Physicians

Antitrust Warfare

Palestrant

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 Today, Teddy Roosevelt has been replaced by Nancy Pelosi and the oil barons have been replaced by……doctors?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.

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Joe The UserGary L KaplanMD as HELLMargalit Gur-ArieJohn R. Graham Recent comment authors
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ExhaustedMD
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ExhaustedMD

“Let them discover, in their operating rooms and hospital words, that it is not safe to place their lives in the hands of a man whose life they have throttled. It is not safe, if he is the sort of man who resents it–and still less safe, if he is the sort who doesn’t.” Ayn Rand, ATLAS SHRUGGED Seems very appropo to this topic, eh? By the way, a lot of what I have noted and proposed about the agenda by the Democrats has been voiced by others of legitimacy and respect in the media. Maybe this does not mean… Read more »

Joe The User
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Joe The User

Perhaps I’m becoming a “usual suspect” here but I think the post raises reasonable points as far as it goes. Before launching my rant, I should say I think that the right, left and center rants here ARE intelligent, are interesting and are generally well informed. Angry too, but these *are* desperate times. Anyway, I think it’s unfortunate, actually, that those taking a traditional liberal position feel that they should get behind what “health reform” has become. The debate that’s been happening has essentially involved a “democracy of thieves”. The health care *blob* is expanding and someone must pay for… Read more »

Gary L Kaplan
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Dr. Palestrant’s comments, however impassioned, reflect a fundamental misunderstanding of the antitrust laws. As has been restated dozens of times by the courts in the past 40 years, the antitrust laws protect competition (i.e. consumuers) not competitors. Further, there is not, as suggested by Dr. Palestrant, a conflict between antitrust laws directed at market structure and monopolization (Section 7 of the Clayton Act, and Section 2 of the Sherman) and law directed against conspiracy/price fixing (Section 1 of the Sherman Act). In some ways, it is a simple as two wrongs don’t make a right. The answer to an overly… Read more »

twa
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twa

I would be interested in Dr. Palestrant’s assessment of the IPA a few miles away in Grand Junction. It seems to be doing fine, and even had a review by the FTC. Perhaps part of the difference is being organized around the interests of patients and patient care instead of physician interests.

Margalit Gur-Arie
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Margalit Gur-Arie

MD as HELL, I agree with you 100%.
However, physician reimbursement is not a monolithic subject. There is tremendous inequity in how different specialties are getting paid for services, and I think that needs to be addressed.

MD as HELL
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MD as HELL

Margalit,
They have been cutting physician reimbursement for years. This past Monday my urgent care did not take Medicare patients because of the fee cut. In order to cut more there must be a fundamental change in my costs. I employ a lot of people just to file forms, just to keep records. I have a substantial insurance bill. If I get to support all of this and nothing left for me, the service is not available.
I need a system where my overhead is far lower than it is right now. This is not it.

Margalit Gur-Arie
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Margalit Gur-Arie

“I AM STILL WAITING FOR SOMEONE TO TAKE A SHOT AT EXPLAINING THE 4 YEAR WAIT FOR THE LEGISLATION TO TAKE EFFECT!!!” Dr. Exhausted, I believe I answered your question shortly after you posed it in the Confused thread. Here is my opinion again: “The provisions not kicking in for 4 years is very unfortunate and it is there more than likely to make the savings look bigger than they actually are. ……… Posted by: Margalit Gur-Arie | Mar 1, 2010 9:23:07 PM” Nobody here, or anywhere else for that matter, thinks this bill is perfect, or that Congress is… Read more »

John R. Graham
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To state, as Dr. Palestrant does, that “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” misses the whole point of insurance. Because few medical prices are formed in normal market circumstances it is impossible to know what prices would be if patients and providers figured it out amongst themselves. We need less insurance, not more. Entire specialties, especially primary-care physicians, internists, perhaps pediatricians and ob-gyns, too, should never have to deal with an insurer through their entire careers. With respect to… Read more »

ExhaustedMD
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ExhaustedMD

Hmmm, to rbar: 1. I do not agree with your perspective that physicians have the level of trust and respect with the American public, at least of now as compared to over 20 years ago, which does coincide with the onset of managed care. Patients by in large felt we sold them out, and by being silent and not advocating for them, much less ourselves, we did sell them out! 2. What defines rich, doctor? If you go by Obama and his attack on taxing those “rich”, that line seems to be $250K, and I would hazard to guess that… Read more »

jd
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jd

I sometimes read articles on this blog that are strangely out of touch, not just with facts but with the Zeitgeist. This one is near the top. The only mentions of anti-trust law I see in the popular media regard health insurers, not providers. You have to dig pretty deep to pretend that provider anti-trust is a common topic of discussion, or that there is a groundswell of new political opposition to provider consolidation or collusion. And even if there were, this article does nothing whatsoever to establish that. As others have mentioned, the Colorado judgment referred to is a… Read more »

Barry Carol
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Barry Carol

rbar – I agree that physicians should be sufficiently well compensated financially to attract and hold smart and dedicated people. That said, I think the profession still has a lot to answer for in the following areas: 1. Lack of price transparency. As Peter says, it’s generally virtually impossible to find out what anything costs in advance other than, perhaps, a routine office visit. This is especially true when PCP’s need to refer patients to specialists or to a hospital. 2. Resistance to having their clinical outcomes and those of their hospital(s) publicly disclosed. 3. Opposition to allowing NP’s, PA’s… Read more »

Orac Knows Nothing
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Orac Knows Nothing

There will be no legitimate health care reform until the HMO’s are no longer allowed to collude and price fix via their anti-trust exemption.

rbar
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rbar

Sorry, dear colleague, but Peter hit the nail on the head. And opposed to your perception, doctors have an excellent reputation in the US and among the most trusted professions. I agree that there is financial pressure on us docs, but it pressure on a relatively priviliged group. To set things straight, I do think docs should be reimbursed well considering the long training, call duty, responsibility, demanding interaction with sick and/or demanding patients … but we should not be physicians to become rich. I met quite a few fee for service (or better: fee for procedure) docs who have… Read more »

ExhaustedMD
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ExhaustedMD

Typical, Peter. You either missed the point, or, I believe you chose to ignore the point. Other professions do not allow their profession to have outsiders set their fees, which is true for what I believe applies to over 65% of us. But, no, you and others want to use the 5% who try to gouge patients and insurers, if they could, and use them as the poster child for the whole 100% of the profession. Are you the person who reads about a bad cop and tells everyone who would listen that all cops are bad? That is how… Read more »

Peter
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Peter

“I’m curious, do you say this to the provider in front of you when he is trying to treat you?”
Hey doc, how much is this going to cost me?
Sorry patient, I don’t know, that’s not what I’m concerned about. You’ll have to speak with my office administrator or billing department, but the total cost will depend on a lot of things.
But doc, can’t I get a quote first so that I can shop around?
Quote? You mean you want me to act as if I’m a mere plumber?