Study: Physician Antitrust Case Damages Shouldn't Be Based on Price Alone

In antitrust cases involving physician practices, damage estimations should consider the cost of providers delivering greater quantities of medical services as well as setting higher prices, according to an analysis performed by researchers from American University and Greylock McKinnon Associates.

The researchers based their analysis on a class-action suit involving Marshfield (Wis.) Clinic. At the time, the clinic was one of the largest private, multispecialty group practices in the country and employed 300 to 400 physicians, most of whom served on the medical staff at Ministry St. Joseph's Hospital in Marshfield, according to the study. The class-action litigation charged Marshfield Clinic and other providers with entering into business arrangements that illegally restricted trade and raised the costs of physician services. The case was ultimately settled after the judge declined to grant summary judgment.

The researchers examined 40 million insurance claims submitted to health insurer Blue Cross Blue Shield by all subscribers living in Wisconsin from 1988 to 1995, the same data used in the class-action suit. They found increased use of medical services drove nearly half of a 10 percent rise in per-person spending in several communities involved in the lawsuit. The analysis states Marshfield Clinic and the others involved in the case created an environment where they could increase not just prices but also quantities of services by more than what would have been possible without anticompetitive action.

Therefore, the study concludes that "especially in cases where a service-intensive practice style is a part of the competitive strategy of a provider accused of illegal anticompetitive conduct, methods of damage estimation should not be based on price only, but rather should also consider whether increased quantities of services contributed to the monetary losses experienced by consumers and health insurers."

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