06/11/2004

Antitrust Issues Affecting Physicians and Physicians Organizations

William E. Berlin
202-326-5011
weberlin@ober.com

Appeared in Health Lawyers Weekly
June 11, 2004

There have been some significant developments in the healthcare antitrust area as it pertains to physicians and physician organizations in recent years. This article will focus on the insight on several physician issues gained through the Joint Federal Trade Commission (FTC)/Department of Justice (DOJ) Hearings on Healthcare and Competition Law and Policy held last January through September, as well as some subsequent developments on those issues.¹ Those Joint Hearings included separate clusters of sessions devoted to each of the three big "players" in healthcare—physicians, hospitals, and health plans. In deference to the Joint Hearings' format this paper will cover aspects of physicians' and physicians organizations' relationships to both hospitals and health plans.

Since I could not possibly cover in this paper all the myriad issues on which testimony was obtained during the fifty-odd sessions of the Joint Hearings,² I will focus on four specific topics.³ First, how accurate is the widely held view that health plans wield purchasing, or monopsony, power and use it to reduce physician reimbursement? Are there legal mechanisms that physicians can use to effectively counterbalance the perceived purchasing power of managed care plans? My second and third topics will discuss in more detail two of those potential mechanisms—permitting information sharing among physicians (and with others) regarding health plan pricing data and/or non-price information, and joint operating agreements, or "clinics without walls."

Fourth, turning to physicians' relationships with hospitals, one aspect that has received much attention recently, including in the recent Medicare Prescription Drug, Improvement, and Modernization (MMA), is physician-owned ventures such as "single specialty" facilities that compete against "full service" hospitals. Do these facilities increase access and decrease cost to consumers, or simply skim profitable services away from general acute care hospitals? And do the established hospitals' responses to the emergence of these facilities raise antitrust issues?

I. Health Plan Purchasing Power—Is It Real and Does It Really Matter?

The antitrust principles that apply to health plan purchasing—or "monopsony" power—are the same as those that apply to monopolist sellers.⁴ Monopsony power is the mirror image of monopoly power on the buyer side—that is, a purchaser's market power in buying its inputs. A seller cannot maintain or expand monopoly power by anticompetitive conduct directed at its actual or potential rivals, and the same is probably true of a buyer with monopsony power. As a result, conduct other than competition on the merits that substantially harms other buyers in the market or prevents the entry of new competing buyers would raise concern absent a procompetitive justification for it.⁵ Examples of anticompetitive conduct by buyers such as health plans include: mergers among competing purchasers⁶ and agreements among competing purchasers fixing the prices they pay for their inputs⁷ or allocating markets.⁸

What does this legal discussion mean for physicians in their dealings with health plans? First of all, do health plans even possess monopsony power? Testimony by panelists at the Joint Hearings on this issue was divided, not surprisingly usually following party lines: payor representatives said no and provider representatives said yes. The second edition of an economic study prepared for the American Medical Association states that managed care organization market concentration and market power is high in a substantial number of areas of the country.⁹ In contrast, the American Association of Health Plans (now part of the merged America's Health Insurance Plans) disagreed, referring to the health plan market as one of the "most highly competitive" in the country.¹⁰ Other panelists noted that monopsony power generally is less prevalent than monopoly power because few markets are characterized by a concentration in buying power and many products have multiple uses that expand the number of potential buyers. These market characteristics that explain why monopsony power is less prevalent in most markets, however, are not always applicable to healthcare markets.

The significant question under the antitrust laws, however, is not whether health plans have monopsony power, but how that power was obtained and what payors are doing with that power. The antitrust laws do not apply to mere differences in bargaining power between buyers and sellers. Just as a seller with legitimately obtained monopoly power may lawfully charge the monopoly price, a buyer with legitimately obtained monopsony power would not violate the antitrust laws simply by paying suppliers only the below-competitive monopsony price.¹¹ It is worth emphasizing that although the antitrust rules are the same for health plans and physicians, health plans are generally better at negotiating favorable terms under those rules. After all, they are large businesses focused on the bottom line (even non-profit plans), while physicians are usually more interested in patient care and practicing medicine than in being businesspersons.

