|FTC Staff Okays Maryland "Clinical Integration" Program
The Federal Trade Commission’s (FTC) Bureau of
Competition has advised TriState Health Partners Inc. (TriState), a
physician-hospital organization based in Hagerstown, Md., that it will
not challenge the organization’s proposed clinical integration
The staff concluded that the proposed cooperation among
doctors and a hospital has the potential to lower healthcare costs and
improve quality of care.
TriState requested the advisory opinion concerning its
proposal to integrate and coordinate the provision of medical care
services to patients by TriState’s more than 200 physician
members, as well as with the Washington County Hospital, also a
participant in the proposed program.
Under the advisory opinion process, FTC staff reviews
proposed business conduct. Staff explains how it would analyze the
legality of the conduct and whether it would recommend challenging the
As TriState describes its program, it will attempt to
coordinate care provided to patients under the program, and seek to
both improve quality and reduce the costs of care, the FTC said.
Under the program, physicians will be subject to a
variety of requirements regarding their performance, including
adherence to clinical practice guidelines being developed by
TriState’s participants. Physicians also must make certain
financial and personal contributions of time and effort toward the
success of the program, such as working on various committees, or
helping to monitor their peers’ performance and working with them
to modify any performance deficiencies, the FTC said.
Physicians generally will be required to use other
providers within the network when making needed referrals, and the
program will monitor and oversee physicians’ performance in
following best practice standards and in meeting both individual and
group performance goals and benchmarks, the FTC said
The FTC also said the proposed program will make
extensive use of a Web-based health information technology system,
including electronic health records, to help identify patients and
providers where various interventions would be most productive in
improving care and patient outcomes, and to facilitate those
According to the FTC, TriState’s program will be
non-exclusive, so that purchasers and payers who do not wish to buy it
will be free to contract directly with TriState’s individual
participants, should they choose to do so. Likewise, access to the
services of Washington County Hospital will not be tied to the TriState
program, but will be separately available to purchasers and payers.
TriState will also implement various information protections in its
program’s operation to minimize the possibility of any
anticompetitive effects in the market outside the program.
The staff opinion letter, dated April 13, was signed by
Markus H. Meier, assistant director of the health care division of the
FTC’s Bureau of Competition. It concludes that the "integration
among the participating physicians in the program ... appears to have
the potential to result in significant efficiencies, both in terms of
cost and quality, in the delivery of medical services to patients
covered under payer contracts for the program."
The letter also states that "TriState’s joint
negotiation of contracts, including price terms, with payers on behalf
of its physician members" appears to be "subordinate and reasonably
related to Tristate’s members’ ... integration through the
proposed program, and appears reasonably necessary to achieve the
potential efficiencies of that program." Thus, the price agreements and
joint contracting would be evaluated under the antitrust rule of
reason, rather than being summarily condemned as per se illegal price
Finally, the letter concludes that, if the program is
operated as proposed, TriState "is unlikely to be able to attain,
increase, or exercise market power for itself or its participants as a
result of implementing the proposed program." The staff therefore
stated that they had no present intention to recommend that the FTC
pursue any law enforcement action against TriState if it proceeded to
implement the proposed program. However, the letter also cautions that
any evidence of exercise of market power or other anticompetitive
activities by TriState would raise antitrust concerns and could result
in the revocation of the opinion.
Addresses: The Federal Trade Commission, 600 Pennsylvania Ave. NW, Washington DC 20580; (202) 326-2222, www.ftc.gov. Tristate Health Partners, 10715 Downsville Pike, Suite 103, Hagerstwon, MD 21740; (240) 313-9940, www.tristatehealth.com.