FTC Staff Issues Advisory Opinion Regarding Proposed Formation of Physicians' Healthcare Advocacy Group in Dayton, Ohio

In response to a request by a Dayton, Ohio, physicians' group, the Federal Trade Commission staff today issued an advisory opinion concerning the proposed formation and operation of a "healthcare advocacy group" of practicing physicians in the Dayton area. According to the letter requesting the advisory opinion, physicians practicing in the community intend to establish the group to undertake "a campaign to inform and educate the general public" about a number of issues that the physicians believe relate to the quality and cost of health-care services in Dayton. These issues include the level of payments made by health plans to doctors in Dayton compared to those in other areas of the country, health plan practices relating to authorization of services, and the adequacy of health plans' specialty physician networks. The group plans to provide information on these issues by sponsoring talks in the community, communicating directly to employers, and communicating through the media to the general public.

The staff opinion advised the group that the FTC staff has no present intention of recommending a law enforcement action if the group collects and publicly disseminates information in accordance with its proposal. According to the FTC staff, the collection and public dissemination of accurate information and the expression of opinions on matters of public interest usually do not raise concerns under the antitrust laws, even when physicians or other groups of competitors do so collectively. The FTC staff's letter stated that increasing the amount of accurate and detailed information available to patients, employers, physicians, and other interested parties can improve the functioning of markets and foster, rather than hinder, competition and consumer welfare.

In most instances, therefore, according to the staff's letter, physicians' collection and publication of such information and their advocacy of a point of view on issues affecting the organization, delivery, and financing of health care services, likely would not impair competition or violate the antitrust laws. The FTC staff cautioned, however, that the antitrust laws forbid concerted action among competitors to set prices or determine quality and output levels of the products or services available to consumers.

Among other things, the group plans to publish the fees that specific health plans pay for particular physician services in Dayton. The group also plans to compare those fees to fees the same companies pay in other cities within 200 miles of Dayton and to private health plan payments in other regions of the country. According to its request letter, the group believes that health plans pay Dayton doctors less than they pay doctors in other cities for the same services and that these lower payments to Dayton doctors hamper retention of physicians in Dayton and impede recruitment of new doctors.

The staff's letter noted that while many of the planned activities appear to pose no substantial antitrust risk, one aspect of the proposal - the collection and publication (to physicians as well as to other members of the public) of payments by named health plans to physicians for specific medical services - could, in some instances, raise competitive concerns. Injury to competition and consumers would result, for example, if the proposed exchange of information facilitated an express or tacit agreement among Dayton-area physicians on prices to demand of health plans; if it facilitated an agreement to refuse to deal with health plans except on agreed terms; or if it facilitated coordinated efforts to reduce or eliminate price differences as a way of increasing average price levels.

According to the information supplied by the requesting organization, Dayton's physician services markets are unconcentrated. This market structure, the staff letter noted, reduces the likelihood that the survey actually would foster anticompetitive effects, because such a market usually is not conducive to effective tacit price coordination. In addition, the advocacy group intends to take a number of steps to prevent the organization from being used for an anticompetitive purpose. The organization will not negotiate on behalf of its member physicians or physician groups with health plans, and the group would not publish or share information that would be "conclusory or suggestive as to how an individual physician or physician group should deal with a third party issue or suggest how any physician will deal with any individual issues."

In addition, the organization stated that fee information will be collected by a third party who is not a physician and who does not advise Dayton physicians with respect to pricing or contract negotiations. Individual survey responses will not be made available to physicians in the community, and no information about fees received by individual physicians will be released.

The FTC staff concluded that, to the extent that the venture helps to inform patients, employers, and payers, as well as physicians, better about the operation of the Dayton health-care market - while avoiding anticompetitive conduct by physicians - the group's effect is likely to be procompetitive. If, however, the physicians use the organization or its activities as a vehicle for collective action that unreasonably limits competition among the doctors, the staff letter warned, then the organization and its members may be subject to law enforcement action.

NOTE: The views expressed in the letter are those of the staff of the FTC's Bureau of Competition and do not necessarily represent those of the Commission or any individual Commissioner.

Copies of the letter are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Commission enforces, the FTC has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws."