Healthcare Business News

FTC green-lights Okla. physician-hospital network

By Joe Carlson
Posted: February 13, 2013 - 6:30 pm ET

The Federal Trade Commission has bestowed rare approval on a proposed arrangement between a large group of Oklahoma doctors and a local hospital, even though people involved with the new network admit that they plan to raise some prices.

In a 21-page advisory opinion released Wednesday (PDF), FTC Assistant Director Markus Meier wrote that a year-and-a-half-long investigation had found that the integrated network's potential benefits to patients, providers and payers seemed to outweigh its risks.

That conclusion came despite the fact that proponents of the new arrangement cannot yet quantify the economic benefits.

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That's because the publicly owned Norman (Okla.) Regional Health System and the independent, 280-doctor Norman Physicians Association promised to use health IT systems and physician committees to vigorously push for efficiencies between physician and hospital care. The network would create transparency in business dealings and actively monitor for problems in the newly integrated Norman Physician Hospital Organization, according to an FTC filing.

In particular, the analysis noted that the new arrangement includes explicit promises that the integrated organization will be non-exclusive and will not prohibit private insurance companies from striking deals with doctors who refuse to join the new network.

In other words, doctors will still be free to compete with the network by negotiating individual contracts with insurance companies.

“If, contrary to these representations, Norman PHO were to operate as a de facto exclusive network, it would raise serious concerns and could be necessary to revisit the issue of Norman PHO's market power and re-evaluate whether staff would recommend an antitrust enforcement action,” according to the staff analysis signed by Meier. The advisory opinion was written by FTC staff members, not the five-member trade commission.

At the heart of the new arrangement is a model similar to an accountable care organization, in which physicians and an acute-care hospital will work together on a common IT network to coordinate patient care and treatment plans and develop common evidence-based care guidelines.

Doing so would potentially increase the frequency and price for some physician services, while decreasing more-expensive acute care. But it's too early to quantify the net financial efficiencies from the proposed network, according to an FTC filing.

“The key to the savings is the reduction of acute care, readmissions rates, disease prevention, getting in early and all of that is ultimately going to be the big portion of the reduction of healthcare costs in general,” said Jay Levine, an antitrust partner with Bradley Arant Boult Cummings in Washington. “The hospital will take a hit in revenue, but ultimately become more efficient … This is where everything is moving.”

The opinion offers other organizations a roadmap for how to structure physician-hospital networks, he said, because it shows how providers can use electronic medical records, clinical guidelines, physician commitments and non-exclusivity to gain approval for arrangements that would otherwise raise red flags in the antitrust world.

But Levine noted Meier's caveats regarding exclusivity: “This is not a blessing per se. This is not saying, we will never challenge it. It just says, if you're representations are accurate, we won't.”

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