insurance company. In the ensuing two years, our leadership has been dragged through a tedious, demoralizing and degrading process orchestrated by our own government via the FTC. Our insurance company has spent over $500,000 in legal costs to reach an out-of-court settlement. We have not seen one shred of evidence of any harm to anyone. To us the reality was that our HMO product was so adequate for local consumers that other companies struggled to compete.
In a small town, anything short of a group of ‘most physicians’ cannot accomplish much.
The competitive model does not apply well in rural areas, and the legislation that the FTC is directed to enforce is ill-suited to rural areas. In a small town, anything short of a group of “most physicians” cannot accomplish much. If you reduce medical care costs or insist on quality standards, you are going to threaten some physicians and some businesses. These are the people and organizations the FTC is charged with protecting.
If you plan to dance with the FTC, be sure you have the music memorized.
I would agree in spirit with Mr. Ettinger. If something is right for your community or organization and patients will benefit, do not be deterred by the threat of antitrust action; just be certain you do not violate the legislation that the FTC enforces. By all means show the marketplace the benefits of physician-driven models, but do your homework from the start. Plan on being investigated and prepare for it.
Secure good legal advice early and have all your documents reviewed;
Secure good insurance, including entity insurance;
Keep only very abbreviated minutes;
Do good works and document them;
Maximize clinical integration and document it;
Do not be greedy, for money is the only motivation given credibility by the FTC.
Above all, be certain that the principles you are organizing for are worth defending, because the defense process is ugly. “Fairness” and “what is right” do not count. If you plan to dance with the FTC, be sure you have the music memorized.
All our documents, the FTC documents and related published articles are available on the Mesa County Physicians IPA's web site: http://www2.ruralhealth.org/mcpipa/.
1. Shenkel R. Rural managed care: a 20-year road to success. Fam Pract Manage. 1993;1(1A):79–84.
2. Shenkel R. Medicaid miracle in the mountains. Fam Pract Manage. 1994;1(2):45–48.
Copyright © 1998 by the American Academy of Family Physicians.
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