So you've just taken it on the chin from another managed care plan. Not only did the plan not increase your reimbursement over last year's, but it actually cut it. You'd like nothing more than to tell the MCO to take a hike, but revenues from that plan constituted 30 percent of your practice's total revenues last year, and you can't take that kind of hit. The new price is still higher than your average total cost of providing services (although not by much), and there's no way you could replace the patients you'd lose if you rejected the plan's offer. You're sick of this situation recurring, but you know there's nothing much you can do about it by yourself because your practice consists of only three doctors. But surely, you think, there's something physicians can do together — some way to get reimbursement back up to a "fair" level. You've heard there are antitrust problems with some of the things physicians are doing to combat the purchasing power of large MCOs, but you believe that the purpose of the antitrust laws is to help the little guys — to help ensure a "level playing field" between sellers and buyers of medical services. Dream on!!

Let's make one thing crystal clear: There is no "magic bullet" or guaranteed successful strategy — that is legal — by which physicians can combat all the bad things they see in managed care. Every strategy by which physicians aggregate their market power to try to increase the prices they receive for their services carries some antitrust risk. Any attorney or health care consultant who tells you otherwise is simply trying to take your money for building you a house of cards. There are several strategies, however, that can improve your situation with an acceptable degree of antitrust risk if implemented carefully and correctly. These are (1) offering better services resulting in the growth of your practice and (2) practice mergers. The first raises no antitrust problems; the problems from the second can be managed.

The Basic Principles — The Antitrust Rules Are the Same for You and Them
Let's start with some very simple antitrust principles: First, the purpose of the antitrust laws is not to protect small businesses or professionals. Likewise, the purpose of the antitrust laws is not to ensure a level playing field for buyers and sellers. Rather, their purpose is to protect competition and otherwise to let the chips fall where they may. One cardinal antitrust principle is that the antitrust laws protect competition, not competitors per se.

In general, the antitrust laws prohibit independent businesses (like medical practices) from joining together and agreeing among themselves (or "conspiring" in the pejorative jargon of antitrust law) to decrease competition. In addition, they prohibit independent businesses with a great deal of market power from abusing that market power by engaging in conduct that has the effect of excluding their competitors, unless that conduct constitutes competition on the merits.

Asymmetric bargaining power, by itself, is not even a concern of the antitrust laws. Differences in bargaining power permeate our economy in every industry. Differences in bargaining power between physicians and MCOs don't even raise an antitrust eyebrow until the MCO has "monopsony" power — that is, the ability to significantly reduce the prices it pays for physicians' services by limiting the amount of those services it purchases. But it gets even worse: Even an MCO's monopsony power isn't unlawful as long as the plan obtained that power legitimately — that is, not by anticompetitively excluding other purchasers of physician services from the market, not by merging with its competitors to the extent the plan obtains power, and not by conspiring with other MCOs to decrease physician reimbursement. The law is clear that a buyer of services has the right to use the market power it has legitimately obtained to get the best deal it can from its suppliers, and physicians are suppliers to MCOs.

But what's sauce for the goose is sauce for the gander. By that, I mean that if your practice obtains, legitimately, substantial market power as a seller of medical services — even monopoly power — there's no limit to what you can legally demand from MCOs without violating the antitrust laws. And some practices, especially in tertiary specialties in relatively rural areas, do have substantial market power. If your practice is a "must have" practice in the eyes of MCOs, then you have market power. A problem arises, however, if you obtain that power by merging too many practices together, entering into collusive agreements with competitors, or acting anticompetitively to exclude practices that attempt to compete against yours. If you obtain substantial power by offering better services, growing your practice by bringing in new doctors from outside, or even from some practice mergers, you don't violate the antitrust laws. Indeed, your doing so is procompetitive, not anticompetitive.