Again, the testimony at the Joint Hearings was mixed on whether health plans are exercising monopsony power in ways having harmful effects on consumers.¹² Low or lower payments by plans to physicians, by itself, does not constitute unlawful monopsony power; competitive harm exits only when prices are driven below competitive levels. Using bargaining power to drive prices to competitive levels is a good result; indeed, it is the point of managed care. The key to distinguish lawful bargaining power from unlawful monopsony power is the effect on the quality and quantity of the output of physician services. While that is usually a difficult task, some more tangible indicia of monopsony power identified during the Joint Hearings include: a pattern of provider exit due to low rates; the alleged monopsonist constitutes a large share of most physician's reimbursement; single-rate contracts by specialty (i.e., no negotiations) or little variation across providers; little opportunity to treat non-commercial patients; and low income or low profit margin for efficient providers, among other criteria. Evaluating these indicia requires a complicated and lengthy market analysis, which itself will be subject to conflicting interpretation.

The bottom line on this issue from what we learned during the Joint Hearings, however, is that it is very difficult for physicians or other providers to prove that health plans are using monopsony power versus bargaining power. An antitrust lawsuit predicated on health plan monopsony power is unlikely to be a fruitful course of action for physicians who believe they have been aggrieved in the bargaining process.

II. What Can Physicians Do to "Level the Playing Field?"

So what can physicians do to level the playing field in the bargaining arena with health plans? At the outset, I want to make clear that there is no guaranteed mechanism or silver bullet for physicians to counter what they perceive to be managed care plans' bargaining power. Beware of any consultant or attorney who tells you otherwise (and as evidenced by the many recent FTC enforcement actions against improperly created physician organizations, there are plenty out there giving bad advice). And it bears emphasis here that physicians should never discuss prices, exchange price information, discuss contracting strategies, or reach any understanding with other practices on the prices they will charge without first discussing your plans with a qualified antitrust attorney.

The testimony of experts in the healthcare antitrust area — economists, attorneys, state antitrust enforcers, and physicians' organizations actually on the ground and dealing with this issue — at the Joint Hearings illustrated this point. If there was any consensus, it was that there is no single, feasible but still legal way to effectively counterbalance payors' market power in all situations. Various mechanisms that were identified to give providers countervailing market power included physician unionization,¹³ state or federal collective bargaining statutes (such as the proposed Campbell Bill and its successors or the Texas Physician Negotiations Statute enacted in 1999), revising the DOJ & FTC Statements of Antitrust Enforcement Policy in Healthcare to increase the ability of physicians to participate in integrated joint ventures or even adding new policy statements or new "safety zones," expanding the agencies' advisory opinion/business review process to account for payor market power when evaluating provider collaborations, or price and conduct regulation.¹⁴ Problems were identified with each of those methods (e.g., the Texas collective bargaining statute contains no requirement that health plans participate in the process set forth there). And for physicians trying to decide what if anything to do about this issue, the biggest problem with these methods is that each really requires some intervening third party to do something on their behalf — Congress, state legislatures, or the federal and state enforcement agencies. Do not expect relief from any of these sources anytime soon, if ever; each of these methods would be difficult to implement, and the subject of conflicting interests and lobbying.

Two additional mechanisms that do not necessarily implicate the creation of countervailing market power or require third-party intervention, but that physicians can use to counter the perceived bargaining power of health plans merit a closer look. Each was the subject of a specific session of the Joint Hearings. The first, joint operating agreements or "clinics without walls," while promising the absolute ability to bargain collectively with health plans if implemented correctly and thus resulting in a single entity, also comes with great risk if done incorrectly, as it commonly is. The second, physician information sharing, is seemingly safer having been countenanced in several recent DOJ and FTC business review letters/advisory opinions, but under only very specific conditions that may be hard to meet and result in a product that is not of much use for this purpose.

A. Joint Operating Agreements or "Clinics Without Walls"

Although the testimony during the Joint Hearings focused on joint operating agreements in the hospital context (also known as "virtual mergers" or "pseudo-mergers," or sometimes "clinics without walls" in the physician practice context), the same analytical framework and practical considerations will apply to the integration of physician practices.¹⁵

As a general matter under the antitrust laws, if competing physician practices completely integrate their separate practices into a single practice through a merger or virtual merger, their subsequent agreements about the prices they will charge cannot violate the antitrust laws.¹⁶ In that situation, there is no concerted action subject to Section 1 of the Sherman Act. The more the parties integrate their operations, the greater the efficiencies their collaboration is likely to achieve. As one panelist during the Joint Hearings noted, less than fully integrated joint ventures potentially are "more problematic" than traditional merged entities because the efficiency benefits from the former arrangements are "less predictable and less likely."¹⁷ As a result, the per se rule does not apply to full mergers because it is assumed the merger will permit or even compel integration that will then generate efficiencies, such as lower prices, lower resource use, higher output, higher quality, better service, better access, or greater choice.¹⁸

