S.C. PHO signs consent decree
* The physician-hospital organization of Oconee Memorial Hospital, Seneca, S.C., signed a consent decree with the Federal Trade Commission last week 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.
FTC looks at pending mergers
* Separately the FTC last month launched antitrust investigations of two pending healthcare deals, Johnson & Johnson's $25.4 billion acquisition of Guidant Corp. and DaVita's $3.1 billion acquisition of fellow dialysis provider Gambro Healthcare US. J&J and Guidant said the FTC request was anticipated and the companies expected to close the deal in the third quarter. Both companies have positions in the coronary stent market, a factor that analysts predicted would lead to a tough FTC review.
Cleveland Clinic settles case
* Cleveland Clinic Health System last month said it would pay $2.75 million to settle Medicare fraud charges against Cleveland Clinic Florida Hospital, which closed its Fort Lauderdale location in June 2001 and reopened in Weston. Allegedly, the hospital regularly billed extra for observation during normal recovery after minor surgery or emergency visits, a service already covered by the Medicare DRG payment, according to the U.S. attorney's office in Miami. The clinic said it settled without admitting wrongdoing "to avoid a lengthy legal battle in a case involving complex billing rules that have only recently been clarified by CMS."