FTC pushes settlements over lengthy litigation

The Federal Trade Commission has thrown a few wet blankets in the go-go world of healthcare corporate transactions in recent years, in the form of litigation to block mergers. But the agency's new director says most of the FTC's enforcement of antitrust laws actually happens in the less-discussed context of out-of-court settlements known as “consent orders.”

Deborah Feinstein, director of the FTC's Competition Bureau, told audiences at a legal conference in New York on Tuesday that litigation is too slow, costly, uncertain and imprecise to be used in every situation. Whenever the commission has a “workable settlement offer” that repairs the competitive harm, commissioners may decide a settlement is in the public's best interest.

On Tuesday, Feinstein told audiences in her keynote address (PDF) at the Global Competition Review's GCR Live forum:

“The commission is able to achieve significant law enforcement through consent orders in large part because over time, outcomes in antitrust investigations have become more predictable. Through substantive guidance on key areas of antitrust law, transparency in decisionmaking via public documents, and outreach to the business community in events like this one, antitrust enforcers 'fill the gaps' over time. The commission will continue to litigate when necessary, but over time, one would expect less litigation in well-established areas, not more.”

The comments come at an interesting time. The FTC is about to go to court in Idaho to argue a case its lawyers failed to resolve this way and is likely to be studied by healthcare legal experts for many years to come: St. Alphonsus Medical Center-Nampa v. St. Luke's Health System.

The case, which began last year as a private antitrust lawsuit until the FTC joined it in March, alleges that Idaho's dominant hospital system, St. Luke's, illegally gained control of more than 60% of the local market for adult primary care when it bought the state's largest multispecialty practice, Saltzer Medical Group, last December.

Like health systems across the country, St. Luke's has been aggressively targeting doctors' practices for alignment and acquisition. But this is the first time that the FTC has litigated a hospital's acquisition of a physician practice all the way to a courtroom.

St. Luke's officials said the Saltzer purchase meets the goals of healthcare reform to create more efficient and better-coordinated care. Two months before the FTC jumped into the case, the CMS accepted St. Luke's into the Medicare Shared Savings Program, which rewards health systems for creating accountable-care organizations that cut overall healthcare costs by using physician care to reduce preventable hospitalizations.

Last month, the FTC surprised many observers by settling its long-running legal battle to block southwest Georgia's Phoebe Putney Health System from gaining control of the only competing hospital in six counties. The agency also recently resolved healthcare antitrust concerns through separate settlements involving Renown Health in Reno, Nev., and the Providence Health Care network in eastern Washington state.

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