The question, then, is under what circumstances does the per se rule not apply to less than fully integrated practices? The answer is, generally, when the integration is sufficient to deem the practices a "single entity" after the transaction. This "single entity" analysis comes from an antitrust principle known as the Copperweld doctrine.¹⁹ That doctrine holds that the components (e.g., a parent and its wholly owned subsidiary) of a single entity are incapable of conspiring with one another as a matter of law. Thus, no Section 1 violation—per se or otherwise — is possible because there is no agreement subject to Section 1 regardless of any effect on competition.²⁰

As the degree of integration between the practices moves from a full merger to something short of that, the more difficult it is to determine if the new combination is a single entity under Copperweld. The Supreme Court emphasized in Copperweld that substance, rather than form, must govern the analysis. The primary variables the courts examine include: the extent to which the parties have integrated their operations; the extent to which they actually function as a single entity as a factual matter; and the extent to which they have (or could have) divergent economic interests that might interfere with the incentive of each to act in the best interest of the group rather than in its individual self-interest. Another variable — intent — was highlighted during the Joint Hearings. It is not uncommon for physician practices to partially integrate, primarily for the purpose of negotiating prices with payors rather than for delivering services more efficiently. If the motivation for the new entity is to integrate as little as possible to allow joint negotiation with payors, that motivation in and of itself suggests the network will have antitrust problems later.

It bears repeating that implementing a "clinic without walls" improperly, either inadvertently or deliberately, can have a huge downside. Conduct that is perfectly lawful if the parties constitute a single entity, constitutes a per se violation of Section 1 absent sufficient integration. This danger is demonstrated by an enforcement action that became public since the Joint Hearings concluded. In that action, Surgical Specialists of Yakima, the FTC addressed the single entity issue in the context of physician practices.²¹ In Yakima, the FTC determined that a group of physicians and their separate practices purporting to constitute a single-entity limited liability company, Surgical Specialists of Yakima (SSY), were not sufficiently integrated to be deemed a single entity for antitrust purposes. SSY negotiated contracts with payors on behalf of its constituent providers. Although the complaint does not state explicitly, it appears the FTC believed SSY and its members committed a per se violation of Section 1 of the Sherman Act by doing so. The facts of the Yakima case illustrate the all too common situation in which competing physician practices want to negotiate collectively with payors but are not willing to integrate their practices to the degree necessary to do so. Thus, according to the FTC's allegations, SSY was what can be labeled a "sham" single entity.

There is no absolute rule or easy answer to determine how much integration is enough to justify single-entity treatment. Control over one entity by another (which is itself a complicated task to assess degrees of control) is probably the most important single factor, followed by whether profits, losses, and prior debts and assets are shared. Other factors include: whether the combined entity employs the physicians and administrative staff or whether they remain employed by their individual practices; whether patients are patients of the new entity or of the separate pre-existing practices; whether business functions, such as billing and collection, as well as utilization review and quality assurance are handled centrally by the new entity; whether equipment and office space is owned or leased by the new entity rather than by the individual practices or physicians; the duration of the transaction joining the practices; and whether the new entity holds itself out to the public as a single practice. These are not the only ways in which integration can be achieved, and no one factor is determinative. In addition, some factors have more weight than others in the analysis.

If physicians want to ensure single-entity treatment under the antitrust laws, they would be safer to totally integrate their separate practices into a new entity through a full merger, and actually function as a single entity rather than as a group of individual practices. This is not to say that physicians should never consider joint operating agreements or "clinics without walls," just that they should carefully evaluate their motivation for doing so and their willingness to truly integrate, even partially, with another practice. As demonstrated by Yakima, if the goal is to create a single entity for antitrust purposes, the integration among the parties must be very substantial and aimed at promoting real efficiencies to achieve single-entity status. Indeed, it was suggested at the Joint Hearings that the FTC and DOJ should review these types of arrangements to ensure that efficiencies actually occur after formation of the joint entity. While this is unlikely and the enforcement agencies obviously cannot review each and every one of these arrangements, health plans can, and not infrequently will, complain to the agencies about joint contract negotiations by physician practices they believe are not a single entity.