The point worth emphasizing is that the antitrust rules of the game are the same for physician practices and MCOs. The MCOs are usually just better equipped than you are to apply the rules to their best advantage. Physicians are interested in patient care and practicing medicine, and MCOs are interested in money. So typically, MCOs are better business persons than physicians are. Whether physicians like it or not, these days they either have to take it on the chin or become better, more foresighted, business persons.

With that short background, let's look at some of the strategies physicians have tried to "level the playing field" with MCOs, whether they raise antitrust problems, and, if so, why.

What Works and What Doesn't?
An important point never to forget is that "horizontal price-fixing agreements" — that is, agreements or understandings among competing practices that directly affect the prices they charge for their services — are usually automatically, or "per se," illegal. Never discuss prices, exchange pricing information, discuss contracting strategies, or reach any understanding on prices you'll charge with other practices without first discussing your plans with a qualified antitrust attorney (not the attorney who got your brother-in-law's divorce or the one who wrote your will).

Again, however, the antitrust rules of the game are the same for MCOs. If competing MCOs in your area reach agreements or understandings among themselves directly affecting the prices they pay physicians, they are probably violating the antitrust laws. Report them to the government immediately.

Joint Contract Negotiations by Competing Medical Practices or Their Agents
The definition of "price-fixing agreement" for antitrust purposes is quite broad. It includes separate competing medical practices jointly negotiating the prices or price-related terms of MCO contracts or their using an agent to negotiate prices on their behalf. It also includes an agreement or understanding among such practices not to contract with an MCO unless the MCO increases its reimbursement and an understanding to terminate participation in an MCO because of its low reimbursement.

Not surprisingly, you can't circumvent this rule by having someone else negotiate on the physicians' behalf. For example, the U.S. Department of Justice Antitrust Division sued a health care consulting firm that negotiated for a group of surgeons in the Tampa, Florida area. (The government sued the surgeons as well.) There, supposedly, the consultant employed by the surgeons went to insurers such as United HealthCare, telling them that none of the physicians would sign contracts unless the MCOs upped their offers. The consultant would return to the doctors with the MCO's offer, and the doctors would collectively decide whether to accept or reject the offer — a pretty clear antitrust violation. In another matter, the government investigated a large law firm because several of its lawyers allegedly negotiated a contract with Blue Cross on behalf of competing hospitals. (Ironically, the government decided not to sue the law firm because Blue Cross told it the attorneys' actions caused no harm and actually facilitated the contracting process.)

So independent, competing physician practices can't jointly negotiate contracts with payers.

Physician Unions
Because many activities of labor unions enjoy an exemption from the antitrust laws, some physicians believe that they can circumvent the price-fixing problem by joining a union and having the union engage in collective bargaining for them. Not so! The so-called "labor exemption" from the antitrust laws applies to collective bargaining only among employers and employees. So physicians employed by a hospital or by a staff-model HMO can negotiate collectively with their employer, but independently practicing physicians who form or join a union can't bargain collectively with MCOs. In fact, the government has sued one union for allegedly bargaining collectively for a group of orthopedic surgeons in Delaware.

Unions, however, can serve useful functions in the contracting process. For example, they can educate physicians about managed care and contracting, can provide comparative information for physicians to examine, and can serve as a third-party "messenger" in a messenger-arrangement network as discussed below. But they provide no protection from the antitrust laws.

Physician-controlled Networks
Physicians frequently form IPAs, PPOs, POs or the physician component of a PHO, which negotiate prices with MCOs. Such negotiations raise substantial antitrust risk in some circumstances, and the government has filed a slew of suits against such networks challenging their contracting activities as price fixing.

The rules discussed here apply only to "physician-controlled" networks. A network is "physician controlled" if the physicians own the network or control its decision making by, for example, constituting a majority of its board. In Antitrust Land, the network is a joint venture among the physicians, and every action the network takes is deemed to result from an agreement among the physicians who control the network. This means, for example, that if the network determines the prices physicians receive for their services through the network, the physicians have participated ina price-fixing agreement, which may or may not be unlawful depending on the factors discussed below.

