Antitrust Warfare


Not since the days of monopoly busting and Standard Oil has anti-trust been such a contentious topic in American politics. Today, Teddy Roosevelt has been replaced by Nancy Pelosi and the oil barons have been replaced by……doctors? The healthcare debate is quickly turning into a dog fight about monopolies and price controls, and in doing so, unveiling some of the dark truths about how the money really flows in this country’s largest industry.

Turns out antitrust law has become so contorted and subverted that it now serves the interests of those it was meant to regulate far more than those it was meant to protect. This past week, the FTC announced a consent decree with Roaring Fork IPA, a physician network in Colorado ( click here). Of course, this is less than a week after the Speaker of the House announced that she will pin her party’s hopes of resurrecting healthcare reform on repeal of the 1945 McCarran-Ferguson Act, a little known antitrust exemption that benefits the insurance industry ( click here).

So why has antitrust become all-the-rage-all-of-a-sudden?  The Sherman Antitrust laws were originally intended to prevent monopoly behaviors, however, it has become a key tool in keeping physicians as indentured servants in our healthcare system.  As Medicare continues to reduce payment rates, more and more providers are choosing to opt-out rather than contract to deliver services at a loss. Most notably, the Mayo Clinic chose to do this a few weeks back ( click here).  What is fascinating, however, is that the FTC is claiming that the Roaring Fork’s decision (unlike Mayo’s) constitutes an anti-trust violation so egregious that it is worthy of an investigation and the consent decree.  With 65 physicians, Roaring Fork represents well less than 1% of the physicians in Colorado, so why the anti-trust concern?

The answer lies in the cozy relationship between the insurance industry and the FTC.  Insurers are determined to make sure that physicians are kept from having any leverage nor allowing market forces to create a balanced supply-demand between physicians and patients.  The net goal of both is keeping physician payment artificially low, while maximizing insurance company profits.  For physicians, Roaring Fork should be a wake up call to accelerate their efforts to decrease their dependence on third party payers and their adoption of technologies and services that can even the playing field.

Today we are witnessing a Kafka-esque sequence of events.  Teddy Roosevelt, the original trust buster, would literally bust out laughing if he could see the incumbent political party pinning their hopes for their highest profile political effort on repeal of an anti-trust exemption, while the government chases after……..doctors, for ostensibly violating this same law.  Only in America.

Daniel Palestrant is the CEO of Sermo, the social networking site for physicians. He is a regular contributor to THCB.