B. Physician Information Sharing

The discussion of physician information sharing during the Joint Hearings focused on two recent advisory opinions by the FTC and DOJ.²² Since that session, the FTC has issued another advisory opinion in this area. These recent opinions discuss and approve, under certain specified conditions, physician-sponsored surveys of reimbursement by health plans with which the physicians contract.²³

Under the antitrust laws, many surveys by physicians will be lawful. In fact, as one panelist at the Hearings noted, information sharing can lead to greater competition from a general economic perspective. Some surveys, however, especially those that disclose prices or pricing formulas, such as relative value scales²⁴ or wages paid to employees, can raise significant antitrust concerns.²⁵ As a result, physicians should be especially careful to avoid participating in surveys concerning current or future charges or payments for services, and they should avoid even discussing current or future prices with competitors. This is particularly true if the survey or discussion relates to the current or future prices of specific, identified competitors. In fact, physicians should obtain the advice of antitrust counsel before participating in surveys of even historical prices.

Surveys of current or future prices among competitors may facilitate a per se unlawful price-fixing agreement or group boycott among the participating physicians.²⁶ Even if no actual price-fixing agreement results, exchanges of competitively sensitive information among competitors still can be unlawful under rule-of-reason analysis if their effect is to raise or stabilize prices, as recognized by one panelist criticizing the DOJ's recent Washington State business review letter.²⁷

The courts apply several factors in assessing the exchange of price information among competitors under the antitrust laws: (1) the level of market concentration; (2) the nature of the information exchanged, particularly whether the prices subject to the exchange or survey are current or future prices or historical prices, and whether the information is aggregated or identifies the prices or other information of specific parties or transactions; (3) whether the information is otherwise publicly available; (4) whether participants in the exchange or survey meet to discuss the information and whether the information contains any instructions about how it should be used; (5) whether the information is gathered and disseminated by the parties themselves or by an independent third party; and (6) the purpose for the exchange.²⁸

These factors also are reflected in Statement 6 of the DOJ and FTC Health Care Enforcement Statements, which addresses provider participation in exchanges of price and cost information. It provides an antitrust safety zone if: (1) the survey or exchange is implemented by a third party; (2) the statistics disseminated are based on data that is at least three months old; and (3) the statistics disseminated are based on data from at least five providers, no single provider's data accounts for more that 25% of the statistics, and the information is sufficiently aggregated or masked so that recipients of the information cannot identify the prices or costs of particular providers participating in the survey.²⁹

According to one panelist, the recent FTC (Primed) and DOJ (Washington State) advisory opinions mark the first time that either agency has approved an information sharing arrangement under the rule of reason outside of the safety zone in Statement 6. In addition, they mark the first time the agencies permitted the exchange of information specific to individual payors as opposed to aggregate information. The more recent MGMA advisory opinion additionally permits the collection and dissemination of not only payor pricing data but also some potentially controversial non-price information such as what percentage of payors maintain an adequate specialist network, what percentage of claims are denied, that percentage of claims are paid within specified time periods, and how satisfied physicians are with payors responsiveness to questions.³⁰ The MGMA, a professional association that represents 19,000 medical practice administrators, will conduct the survey initially among members of the Colorado State Medical Association, and if it is successful, may expand the survey to other states.

In addition to these more recent opinions, the federal enforcement agencies have issued numerous prior advisory opinions discussing the exchange or dissemination of provider prices.³¹ The DOJ also has brought enforcement actions against obstetricians for exchanging information on the prices they charged for deliveries³² and against hospitals for exchanging information about the wages paid nurses.³³ And in a pending private class-action suit filed by current and former medical-school residents (the "Match" litigation), the plaintiffs allege that the resident-stipend surveys conducted by the American Medical Association and the Council of Teaching Hospitals, which they post on the Internet, are facilitating practices in a nationwide conspiracy among graduate medical education programs to reduce the stipends paid to medical residents and fellows.³⁴

Whether or not the Washington State, Primed, and MGMA advisory opinions indicate that the enforcement agencies are relaxing the standards applying to information sharing in the healthcare context remains to be seen. A more relevant question to this paper is whether information sharing is a viable method for physicians to level the playing field in negotiations with health plans. The proponents of the surveys at issue in the Primed advisory opinion testified at the Joint Hearings that one rationale supporting the proposal was to counterbalance, indirectly, the market concentration of health plans and resulting decrease in reimbursement rates to physicians by using the survey information to educate employers who purchase health insurance about the effects from health plan buying power in that market. Specifically, the survey was intended to show that the reimbursement rates are so low that it is difficult to recruit and retain physicians, resulting in lower quality of care and higher long-term costs. Similarly, the MGMA survey's claimed benefit was to permit physicians to compare the performance of payors with which they contract with the overall benchmark performance of payors in the market.

