The physician-hospital organization of Oconee Memorial Hospital, Seneca, S.C., signed a consent decree with the Federal Trade Commission to resolve price-fixing allegations. The FTC alleged that the 9-year-old PHO -- 100-physician Preferred Health Services -- represented 70% of independent doctors in the market and illegally negotiated collective contracts for the physicians, forcing health plans to pay higher prices. Preferred Health claimed it used a legal "messenger model" for negotiations and settled without admitting wrongdoing. The decree banned the PHO from negotiating with payers on behalf of its members. The hospital was not a defendant.
Michael Cowie, an attorney for the PHO with the Washington firm Howrey Simon Arnold & White, said Preferred Health will continue to provide credentialing, insurance purchasing and vendor-relations services. Cowie said the PHO may consider clinical integration in the future, which could allow it to resume managed-care contracting. Read the settlement agreement and complaint. The FTC has reached price-fixing settlements with at least 23 independent practice associations and PHOs since 2001. -- by Mark Taylor