A price-fixing agreement, for example, results if the network has a fee schedule that it uses in contracting on behalf of its member physicians. Some physicians (and attorneys) believe, incorrectly, that no price-fixing agreement results if the network's fee schedule is developed by an independent consultant instead of by the doctors or the network itself. The truth is that it doesn't matter who develops the fee schedule. Rather, it's the network's adoption and use of the fee schedule, regardless of who developed it, that results in the price-fixing agreement. Some physicians also believe that if the network "messengers" the fee schedule developed for it to each practice and each practice accepts it or rejects it (that is, "opts in" or "opts out"), no price-fixing agreement occurs. That also is incorrect. Some physicians believe that no problem results where the network has no fee schedule but merely negotiates fees with the payer. That, too, is incorrect. The bottom line is that if a physician-controlled network has or uses a fee schedule or negotiates prices or price-related terms, the network and its physicians are fixing prices. Price-fixing agreements, where unlawful, are the most serious type of antitrust violation and can even result in criminal prosecution. (Just ask Alfred Taubman, the chairman of Sotheby's auction house, who was recently sentenced to a year-and-a-day in prison and fined $7.5 million for fixing prices with a competing auction house.)

Risk-bearing Networks: But not all physician-controlled network price-fixing agreements are per se unlawful (although, as a practical matter, most are). For example, it is not per se illegal for networks contracting only on a risk basis to set the fees for the network's services. This is the case, for example, where the network accepts capitation, withholds funds due physicians if the network fails to meet predetermined utilization- or cost-saving goals, accepts a percentage of the insurance premium, or contracts on a global-fee basis.

But, understandably, risk-based contracts aren't popular with physicians for a number of reasons. Most patients don't like the idea of an MCO telling their physician how to practice, or that physicians are rewarded for providing less care. Who's to say whether that amount of care is optimal in particular given circumstances? In addition, in a number of states, physician networks would be precluded by insurance-department laws or regulations from accepting risk.

It is interesting that a number of state bars — state agencies regulating attorneys — have issued ethics opinions holding that it is unethical for an attorney to accede to the demands of an insurance company insuring the attorney's client with respect to how the attorney should handle the client's case — for example, the insurance company's deciding whether the attorney can take a particular deposition the attorney believes is important. Ethically, these state bars explain, the attorney must be able to exercise his or her independent judgment in representing the client to the best of his or her ability. Why isn't this same principle applicable in medicine where the stakes are usually even higher? Could a state board of medicine reach the same conclusion? Or could such a principle be codified in state statutes? Has anyone even looked into this?

Clinically Integrated Networks: Even if the physician network members do not share substantial financial risk through the network, the network's contracting with payers at network-determined fee-for-service prices is still not per se unlawful if the network is clinically integrated. "Clinical integration" is a complicated topic, but basically a network is clinically integrated when it has established a formal, sophisticated utilization-review program, tracks its results, has a mechanism to monitor and correct the utilization behavior of errant members, and expels members who either cannot or will not meet the network's utilization goals. The Federal Trade Commission, in February 2002, issued the government's first advisory opinion on a clinically integrated network to MedSouth, Inc., an IPA in Denver. There, the Commission determined that MedSouth's clinical integration program was sufficient so that its negotiating fee- for-service contracts with payers would not result in a per se unlawful price-fixing agreement.

But the government antitrust enforcement agencies are skeptical about clinical integration programs, believing that physicians will throw together weak, "sham" programs just to try to get the ability to negotiate collectively. They also question whether such programs provide the incentives necessary for physicians to reduce unnecessary utilization. It's clear from the MedSouth advisory opinion and from MedSouth's discussions with the government that the government will require a clinical integration program that, based on its complexity and cost, will probably be beyond the means and expertise of most physician networks.