Has it worked? Panelists critical of these recent advisory opinions testified during the Joint Hearings that much of this information is already available so a survey is unnecessary, and that the advisory opinions themselves provided insufficient guidance or specific detail needed to know whether the survey would allow physicians, employers, and others to make better informed decisions. The panelists for this session agreed, however, that it was too early to tell whether either the benefits claimed by proponents, or the anticompetitive effects feared by opponents, were in fact being realized in the Dayton, Ohio, market at issue in the Primed opinion, and the Washington State survey was never implemented due to concerns raised by that state's attorney general. In any event, this mechanism appears to have limited utility for improving physicians' negotiating ability with health plans due to the cumbersome requirements needed to comply with the antitrust laws, and the attenuated connection between contract negotiations and information sharing in the first place.

III. Single Specialty Hospitals—Another Field in Need of Leveling?

While this paper has focused thus far on physicians' often adversarial relationships with payors, we now turn to their relationships with another provider of healthcare services—hospitals. The issue of single specialty hospitals is one area where physicians' and hospitals' interests are not aligned in opposition to payors. In fact, one hospital representative who testified during this session of the Joint Hearings made an interesting comment that provides an appropriate segue from physician-payor relations to physician-hospital relationships: he stated that physicians' ability to refer patients to their own facility was unfair, and established hospitals should be allowed to revoke those physicians' hospital privileges in order to compete on a "level playing field."³⁵

At the Joint Hearings, a representative of the Center for Studying Health System Change testified that there has been rapid growth in the number of these facilities, and a corresponding increase in controversy over this issue in recent years. Hospitals have expressed increasing concern about efforts by their medical-staff members to go into competition with the hospital, particularly the establishment of independent specialty hospitals, generally heart hospitals and orthopedic surgery hospitals, as well as outpatient surgery centers, by members of the hospital's medical staff.³⁶

This concern has culminated in action by Congress putting single specialty hospitals on hold. In addition, at the state level, many legislatures have either passed or are attempting to pass legislation restricting specialty hospitals or requiring them to provide services such as full service, comprehensive emergency departments and/or to provide care to uninsured patients. Although the federal Stark laws and regulations generally prohibit a physician from referring Medicare and Medicaid patients to facilities in which they have a financial interest, physicians and hospitals were previously able to form specialty hospitals under the "whole hospital" and "rural provider" exceptions under Stark, which permitted physician referrals to whole hospitals and certain rural hospitals in which they have an ownership or investment interest. The MMA, however, imposes an eighteen-month moratorium on these exceptions for hospitals meeting the specialty hospital definition under the statute.

Specifically, the statute excludes referrals to such hospitals devoted primarily or exclusively to cardiac, orthopedic, or surgical specialties, and potentially others designated later. The statute attempts to "grandfather" specialty hospitals in operation or under development as of November 18, 2003; however, those existing hospitals may also fall under the moratorium if the number of physician investors increases, if the types of procedures performed at the hospital changes, or if the number of beds increases by a specified amount.

The statute also requires the Medicare Payment Advisory Commission and the Department of Health and Human Services (DHHS) to conduct studies of specialty hospitals compared with other similar general acute hospitals regarding quality of care issues, the impact of the specialty hospital on the general hospital, differences in scope of services at such hospitals, and other related issues. The report must be submitted to Congress no later than March 8, 2005, which is prior to the end of the moratorium.

What led to this situation? There are two sides to the story. Advocates for specialty hospitals, including some physicians as well companies who organize these facilities for physician investors, testified at the Joint Hearings that these types of hospitals are more likely to introduce medical breakthroughs in their respective specialties, are pro-competitive and are more efficient, ultimately resulting in lower prices to payors while providing better quality services, greater access, and higher satisfaction to both consumers and the physicians who work in them.

Opponents, typically established traditional acute care general hospitals and the American Hospital Association, also testified, countering that the physicians are "cream skimmers," taking high-margin business to their facilities and leaving the hospital with money-losing but important services such as emergency services. Moreover, the hospitals argue that the physicians take only patients with high-reimbursement commercial insurance, while leaving the hospital with the uninsured and Medicaid patients. Other complaints include the charge that they are able to avoid responsibilities under the Emergency Medical Treatment and Labor Act and the attendant cost of uninsured patients by not having emergency departments. Acute care general hospitals raise fears of closing departments or even insolvency. Finally, as the panelist noted at the outset to this section testified, hospitals contend that the physicians have an unfair advantage because of their financial incentive and ability to refer their patients to a facility in which they have an economic interest, regardless of whether that facility is the best choice for the patient.³⁷

Both proponents and opponents who testified at the Hearings agreed, however, that a key driver behind this controversy was general acute care hospitals "cross-subsidizing" unprofitable services (e.g., trauma centers and burn units) with those profitable services that are often the same services being offered by single specialty hospitals. While the panelists agreed this issue needed to be addressed and perhaps corrected, no ideas were put forward explaining how this should be done. Most panelists also agreed that it is still too early to definitively determine what if any impact, beneficial or detrimental, single specialty hospitals have on the quality of care.

