Thursday, September 25, 2003

Antitrust News: FTC Strikes Washington State

The Bush administration's war on physicians moves to Yakima, Washington, with news of the latest surrender:
A group of surgeons in Yakima, Washington, has settled Federal Trade Commission charges that it increased the cost of health care for consumers in Yakima by jointly fixing prices in contract negotiations with insurers in violation of federal laws. The proposed consent order with Surgical Specialists of Yakima, P.L.L.C. (SSY) and two of its members – Cascade Surgical Partners, Inc., P.S. (CSP) and Yakima Surgical Associates, Inc., P.S. (YSA) – is designed to remedy SSY’s allegedly anticompetitive collective-bargaining practices. According to the FTC, such conduct is detrimental to consumers in the Yakima, Washington, area and has resulted in higher prices for services SSY’s doctors provide.
The targeting of these small specialist groups may produce a backlash unexamined by FTC lawyers. Specialists, after all, face a far greater struggle to obtan market-level compensation for their valuable work, and in markets where managed care plans use the force of antitrust to impose their prices, these specialists can simply quit the market altogether. Yesterday I spoke to a healthcare management consultant in one major metropolitan area, and she told me of a hospital that lost all of its orthopaedic specialists because because the doctors practicing there felt under siege from the dominant HMO. Because the specialists realized any effort to negotiate prices would result in an antitrust prosecution, they simply left the market and went to work in other cities.

The FTC has never publicly acknowledged this possibility; after all, the agency is fixated on short-term price levels to the detriment of all other factors. But given the FTC's institutional hostility towards the economic rights of physicians, we might someday see the agency attempt to force physicians to stay in unprofitable markets, lest they violate the "right" of consumers to receive specialty care.

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