Networks and "Market Power": Moreover, physician networks are not freed from antitrust concerns even if the doctor-members share financial risk or the network is clinically integrated. All these forms of integration mean is that the network's price-fixing is not per se, or automatically, unlawful. The network's using a fee schedule or negotiating prices is still unlawful, even if network members share risk or the network is clinically integrated, if the network is able to exercise "market power." "Market power" is a term of art in economics and antitrust law; it refers to the ability of a group of competing sellers to raise prices significantly without losing so much business that the price increase is unprofitable.

In assessing whether a physician-controlled network will be able to exercise market power, two variables are particularly important. The first is the network's "participation percentage." The participation percentage is the percentage of all area physicians in a given medical speciality who are participants in the network. A multi-specialty IPA will typically have a large number of participation percentages — one for each medical specialty represented in the network. Obviously, the larger the network's participation percentages, the more likely the network can exercise market power — that is, "jack prices up." The second variable is whether the network is an "exclusive" network or a "non-exclusive" network. A network is exclusive if, as a factual matter, its physician members contract with MCOs only through that network; that is, they won't contract with payers individually or through other networks.

An exclusive network with high participation percentages can almost always exercise market power and thus almost always raises significant antitrust concern. Government health care antitrust guidelines provide an "antitrust safety zone" for exclusive networks with participation percentages less than 20 percent if members share substantial financial risk through the network or the network is clinically integrated. But concern begins to arise where the network is exclusive and has participation percentages above 30 percent.

Note that the antitrust laws prohibit exactly what most physician networks would like to do: use the network to increase prices or at least keep them from falling. If the network is able to increase prices, it has market power. If the network has market power, MCOs are likely to complain about the network to the government. If the MCO tells a plausible story about the network's market power, the government is likely to investigate. If the investigation shows that the network was able to increase prices (or the investigation shows the network is fixing prices absent risk sharing or clinical integration), the government is likely to challenge it. The moral of this story is that if the reason you're forming or joining a network is to increase the prices you can charge MCOs, your effort may be self-defeating and you may be simply wasting your time and money.

"Messenger-Arrangement" Networks: Some physician networks, to avoid the price-fixing problem, opt to establish a so-called "messenger-arrangement" network. These can take several forms, but the most common forms are what I call the "classic" messenger-arrangement network and the "standing offer" messenger arrangement. In the former, all the network does is accept contract offers from payers and transmit or "messenger" those offers to their individual physician members. The members, individually and without consulting with other practices, either accept or reject the offer, or submit a counteroffer to the network, which the network then "messengers" to the payer for its acceptance, rejection, or counteroffer. In the standing-offer messenger arrangement, each practice participating in the network submits its lowest acceptable price to the network (the practice's "standing offer") and authorizes the network to contract on its behalf with any payer whose price offer equals or exceeds that price. Or the network simply takes all the standing offers and provides them to the payer as the network's offer. There is no price-fixing agreement because each practice has determined its offer individually. Note there is no network fee schedule (unless it's a fee schedule consisting of all the practices' individually determined standing offers), and there is no negotiation of prices between the network and the payer. The network is merely a conduit through which offers and counteroffers flow between physician members and payers. Thus, if implemented correctly (which it rarely is), there is no price-fixing agreement, and the network doesn't aggregate the power of its individual practices. If there's no price-fixing agreement and no aggregation of power, an antitrust violation can't occur.

Several points about messenger arrangements are worth making. First, messenger-arrangements networks aren't really "networks" at all. In a messenger arrangement, neither the network nor the customer knows, until the end of all the messengering, which physicians will participate and which won't. Second, messenger arrangements are a clumsy and inefficient way to contract. Experience shows, for example, that the counteroffer process can go on for what seems like an eternity, and that customers often end up mad at the network because some important physician groups won't participate (usually because they have a substantial degree of market power themselves and thus can demand a very high price). Third, many purported messenger arrangements aren't messenger arrangements at all. The network may actually think it has implemented a messenger arrangement, but it hasn't, either because it uses a fee schedule or because it engages in some price negotiations with payers. Several of these networks have experienced significant problems with the government antitrust enforcers, including dissolution of the network resulting from suits by the government. Finally, if the physicians' goal is to increase prices or keep them from falling, a properly implemented messenger-arrangement network won't do the trick.

