In May, Christine A. Varney, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, addressed the American Bar Association/American Health Lawyers Association Antitrust in Healthcare Conference, where she discussed healthcare antitrust enforcement and competition policy, and the role of the Antitrust Division in connection with healthcare reform.
Richard T. Greenberg, a partner at McGuireWoods, shares the following five things you should know about antitrust policy and how it may impact surgery centers and other providers.
1. Increased inspection of mergers and acquisitions. Ms. Varney said the role of her division is to ensure competition is preserved and protected, and one way it will ensure this happens is by close examination of significant mergers and acquisitions, and other combinations of providers or healthcare delivery systems, says Mr. Greenberg.
"They're going to look closely at large mergers and acquisitions, but may also examine smaller combinations that may tend to dominate smaller markets or specific services that are of particular interest, " he says. "She sees her job as making sure competition goes forward uninhibited."
2. Close examination of arrangement legitimacy. Deals made between providers that look more like surface arrangements or organizations going through the motions to give the appearance of integration for a financial benefit may draw the ire of the antitrust division.
"She's going to require true integration in the sense of common investment, shared infrastructure and shared use of healthcare IT systems for newer arrangements that propose to be innovative," Mr. Greenberg says. "She says where that's taking place, as long as there's a good chance the integration has achievable benefits such as better care, lower costs, then they're not likely to challenge the arrangement."
3. Need for private enforcement in smaller markets. Mr. Greenberg says Ms. Varney's remarks indicated that in small- and medium-sized markets where there are a limited number of dominant players, combinations of providers in these areas have a greater potential to harm competition and consumers because of barriers to entry for potential new providers into the market or growth of smaller players.
"That's significant for ASCs in rural and small town markets, certain parts of states where the population isn't large," he says.
In such smaller markets, Mr. Greenberg says it is critical for surgery centers to remain aware of possible deals between dominant players due to the limited resources of the antitrust division
"Absent some really high profile situation, a lot of antitrust enforcement is still going to be left up to private entities," he says. "An ASC in a small or medium market has to make sure dominant players don't take action together and therefore increase the economic pressure on smaller providers. If they try to do so, the ASC may have good grounds for a challenge."
On the other hand, where you have a lot of significant players, Mr. Greenberg says Ms. Varney indicated the antitrust division is less likely to see combinations of providers as a problem because there is a lot of competition, so it's more likely a new entrant will have a reasonable chance to succeed or a smaller provider will still have the opportunity to grow.
4. Creative arrangements likely to garner support. Innovative, calculated arrangements for new delivery systems, such as strategic alliances or financial connections between a hospital and an ASC, are more likely to receive support from the antitrust division, says Mr. Greenberg.
"I think people should be, as long as they go about it for the right reasons, willing to test the waters and take their chances with such arrangements," he says. "As long as they can document good motives and a reasonable prospect of success absent very unusual circumstances, I think more of those kinds of arrangements are going to get by. In many ways the new healthcare reform legislation is depending on competition to deliver lower costs and innovative new ways to serve patients."
5. Payors still protected by antitrust exemption. Ms. Varney continued the Obama Administration's call for the repeal of the McCarran-Ferguson Act, which exempts insurance companies from the antitrust laws and leaves regulation of such payors in the hands of the states. The House voted overwhelmingly this term to repeal the Act but the Senate has not taken it up and its prospects for repeal there are uncertain at best, Mr. Greenberg says.
"As a result of that, there are many fewer challenges which the antitrust division can make against health insurers," he says, leaving providers to continue dealing with many coordinated payor tactics.
Contact Richard Greenberg at rgreenberg@mcguirewoods.com.
Read Christine A. Varney's remarks on antitrust and healthcare.
Richard T. Greenberg, a partner at McGuireWoods, shares the following five things you should know about antitrust policy and how it may impact surgery centers and other providers.
1. Increased inspection of mergers and acquisitions. Ms. Varney said the role of her division is to ensure competition is preserved and protected, and one way it will ensure this happens is by close examination of significant mergers and acquisitions, and other combinations of providers or healthcare delivery systems, says Mr. Greenberg.
"They're going to look closely at large mergers and acquisitions, but may also examine smaller combinations that may tend to dominate smaller markets or specific services that are of particular interest, " he says. "She sees her job as making sure competition goes forward uninhibited."
2. Close examination of arrangement legitimacy. Deals made between providers that look more like surface arrangements or organizations going through the motions to give the appearance of integration for a financial benefit may draw the ire of the antitrust division.
"She's going to require true integration in the sense of common investment, shared infrastructure and shared use of healthcare IT systems for newer arrangements that propose to be innovative," Mr. Greenberg says. "She says where that's taking place, as long as there's a good chance the integration has achievable benefits such as better care, lower costs, then they're not likely to challenge the arrangement."
3. Need for private enforcement in smaller markets. Mr. Greenberg says Ms. Varney's remarks indicated that in small- and medium-sized markets where there are a limited number of dominant players, combinations of providers in these areas have a greater potential to harm competition and consumers because of barriers to entry for potential new providers into the market or growth of smaller players.
"That's significant for ASCs in rural and small town markets, certain parts of states where the population isn't large," he says.
In such smaller markets, Mr. Greenberg says it is critical for surgery centers to remain aware of possible deals between dominant players due to the limited resources of the antitrust division
"Absent some really high profile situation, a lot of antitrust enforcement is still going to be left up to private entities," he says. "An ASC in a small or medium market has to make sure dominant players don't take action together and therefore increase the economic pressure on smaller providers. If they try to do so, the ASC may have good grounds for a challenge."
On the other hand, where you have a lot of significant players, Mr. Greenberg says Ms. Varney indicated the antitrust division is less likely to see combinations of providers as a problem because there is a lot of competition, so it's more likely a new entrant will have a reasonable chance to succeed or a smaller provider will still have the opportunity to grow.
4. Creative arrangements likely to garner support. Innovative, calculated arrangements for new delivery systems, such as strategic alliances or financial connections between a hospital and an ASC, are more likely to receive support from the antitrust division, says Mr. Greenberg.
"I think people should be, as long as they go about it for the right reasons, willing to test the waters and take their chances with such arrangements," he says. "As long as they can document good motives and a reasonable prospect of success absent very unusual circumstances, I think more of those kinds of arrangements are going to get by. In many ways the new healthcare reform legislation is depending on competition to deliver lower costs and innovative new ways to serve patients."
5. Payors still protected by antitrust exemption. Ms. Varney continued the Obama Administration's call for the repeal of the McCarran-Ferguson Act, which exempts insurance companies from the antitrust laws and leaves regulation of such payors in the hands of the states. The House voted overwhelmingly this term to repeal the Act but the Senate has not taken it up and its prospects for repeal there are uncertain at best, Mr. Greenberg says.
"As a result of that, there are many fewer challenges which the antitrust division can make against health insurers," he says, leaving providers to continue dealing with many coordinated payor tactics.
Contact Richard Greenberg at rgreenberg@mcguirewoods.com.
Read Christine A. Varney's remarks on antitrust and healthcare.