Agenda for Joint FTC/DOJ Hearings
on Health Care and Competition Law and Policy
April, 2003
Wednesday
April 9, 2003 2:00 p.m. 5:00 p.m.
Title: Hospitals
- Horizontal Networks and Vertical Arrangements
Hospitals are increasingly affiliating
into horizontal networks and entering into vertical
arrangements with other health care providers (e.g.,
physicians, nursing homes, home health agencies,
and other entities). These arrangements, which occur
against the backdrop of other laws and regulatory
constraints, have paralleled several transformations
in the nature of hospitals, from doctors' workshops,
to the center of integrated delivery networks, to
complicated networked affiliates and contractual
partners with other entities. Ronald Coase's theory
of the firm suggests that transactions can either
be organized inter-firm (i.e., through the market)
or intra-firm. The development of these arrangements
is one example of the reconceptualization of the
boundaries of a Coasean firm. What horizontal and
vertical arrangements have emerged in the health
care marketplace? What are the key drivers for this
behavior, and do the type of arrangements that prevail
vary across geographic markets? Do consumers prefer
these arrangements? Do employers and insurance companies
prefer these arrangements?
How do these arrangements change
the competitive dynamics, including the relative
bargaining power of hospitals and insurers? How
do these arrangements affect the definition of the
relevant product and geographic markets? How do
these arrangements affect cost and quality? Are
certain types of consumers particularly adversely
affected? What are the pro-competitive and anti-competitive
consequences of these arrangements? Are there efficiencies
associated with particular arrangements? How should
competition law and policy address such arrangements
when networks seek to merge? Should the analysis
be different when there are other hospitals in the
area or there is no geographic overlap among the
hospitals? What does economic theory have to say
about the circumstances under which these arrangements
emerge? Does traditional antitrust analysis, including
but not limited to tying doctrine, adequately address
the forms of anti-competitive conduct likely to
emerge?
Thursday
April 10, 2003, Morning Session 9:15 a.m.
12:30 p.m.
Title: Hospitals
- Non-profit Status
Nonprofit hospitals comprise approximately
60% of community hospitals in the United States.
Nonprofit insurers comprise/administer a substantial
proportion of total premium dollars spent on health
care in the United States. Conversely, physicians,
nursing homes, and many other health care providers
are organized as for-profit operations. How does
entity status affect performance? Are there systematic
differences between the performance of nonprofit
and for-profit entities? How do consumers perceive
the performance of nonprofit and for-profit entities,
with regard to cost, quality, and access? Do consumers
know when they are receiving care from a nonprofit
entity? How should competition law and policy address
nonprofit status?
Thursday
April 10, 2003, Afternoon Session 2:00 p.m.
5:00 p.m.
Title: Hospital
Joint Ventures and Joint Operating Agreements
Hospital joint ventures and joint
operating agreements ("JOAs") raise a
number of distinct issues for competition law and
policy. Because these arrangements fall short of
full merger, such collaborations may, even when
entered into between rivals, present fewer competitive
concerns than a merger would. On the other hand,
lack of complete integration may limit the prospect
for substantial, pro-competitive efficiencies to
be realized. Joint ventures are discussed in the
1996 Statements of Antitrust Enforcement Policy
in Health Care jointly issued by the Federal Trade
Commission and the Department of Justice ("Statements"),
but JOAs are not. What are the advantages and disadvantages
of joint ventures and JOAs? Under what circumstances
are joint ventures, JOAs, and other forms of cooperation
likely to be pro-competitive and under what circumstances
are they likely to be anti-competitive? Can some
types of joint ventures help limit costly "medical
arms races?" If so, would the reduction in
this form of rivalry represent merely a savings
to the parties, or would it constitute a net benefit
to consumers? What other types of efficiencies may
result from joint ventures, and what does the available
historical evidence indicate about these claims?
Do administrative efficiencies, in the absence of
clinical integration or efficiencies, constitute
a "unity of interest" so as to merit single
entity treatment under Copperweld Corp. v. Independence
Tube Corp., 467 U.S. 762 (1984)?
- Jeff Miles, Ober Kaler,
Grimes & Shriver
- Robert Taylor, Robert Taylor
Associates
- Margaret
Guerin-Calvert, Competition Policy
- William G. Kopit, Epstein,
Becker & Green
- Robert L. Hubbard, New York
Attorney General Office
- David
Eisenstadt, Microeconomic Consulting and
Research Associates, Inc.
- Robert
Moses, Oxford Health Plan
Friday April
11, 2003, Morning Session 9:15 am 12:15 pm
A Tale of Two
Cities: Little Rock
In many geographic markets in
the United States there has been a significant amount
of market turbulence and varying degrees of consolidation
among health care providers and insurers. Boston
and Little Rock provide two points on the spectrum
of market consolidation. To provide a frame of reference
for the balance of the hearings, a day will be spent
painting a comprehensive picture of current market
conditions in Boston and Little Rock. The full range
of competitive issues will be addressed, including
the cost and quality of the care rendered, the degree
of market concentration among providers and insurers,
and the impact of market consolidation on the performance
of the payor and provider markets. (The session
on Little Rock was postponed until this date due
to inclement weather.)
- Kevin
W. Ryan, Arkansas Center for Health Improvement
- Joseph
M. Meyer, [Document
2], ALLTEL, CorporationInc.
- Jonathan
R. Bates, M.D., Arkansas Childrens
Hospital
- Russell
D. Harrington, Jr., Baptist Health
- James
J. Kane, Jr., M.D., [Document
2 ( Addendum to Testimony)] Little Rock
Cardiology Clinic, P.A. Arkansas Heart Hospital
- Robert
L. Shoptaw, Arkansas Blue Cross and Blue
Shield
- John Wilson, M.D., Arkansas
Medical Society
Friday April
11, 2003, Afternoon Session 1:30 p.m. 5:00
p.m.
Title: Hospitals
- Post-Merger Conduct
Before a hospital merger is consummated,
the parties routinely make representations about
the pro-competitive benefits of the transaction.
After a hospital merger, do the merged entities
achieve the efficiencies they claim? Are the merged
entities able to exert market power and raise prices?
To what extent have hospitals actually combined
administrative and/or clinical operations? Does
patient flow data or "critical loss" computations
accurately predict the post-merger behavior of hospitals
in both the short and long-run? Do critical loss
computations cast any light on the relative magnitude
of post-merger price-increases, if any? How effective
are payors at steering patients to alternative hospitals
in response to post-merger price increases? What
other strategies do payors have to resist demands
for higher prices? How do state "sufficiency"
requirements influence the bargaining power of hospital
and insurers? What roles do patients, employers,
insurance product design, and non-hospital facilities
play? What is the significance of any excess capacity
in the hands of rivals? How effective are "non-traditional
remedies" (e.g., price freezes, indexed prices,
community commitments, and the like) in addressing
the market power that a merger may confer?
- Lawrence
Wu, National Economic Research Associates,
Inc.
- David Balto, White &
Case
- Jacgueline
D. Scott, Partner, Riddering, Schmidt &
Howlett, LLP
- William G. Kopit, Epstein
Becker & Green
- James
Langenfeld, LECG, L.C.C.
- David
A. Argue, Economists Incorporated
- Seth
Sacher, Charles River Associates
- Robert Taylor, Robert Taylor
Associates
- Kirby
O. Smith, Susquehanna Health System
- Jamie E. Hopping, Ardent
Health Services
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