"Everyone Else Does It, So It Must Be OK": Two questions always come up with physician groups. The first is, "How little do we have to integrate our practices and still be able to fix prices?" No one knows the precise answer to that question, but the answer is that you have to do more than most physicians are willing to do. In fact, that this question is asked suggests the network will have antitrust problems later. The second question, which I want to discuss briefly here is, "I know 10 networks that use a fee schedule, so why can't we?"

It certainly is true that many networks use a fee schedule or negotiate prices with payers notwithstanding the antitrust risk. First, the network might not be a physician-controlled network. For example, where a broker or TPA develops and controls the network, that nonphysician can establish the prices the network will pay physicians without much antitrust risk. The same is true if the network or panel is established by an MCO. Cigna, for example, can use a fee schedule in contracting with physicians; its network is not physician controlled. Second, the network may be physician controlled, but simply may not realize that using a fee schedule is unlawful. But as the saying goes, "Ignorance of the law is no defense." There is an amazing amount of confusion and misinformation among physician networks about what they can and can't do when it comes to pricing activities. Third, the network may realize that use of a fee schedule and negotiations with payers raise significant antitrust problems, but the network may simply decide to take the risk. This is not an unusual situation. Some networks may find it impossible to accept risk or clinically integrate. They decide that switching to a messenger arrangement is simply too cumbersome for the network to operate in an efficient manner and that customers, particularly self-insured employers and their brokers or TPAs, either don't understand or object to participating in messenger arrangements. The network figures, "Everyone's happy, so we'll stick with our fee schedule."

The latter strategy will work until someone — typically a payer — complains to the government. The government lacks the resources to go around the country actively seeking out and investigating every network that might be operating unlawfully. It typically waits until it receives a complaint and then investigates. So if you see other physician-controlled networks using a fee schedule, the reason is probably that nobody has complained yet. But keep this in mind: If your goal in creating the network is to keep prices higher than they otherwise would be, the probability is that, sooner or later, a payer will complain to the government. And if your network is using a fee schedule, negotiating prices, or refusing to participate in a plan because it believes the plan's fees are too low, the probability of an investigation and suit by the government is high. So sooner or later, the network is likely to experience an antitrust problem. If it does, the fact that you knew there was an antitrust problem with the way the network was operating and chose to ignore it and take the risk rather than fixing the problem will cut heavily against you when the government formulates the necessary relief in the case. Indeed, the DOJ frequently prosecutes price-fixing violations criminally when the parties knew they were violating the law and simply ignored that fact.

Mergers, Virtual Mergers, and Clinics Without Walls
Another way that medical practices might be able to improve their position with MCOs is by actually merging — two or more practices becoming a single, fully integrated medical practice with all authority over the practices centralized in a single board of directors. Merging solves the price-fixing agreement problem. Since the formerly separate practices are now a single entity, the actions of the new practice don't result from an "agreement" to which the antitrust laws apply. So the single practice's setting the prices it will charge can't result from a price-fixing agreement. A practice's setting prices unilaterally cannot violate the antitrust laws.

But the merger itself is subject to the antitrust laws, and medical practices can merge only within limits. You certainly can't merge every urology practice in the area without an antitrust problem arising. Antitrust merger analysis requires examination of a plethora of variables, but the most important is the merged practice's market share after the mergers. (Calculating this, of course, requires determining what "the market" is, and this can be a quite complicated task by itself.) A rough rule of thumb is that competing practices can merge without significant antitrust concern until the post-merger practice has a market share of about 35 percent. Many mergers resulting in larger market shares have not been challenged or have been upheld, but some concern begins to arise when the merger results in a firm with 35 percent. Hopefully, such a merger of practices will generate significant efficiencies that lower the average total cost of the previously separate practices. This, of course, leaves more money in the doctors' pockets and thus can have the same effect as a price increase without adverse antitrust consequences.

