FTC Staff Issues Advisory Opinion that a Planned Survey of Hospital Prices in the Waco, Texas Area, Appears to Meet Guidelines Outlined in the Joint FTC/Department of Justice Statements of Antitrust Enforcement Policy in Health Care, Issued in August,

Staff of the Federal Trade Commission have advised Business Health Companies, Inc. (“BHC”) that a planned survey of hospital prices in the Waco, Texas area, appears to fall within the safety zone for exchanges of price and cost information outlined in the Joint FTC/Department of Justice Statements of Antitrust Enforcement Policy in Health Care, [HTML, PDF] issued in August, 1996.

BHC has been retained by the Central Texas Healthcare Coalition, a group of Waco employers, to collect and analyze data relating to hospital services in Waco. The project involves analysis and comparison to expected norms of the two major Waco hospitals’ average charges by diagnosis related group and utilization statistics, and an analysis of patient outcomes by type of case. BHC will add to the information gathered from the Waco hospitals similar information from three other Texas hospitals of similar size and patient mix. The information will be blended so that no hospital can identify the data submitted by any other hospital. The analysis will be provided to the hospitals and to the Coalition. In the second phase of the project, the Waco hospitals would be compared on a quality performance basis, using the data obtained from them in comparison to benchmarks developed by HCIA, Inc., a healthcare information company that uses its data bases to compare the performance of particular hospitals with selected comparison facilities. No participating hospital will be given information concerning any other individual hospital’s performance.

In a letter to Ralph T. Smith, of Business Healthcare, Robert F. Leibenluft, Assistant Director for Health Care in the FTC’s Bureau of Competition, said that the survey BHC proposes to undertake "appears to fall within the safety zone." The safety zone applies to provider participation in written surveys for health care services if the following conditions are met:

1. The survey is managed by a third-party (a purchaser, government agency, healthcare consultant, academic institution, or trade association)
2. The information provided by survey participants is based on data more than three months old; and
3. There are at least five providers reporting data upon which each disseminated statistic is based; no individual provider’s data represents more than 25 percent on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that would not allow recipients to identify the prices charged or compensation paid by any particular provider.

"Consequently, the participation of the Waco hospitals in the data collection effort would not appear to raise concerns under the antitrust laws," the letter 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 Commission. 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."

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; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases, advisory opinions, and other materials also are available on the Internet at the FTC’s World Wide Web site at: https://www.ftc.gov