New York's price-fixing lawsuit against two hospitals, along with the Federal Trade Commission's lenient settlement in a Colorado physicians case, had federal law enforcement officials on the defensive last week at the National Health Lawyers Association's annual healthcare antitrust conference in Washington.
Both situations are raising questions about the government's ability to protect payers and consumers against alleged anti-competitive behavior by providers.
The FTC will allow the Mesa County, Colo., physicians to keep their network (See story above), and the U.S. Justice Department previously gave its blessing to the proposed mergerlike partnership of the two New York hospitals now accused of illegal price fixing.
The Justice Department doesn't plan to join New York's lawsuit, said Gail Kursh, chief of its healthcare section.
Kursh said she had no further comment on the suit but defended the department's decision not to challenge the partnership.
"We don't give (deals) a seal of approval," she said. "We don't OK things. We just choose not to challenge it at that time."
Both Justice Department and FTC officials portrayed their agencies as very busy and understaffed, unable to tackle every potentially anti-competitive case.
"The FTC is very overworked," said Robert Leibenluft, assistant director of the FTC's Bureau of Competition, adding that the commission is seeking to hire attorneys. "We can't invest resources in things that won't pan out."
"We're also obviously overworked," Kursh said. "We try to take a hard look at a merger before issuing a second request, because it's a big burden for both sides. Early on, we see if we can be persuaded to end an investigation (if the party produces the right documents)."
In New York, the state has accused 317-bed Saint Francis and 257-bed Vassar Brothers, the only two acute-care hospitals in Poughkeepsie, N.Y., of using their 6-year-old joint operating agreement as a vehicle between competitors to fix prices and illegally allocate services (Feb. 16, p. 3).
The hospitals have denied the charges, citing the Justice Department's 1995 blessing of their arrangement as a de facto merger. Merged companies are considered a single economic unit incapable of conspiring with itself.
The Poughkeepsie case has raised many issues of interest to attorneys general, said Kevin O'Connor, assistant attorney general for Wisconsin and chairman of the National Association of Attorneys General's multistate antitrust task force.
The main issue is the extent of financial and clinical integration that hospitals in JOAs need to legally engage in certain activities.
O'Connor said he foresees more investigations and even lawsuits by state attorneys general in the hospital JOA arena.
If states start using magnifying glasses, they have a good chance of finding something, some antitrust attorneys said. "JOAs are set up in ways more superficial than the parent organization," said Kevin Grady, an attorney with Alston & Bird in Atlanta. "Lots of JOAs don't pass the smell test."