In a true merger, the old practices combine and integrate all their operations. Many physician practices, for various reasons, don't want to go that far, but yet they want to be able to negotiate with MCOs together. Thus, they might engage in what's become known as a "virtual merger," one form of which is what physicians and attorneys sometimes call a "clinic without walls." Here, the practices combine some functions but not others, and the physicians usually continue to practice out of their old offices. For the most part, the practices retain the autonomy they had before. In sum, often very little actually changes in a clinic-without-walls transaction. There may be a central board of directors for the practices, but the individual practices continue to make individual decisions with regard to most questions affecting them.

The antitrust concern with clinics without walls is that if the degree of integration among the practices is too small — if very little really changes with respect to how the practices operate — the transaction will result in, at best, a joint venture among the practices rather than a merger. If the transaction results in a joint venture, the antitrust laws continue to treat the practices as independent practices. In that situation, if the practices jointly negotiate contracts, they are engaging in price-fixing agreements to which the principles discussed above apply.

The problem is difficult to analyze because there are no guidelines indicating or suggesting how much integration is enough to make the practices a single entity — that is, for the transaction to result in a merger rather than a joint venture. But in general, the practices should consolidate every aspect of their practices they can — compensation systems, benefits, hiring and firing, scheduling, billing, planning, back-office functions, and the like. And the practices should give up their individual names and identities and hold themselves out to the public (including to MCOs) as a single medical practice. Usually, the practices benefit substantially more if they simply merge.

"We're Special" — Antitrust Exemption Legislation
The rage now is for physician groups to go either to their state legislatures or to Congress and attempt to obtain legislation relaxing the antitrust laws' application to their collective bargaining activities. At the state level, both Texas and New Jersey have passed statutes permitting physicians to bargain collectively. Aside from the policy question of whether such statutes are wise, both statutes are pretty worthless to physicians. Moreover, some of the physician joint-negotiation bills in state legislatures around the country now (in Alaska, for example) would probably not even protect physicians from antitrust liability.

The Texas and New Jersey laws are flawed in numerous respects. But from the standpoint of physicians, the biggest flaw is that neither statute has any teeth. Neither requires MCOs to negotiate with groups of physicians, and neither permits physicians to agree to refuse to contract if their demands aren't met. So all an MCO has to do is tell the physician group that the MCO won't negotiate with it, which is what one MCO did in Texas, and the physicians are back where they were before the statute was passed. Collective bargaining has little meaning if one side has absolutely no leverage vis-a-vis the other side.

The federal bill is euphemistically entitled the "Health Care Antitrust Improvements Act of 2003." This bill, introduced in March 2003, is not as generous to physicians as the Campbell bill, introduced several years ago, would have been. Under that proposal, joint negotiations among health care providers with payers simply would have been exempt from the antitrust laws. Under the 2003 bill, such negotiations are subject to the antitrust laws, but the rule-of-reason standard, rather than the per se standard, applies. Thus, joint negotiations would not be automatically illegal, but rather would be unlawful only if evidence shows that they would actually unreasonably restrain competition, "taking into account all relevant factors affecting competition, including patient access to health care, the quality of health care received by patients, and contract terms or proposed contract terms." Of course, Congress made sure that the statute does not apply to governmental programs such as Medicare and Medicaid.

The bill applies not only to physicians but to all types of "health care professionals," defined as "any individual or entity that provides health care items or services, treatment, assistance with the activities of daily living, or medications to patients and who ... possesses specialized training that confers expertise in the provision of such items or services, treatment, assistance, or medications."

Under the bill, health care professionals can form "health care cooperative ventures" and file a notification of the venture with the Antitrust Division of the DOJ. If the venture files such a notification but is later sued for an antitrust violation, damages are limited to single instead of triple damages.

