In an unusual antitrust settlement, a group of heart surgeons in Maine will be allowed to merge their practices into a virtual monopoly as long as their prices don't exceed those charged by heart surgeons in Boston.
In theory, the settlement will prevent the Maine doctors from using their market power to raise prices arbitrarily, tying their charges to an allegedly more competitive market for heart surgery. But in reality, Boston generally is regarded as one of the most expensive healthcare towns in America, which could allow the Maine doctors to actually raise their prices.
Nine cardiac surgeons practicing in Portland, Maine, and the Maine attorney general's office entered the settlement late last month. The office has been one of the most active in the country regarding the consolidation of physician practices. Since 1992, it has investigated and settled antitrust cases against groups of other cardiologists, obstetrician-gynecologists and neurosurgeons.
The new investigation focused on the proposed merger of four cardiothoracic surgery practices. The four practices represent nine of the 10 heart surgeons practicing in Portland. According to the state, the nine physicians perform more than 80% of the cardiac surgeries at Maine Medical Center in Portland, the state's largest hospital.
In an antitrust complaint filed along with the settlement, the state said the merger would violate state antitrust law by creating a monopoly over heart surgery in the market and eliminating competition among the four practices and nine physicians. The state said the merger would allow the physicians to use their market power to raise prices and fend off attempts by managed-care plans and other payers to negotiate lower prices for heart surgery.
The seven-page settlement with the state allows the doctors to proceed with their merger under certain conditions. For example, the settlement bars them from entering an exclusive contract with any hospital for the provision of cardiothoracic surgical services. It also requires the physicians to reimburse the state $4,500 for costs related to the state's investigation and settlement of the case.
The most noteworthy part of the settlement ties changes in the doctors' charges to those of similar physicians in Boston. It does so by requiring that the "conversion factor," or a number calculated by Medicare that's often used in contracts between the doctors and payers, be similar to the conversion factor used in contracts between Boston heart surgeons and payers. The conversion factor essentially is a multiplier used to calculate physician fees.
In theory, the competition that controls charges by Boston heart surgeons will be transplanted to Portland to control prices charged by the nine Maine doctors, who no longer compete with one another.
But if Medicare data are any indication, the Maine doctors will be able to raise their fees under the settlement.
According to data from HCFA's regional office in Boston, the Medicare payment to physicians this year for a six-vein coronary bypass procedure ranged from $3,253 to $3,480 in Maine, depending on the region.
The Medicare payment to Massachusetts doctors for the same procedure is $3,719 to $3,859, depending on the market. That's 11% to 14% higher than payments to physicians in Maine.