Oakland Physician Network

Oakland Physician Network, L.L.C.'s plan to operate a physician network joint venture to market primary and specialty services to health benefit plans in the Detroit metropolitan area appears not to violate federal antitrust laws, staff of the Federal Trade Commission has advised the network. The network could, in fact, "have significant procompetitive potential," according to a letter from Mark J. Horoschak, Assistant Director for Health Care in the FTC's Bureau of Competition.

Attorneys for the network had requested the FTC staff advisory opinion. Under the plan, Oakland Physician Network will negotiate and enter into contracts with health plans, under which physician members of the network will provide health care ser- vices to the plans' beneficiaries. The network currently has about 280 physician members, most of whom practice in Pontiac, Michigan, although the network plans to solicit contracts from health plans in the Tri-County area. Physicians also could participate in other networks, under the plan.

The network plans to provide physicians' services under two models. Under the first model, Oakland will negotiate contracts under which its members will provide services to health plans on a capitated basis. Under the second model, Oakland will use a "messenger" to solicit business for its individual physician members from managed care entities, and each physician member will individually contract with the entities through the mes- senger.

Although the first model involves agreements on prices among otherwise competing physicians, the agreements are ancillary to a significant economic integration among the physicians, the FTC staff said. The non-exclusive joint venture also comprises less than 30 percent of the physicians with active hospital staff privileges in the area, he said, so it falls in a "safety zone" of conduct not likely to be challenged under the antitrust laws,

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Oakland--04/03/95)

according to the letter. The safety zone is contained in the joint FTC/Department of Justice Health Care Policy Statements. The second model does not appear to involve any prohibited price agreements, the staff said.

NOTE: This letter sets out the views of the staff of the FTC's Bureau of Competition, as authorized by the Commission's Rules of Practice. It has not been reviewed or approved by the Commis- sion. As the Commission's rules explain, the staff's advice is rendered "without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding." Staff advice concerning issues covered by the FTC/DOJ Health Care Policy Statements will be given within 90 or 120 days (depending on the topic) after all necessary information is provided.

Copies of the letter are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.