In any event, this disagreement has escalated into various countermeasures by hospitals. Competing facilities owned by a hospital's medical-staff members have alleged that hospitals have engaged in a number of different types of exclusionary conduct to impede their efforts to establish viable competing facilities. These efforts, many of which were identified during the Joint Hearings, have included hospital policies to exclude such physicians from their medical staffs (e.g., "economic credentialing") or remove them from hospital positions, attempts to persuade other physicians not to refer to the physicians' facility, exclusive contracts with payors for the services in question,³⁸ the use of bundled discounts with payers,³⁹ refusals to enter into transfer agreements with such facilities,⁴⁰ CON process "abuse," and similar types of conduct.

These measures can raise several issues under the antitrust laws. If a hospital has substantial market power in the market for the services provided by the physicians' facility, these types of conduct can raise monopolization or attempted monopolization concerns under Section 2 of the Sherman Act. If the conduct results from agreements between the hospital and others (such as payors or other members of the hospital's medical staff) and if the agreements appear to restrain competition unreasonably in the market for the affected services, issues under Section 1 of the Sherman Act may arise as well. Or if the hospital has market power in the market for inpatient hospital services and conditions its sales of those services on a payor's also purchasing the services in question from it, a tying arrangement might result. The analysis generally focuses on the extent to which competitors of the hospital are foreclosed from patients by the conduct and the effect of that foreclosure on the hospital's market power.

There are few decisions discussing this factual situation in detail, although several cases are pending at this time.⁴¹ In the Surgical Care Center of Hammond case,⁴² the court rejected a claim of this type under Section 2 of the Sherman Act by a physician-established ambulatory surgery center, primarily because it found that the plaintiff failed to prove the hospital's market power in the market for outpatient surgery. In addition, it found that the hospital's exclusive contract with a payor was not predatory based in part on the testimony of plaintiff's own expert.⁴³

Where do we go from here? First, more litigation focusing on this issue is likely in the near future, although the moratorium under the Medicare reform statute may slow the pace of new suits being filed.⁴⁴ On the legislative front, we appear to be in a wait and see mode pending completion of the DHHS report on single specialty hospitals. What that report will say is anyone's guess at this point. One interesting question is whether, absent physician investors who no longer (at least during the moratorium) are able to finance these ventures, we will continue to see new single specialty hospitals being built. Will firms like MedCath, which in the past has organized these hospitals on behalf of physician investors (and which testified at the Joint Hearings), continue to be involved in the start-up of single specialty hospitals, but perhaps with a different class of investors? It seems clear that, at a minimum, the rapid pace of new single specialty hospitals being opened will slow considerably.

IV. Conclusion

If it seems like this paper has thrown cold water on most of the options receiving attention today for physicians to "level the playing field" in the bargaining arena with health plans, it has. The testimony at the Joint Hearings confirmed what we suspected if not already knew: those mechanisms discussed above are either unlikely to ever be implemented, difficult to implement, or if implemented improperly, greatly increase the antitrust risk for physicians.

So what options are left? First, the antitrust laws do not constrain physician practices' internal growth and simply offering a more efficient and attractive product than its competitors, even if that results in gaining substantial market power that permits physicians to achieve more favorable terms in bargaining with payors. Indeed, that is precisely what the antitrust laws encourage. Second, physicians should seriously consider fully merging practices, or integrating sufficiently to achieve single-entity status under the antitrust laws, in order to achieve meaningful, tangible efficiencies. If the goal is to create a more efficient business entity, and it is achieved, better terms from payors will likely follow in time. At a minimum, profitability should be improved. While the antitrust laws do place limits on mergers, they are a viable strategy. There are no quick shortcuts, however, and no guaranteed silver bullets to level the playing field. Attempting to avoid or minimize the integration and go directly to joint negotiations with health plans will almost certainly result in antitrust problems.

Finally, in the debate between physicians and hospitals over physician-owned, single specialty hospitals, it appears that Congress has, if not leveled the playing field, closed the gates to the stadium for the time being.