In a recent speech to a healthcare trade group in Washington, Federal Trade Commissioner Julie Brill addressed an issue of concern to many in the healthcare industry—the apparent tension between the Affordable Care Act ("ACA"), Accountable Care Organizations ("ACOs"), and antitrust law. As Commissioner Brill acknowledged, critics of the ACA contend that the federal government is speaking "out of both sides of its mouth" when it comes to Accountable Care Organizations and antitrust enforcement. Specifically, they contend that while the ACA is encouraging providers to "collaborate" and "consolidate," the Federal Trade Commission's ("FTC") enforcement of antitrust laws seem to impede their ability to do so.
Addressing this perceived tension, Commissioner Brill sought to distinguish between what she views as "legitimate collaborative activities", which she maintains do not present antitrust problems, and joint conduct that fails to promote lower costs or improved quality, which may raise antitrust concern. She further indicated that the antitrust laws "align naturally with the goals of ACOs" by permitting providers to coordinate patient care for improved outcomes, provided such coordination does not have anticompetitive effects.
Relying on well-settled antitrust doctrine, Commissioner Brill explained that "agreements among competitors that limit some aspect of their rivalry are permissible where the restraint at issue is 'reasonably necessary' to produce procompetitive benefits to the market that outweigh any loss of competition among participants."
Her explanation reinforced the view that this was the standard that the FTC would be applying to provider collaborations. Commissioner Brill also noted that, instead of merging, some providers might be better off entering into contractual relations that are well short of a merger, such as a joint venture or other ACO arrangements, and observed that CMS rules permit ACO participants "to use a variety of collaborative organizational structures, including collaborations short of merger" to achieve their goals.
To further illustrate her point, Commissioner Brill noted that more than 250 ACOs have already been established under the Medicare program and that hundreds of additional ACO-like organizations have been formed outside of Medicare. She also pointed to the procedures established by the FTC/DOJ to provide expedited guidance to providers on the antitrust issues raised by a proposed ACO, but stated that few providers have, at least so far, elected to submit to such voluntary reviews.
Finally, Commissioner Brill addressed recent FTC enforcement actions in the health care arena. Commissioner Brill asserted that the FTC addresses antitrust enforcement using a "scalpel" and not a "sledgehammer" in order to cause as little disruption to the market as possible while also ensuring procompetitive outcomes. She noted that while the FTC has recently challenged several hospital mergers, many more have been allowed to proceed unchallenged. She ended her speech by commenting that the FTC has increased its enforcement activity with respect to hospital acquisitions of physician practice groups. With respect to these acquisitions, one common theme identified by Commissioner Brill was the aggregation of a large share of specialists at a single hospital. Commissioner Brill reasoned that such a grouping would give that hospital too much market power in the specialty area, which would give rise to antitrust concerns.
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