Critical issues in hospital antitrust law

Health Affairs

Volumn 22, Issue 6, 2003, Pages 88-100

  Hammer, Peter J ^a   Sage, William M ^b  

^a WAYNE STATE UNIVERSITY   (United States)

^b Columbia Law School ^*  (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; ECONOMIC ASPECT; ECONOMICS; GOVERNMENT REGULATION; HEALTH CARE COST; HEALTH INSURANCE; HOSPITAL SERVICE; LAW; LEGAL ASPECT; PUBLIC RELATIONS; UNITED STATES;

ANTITRUST LAWS; ECONOMIC COMPETITION; GOVERNMENT REGULATION; HEALTH CARE SECTOR; HOSPITAL SHARED SERVICES; HOSPITAL-PHYSICIAN RELATIONS; INSURANCE, HOSPITALIZATION; INTERINSTITUTIONAL RELATIONS; LEGISLATION, HOSPITAL; MANAGED CARE PROGRAMS; UNITED STATES;

EID: 1542539987     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.22.6.88     Document Type: Article

References (55)

1. C.C. Havighurst, "Health Care as (Big) Business: The Antitrust Response," Journal of Health Politics, Policy and Law 26, no. 5 (2001): 939-955.
2. P.J. Hammer and W.M. Sage, "Antitrust, Health Care Quality, and the Courts," Columbia Law Review 102, no. 3 (2002): 545-649.
3. W.M. Sage and P.J. Hammer, "A Copernican View of Health Care Antitrust," Law and Contemporary Problems 65, no. 4 (2002): 241-290.
4. United States v. Von's Grocery, Co., 384 U.S. 270, 301 (1966) (Justice Potter Stewart dissenting).
5. In re American Medical International, Inc., 104 F.T.C. 1 (1984); in re Hospital Corporation of America, 106 F.T.C. 361 (1985), affirmed, 807 F.2d 1381 (7th Cir. 1986); United States v. Rockford Memorial, 898 F.2d 1278 (7th Cir. 1990); and T.L. Greaney, "Whither Antitrust? The Uncertain Future of Competition Law in Health Care," Health Affairs (Mar/Apr 2002): 185-196.
6. United States v. Carilion Health Systems, 707 F. Supp. 840 (W.D. Va. 1989); and F.T.C. v. Butterworth Health Corp., 946 F. Supp. 1285 (W.D. Mich. 1996). William Lynk's research suggests that nonprofit hospitals with market power do not charge higher prices. W. Lynk, "Nonprofit Hospital Mergers and the Exercise of Market Power," Journal of Law and Economics 38, no. 2 (1995): 437-461;
7. and W. Lynk and L. Neumann, "Price and Profit," Journal of Health Economics 18, no. 1 (1999): 99-116. This claim has been criticized.
8. See D. Dranove and R. Judwick, "Competition and Pricing by Nonprofit Hospitals: A Reassessment of Lynk's Analysis," Journal of Health Economics 18, no. 1 (1999): 87-98;
9. and E. Keeler, G. Melnick, and L. Zwanziger, "The Changing Effects of Competition on Non-Profit and For-Profit Hospital Pricing Behavior," Journal of Health Economics 18, no. 1 (1999): 69-86. More recent studies further support the proposition that market power results in higher prices for both nonprofit and for-profit hospitals.
10. See M. Gaynor and W.B. Vogt, "Competition among Hospitals," NBER Working Paper no. 9471 (Cambridge, Mass.: National Bureau of Economic Research, 26 November 2002). There is some evidence that locally controlled nonprofit hospitals raise prices to a lesser extent than nonprofit hospitals that are affiliated with larger hospital systems.
11. See G.J. Young, K.R. Desai, and F.J. Hellinger, "Community Control and Pricing Patterns of Nonprofit Hospitals: An Antitrust Analysis," Journal of Health Politics, Policy and Law 25, no. 6 (2000): 1051-1081.
12. United States v. Rockford Memorial (1990).
13. B. Furrow et al., Health Law, 2d ed. (St. Paul, Minn.: West Publishing Company, 2000), sec. 14-49.
14. United States v. Mercy Health Services, 902 F. Supp. 968, 972 (N.D. Iowa 1995), vacated, 107 F.2d 632 (8th Cir. 1997).
15. United States v. Carilion Health Systems, 707 F. Supp. 840 (W.D. Va. 1989), affirmed, 892 F.2d 1042 (4th Cir.).
16. Gaynor and Vogt, "Competition among Hospitals";
17. and M.W. Sohn, "A Relational Approach to Measuring Competition among Hospitals," Health Services Research 37, no. 2 (2002): 457-482.
18. W.M. Sage, "Judge Posner's RFP: Antitrust Law and Managed Care," Health Affairs (Nov/Dec 1997): 44-61.
19. Hospital mergers in 1994-1998 were frantic, with more than 1,000 deals involving nearly 3,500 facilities. M.E. Guerin-Calvert et al., "Economic Analysis of Healthcare Cost Studies Commissioned by Blue Cross Blue Shield Association," 25 February 2003, www.hospitalconnect.com/aha/press_room- info/content/ EconomistReport030225.pdf (11 August 2003) (data derived from the AHA Annual Survey and Modern Healthcare). Merger activity has declined markedly. Compared to a high of 235 deals in 1996, only 60 deals were reported in 2002.
20. In 2001 Medicare and Medicaid paid $212.4 billion for hospital services; private insurers paid $152.1 billion. K. Levit et al., "Trends in U.S. Health Care Spending, 2001," Health Affairs (Jan/Feb 2003): 154-164.
21. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984). Even in situations where the unity of interest between the medical staff and the hospital administration was questionable, antitrust courts in the 1980s were quick to invoke Copperweld as a convenient means of dismissing staff-privileges cases. Medical markets have changed sufficiently that today most hospitals would comfortably fall within the Copperweld requirements without stretching the truth.
22. Jung v. Association of American Medical Colleges (D. D.C.) (1:02CV00873) (7 May 2002).
23. F.H. Miller and T.L. Greaney, "The National Resident Matching Program and Antitrust Law," Journal of the American Medical Association 289, no. 7 (2003): 913-918.
24. Chicago Board of Trade v. United States, 246 U.S. 231 (1918).
25. Medicare Payment Advisory Commission, Report to the Congress: Rethinking Medicare's Payment Policies for Graduate Medical Education and Teaching Hospitals (Washington: MedPAC, August 1999);
26. and J.P. Newhouse and G.R. Wilensky, "Paying for Graduate Medical Education: The Debate Goes On," Health Affairs (Mar/Apr 2001): 136-147.
27. K.J. Devers, L.R. Brewster, and P.B. Ginsburg, "Specialty Hospitals: Focused Factories or Cream Skimmers?" Issue Brief no. 62 (Washington: Center for Studying Health System Change, April 2003).
28. Hammer and Sage, "Antitrust, Health Care Quality, and the Courts."
29. P.J. Hammer, "How Doctors Became Distributors: A Fabled Story of Vertical Relations," Loyola Consumer Law Reporter 14, no. 4 (2002): 411-438.
30. P. Starr, The Social Transformation of American Medicine (New York: Basic Books, 1982);
31. and R. Stevens, In Sickness and in Wealth: American Hospitals in the Twentieth Century (New York: Basic Books, 1989).
32. Hammer and Sage, "Antitrust, Health Care Quality, and the Courts."
33. 42 U.S.C., secs. 11,101-11,152 (2003).
34. Sage and Hammer, "A Copernican View of Health Care Antitrust";
35. and W.M. Sage, D.A. Hyman, and W. Greenberg, "Why Competition Law Matters to Health Care Quality," Health Affairs (Mar/Apr 2003): 31-44.
36. The Emergency Medical Treatment and Active Labor Act (EMTALA, 42 U.S.C.A., sec. 1395dd) requires all hospitals participating in Medicare that have emergency rooms to provide screening exams and to stabilize the emergency conditions of any patient coming to their emergency room.
37. A variant of the argument succeeded in United States v. Brown University, 5 F.3d 658 (3d Cir. 1993), a case that eventually settled but remains the closest analogy to the NRMP challenge. In Brown University, a group of prominent colleges claimed that avoiding bidding wars for individual applicants by setting financial aid packages collectively allowed them to offer financial aid to a greater number of incoming students.
38. R.L. Nagele, "Hospital Privileges as Kickbacks? The Economic Credentialing Debate Commands Renewed Attention," in 2003 Health Law Handbook ed. A.G. Gosfield (St. Paul, Minn.: West Group, 2003), 315-381.
39. 42 U.S.C., sec. 1395nn(d)(3).
40. "Redefining Hospital Capacity," AHA Trend Watch (September 2000): 1-8.
41. B.C. Strunk, P.B. Ginsburg, and J.R. Gabel, "Tracking Health Care Costs," 26 September 2001, www.healthaffairs.org/WebExclusives/ Strunk_Web_Excl_092601.htm (11 August 2003).
42. B.C. Strunk, P.B. Ginsburg, and J.R. Gabel, "Tracking Health Care Costs," 2001 Ibid.
43. In 542 judicial opinions published between 1985 and 1999, monopsony power was addressed on only two occasions. Hammer and Sage, "Antitrust, Health Care Quality, and the Courts."
44. Ball Memorial Hosp., Inc. v. Mutual Hosp., Inc., 784 F.2d 1325 (7th Cir. 1986).
45. F.J. Hellinger, "An Analysis of Physician Antitrust Exemption Legislation," Journal of the American Medical Association 286, no. 1 (2001): 83-88.
46. C.S. Capps et al., "The Silent Majority Fallacy of the Elzinga-Hogarty Criteria: A Critique and New Approach to Analyzing Hospital Mergers," NBER Working Paper no. 8216 (Cambridge, Mass.: NBER, April 2001).
47. United States v. Long Island Jewish Medical Center, 983 F. Supp. 121 (E.D. N.Y. 1997).
48. "Managed Care Crunch," Boston Globe, 25 October 2000.
49. J. Blumstein, "Framing Presentation" (DOJ/FTC Hearings on Health Care Competition Law and Policy, 27 February 2003), www.ftc.gov/ogc/ healthcarehearings/030327trans.pdf, 17-40 (11 August 2003).
50. R.H. Bork, The Antitrust Paradox (New York: Free Press, 1978).
51. L. Casalino, "Managing Uncertainty: Intermediate Organizations as Triple Agents," Journal of Health Politics, Policy and Law 26, no. 5 (2001): 1055-1068.
52. Kartell v. Blue Shield, 749 F.2d 922 (1st Cir. 1984).
53. F.T.C. v. Butterworth Health Corp., 946 F. Supp. 1285 (W.D. Mich. 1996).
54. B.C. Vladeck, "The Political Economy of Medicare," Health Affairs (Jan/Feb 1999): 22-36.
55. L.M. Nichols and R.D. Reischauer, "Who Really Wants Price Competition in Medicare Managed Care?" Health Affairs (Sep/Oct 2000): 30-43.