In addition to mandating rule-of-reason analysis to joint negotiations, the bill decrees that so-called "all-products" provisions in provider agreements are unlawful tying arrangements unless the health plan "demonstrates it lacks market power." As a factual matter, however, all-products provisions are not tying arrangements and, although physicians may not like them, are often procompetitive and beneficial to consumers.

Finally, the bill mandates that the Antitrust Division establish demonstration projects "under which health care professionals in the States ... may act together to jointly negotiate contracts and agreements." The actions taken by these groups "shall not be subject under the antitrust laws to criminal sanctions or civil damages, fees, or penalties other than actual damages." Such demonstration projects seem completely unnecessary — a total waste of time and money.

The bill as a whole is so poorly drafted that many of its provisions are quite ambiguous, and, indeed, the statute, even if passed, may not even do what many physicians want — permit doctors to leverage their collective power to increase reimbursement. For example, it's not clear that physicians negotiating jointly can force payers to negotiate with them. In the case of the demonstration projects mentioned above, the bill does "not provide health care professionals with any new right to participate in any collective cessation of service to patients not already permitted by existing law." Morever, the bill mandates that joint negotiations be examined under antitrust's rule-of-reason standard. But the question under that standard is always whether the sellers whose conduct is being examined are able to exercise market power — that is, raise prices above what they otherwise would be. So if the group is successful in increasing reimbursement, its joint negotiations may still violate the law!

Whether, as a policy matter, health care professionals deserve special treatment under the antitrust laws is, itself, problematic. It's clear, however, that even if special treatment is warranted, this bill is not the way to go. The bill's passage, however, seems unlikely at this time.

Complaining About MCO Mergers
Clearly, markets for health plans have become substantially more concentrated over the last 10 years or so. To the extent that MCOs have become larger and more powerful because of internal growth, there is nothing the antitrust laws can do. (The same is true of physician practices that grow the same way.) But much of the increased concentration in health plan markets has resulted from MCO mergers, and here the antitrust laws do have a role to play. Overly concentrated MCO markets resulting from MCO mergers hurt both consumers and physicians in ways the antitrust laws care about and can do something about.

So it can be worthwhile for both physician and consumer groups to complain to the DOJ's Antitrust Division about mergers of competing MCOs. A couple of years ago, the Antitrust Division successfully challenged the merger of the Aetna and Prudential MCOs in the Houston and Dallas areas because of its effect on both consumers and physicians. Moreover, complaining about such mergers is quick, cheap, and easy. To be sure, such mergers raise difficult and complex antitrust issues, and the government will not challenge every MCO merger that you might think it should. But when MCOs in you area merge into one entity with a 35 percent or more market share (excluding government programs), you should seriously consider contacting the Antitrust Division about it.

Conclusion
So what does all this mean? First, most of the strategies physicians have used thus far to combat MCOs are relatively worthless. How many physician networks are you aware of, whether an IPA, PPO, PHO, or PO, that have been successful? I'm aware of very few.

Second, unions can help some, but not much. Because of the antitrust laws, the bona fide activities of physician unions are quite limited and can have no teeth. Third, however, the antitrust laws place no constraints on your group's internal growth and its simply offering a more attractive product than anyone else. Indeed, that's precisely the type of activity that the antitrust laws encourage, even if you gain substantial market power. And if you obtain your power legitimately, there are no antitrust constraints on the terms you can demand from MCOs. Fourth, physicians need to consider physician-practice mergers much more carefully than they have in the past. Although the antitrust laws do place limits on mergers, they are a viable strategy. Physicians should carefully consider notifying the Antitrust Division about anticompetitive MCO mergers in their areas and request investigations. Finally, never forget that the antitrust rules are the same for physicians and MCOs. If MCOs agree among themselves on the prices they'll pay physicians, they violate the antitrust laws. Let the Antitrust Division know.

There are no easily implemented magic bullets that guarantee physicians success in fighting back against MCOs. But the situation is far from hopeless. It takes some thought, and it may take a strategy that physicians don't think is optimum. But physicians are not helpless, and that's the bottom line.