FTC clears physician-hospital organization

Staff at the Federal Trade Commission yesterday said it won't challenge a proposed physician-hospital network, claiming the organization doesn't appear to restrict trade.

Amid increasing partnerships--and antirust challenges--the cleared Norman Physician Hospital Organization (Norman PHO) in Oklahoma could predict future structures with similar integrated arrangements.

The network includes Norman Regional Health System and 280 physicians. Norman Regional Health System is the only provider in the network that offers services, the FTC noted. Aimed at creating efficiencies, the physicians collaboratively coordinate clinical activities-- developing clinical practice guidelines and performance measures, conducting peer review and corrective action processes, and designing and implementing quality improvement initiatives.

After the clinically integrated healthcare network had requested an advisory opinion, FTC staff said it doesn't look like the proposed formation of the Norman PHO is exclusive in its joint contracts with third-party payers. Although the FTC didn't conduct a market analysis, it said the current arrangements won't strong-arm payers to contract with it and is a necessary part of implementing the program to achieve the benefits of efficiency.

FTC Assistant Director Markus Meier does emphasize antitrust laws condemn "naked" agreements among competitors that fix prices, but collaborations that require agreements to the benefit of consumers will be analyzed under the rule of reason.

PHOs are one way practices can maintain their independence as an alternative to direct employment or an accountable care organization model, Patrick Lencioni, consultant of the Table Group firm in Lafayette, Calif., previously said at the October 2012 Medical Group Management Association's Annual Conference in San Antonio.

The Norman PHO case could become a precedent for other joint ventures between hospitals and physicians in how they set up their arrangements, with this early thumbs-up from the FTC.

For more information:
- see the FTC announcement
- read the opinion (.pdf)

Related Articles:
How practices can stay independent
Aetna, Banner Health collaborate in accountable care
Hospitals need market clout, physician relationship prior to ACO efforts