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- One Year Out—What Do Anesthesiologists Need to Know About ICD-10-CM Conversion?
- One Year Out—What Do Anesthesiologists Need to Know About ICD-10-CM Conversion?
- Anesthesia Practices Prepare for the Health Insurance Exchanges
- Will the Medicare Physician Value-Based Payment Modifier Affect Your Anesthesia Group?
- Before the Shoe Drops: Anesthesiologists Can Help Hospitals Prevent Certain Hospital-Acquired Infections
- What Anesthesiologists Should Know About Third Party Payer Performance
- CERT Errors of Interest to Anesthesiologists and Pain Medicine Providers: Will the New A/B Contractor CERT Task Force Make a Difference?
- Will Medicare Publish Information on Payments to Anesthesiologists and Other Physicians?
- Legislative Replacement for SGR is on the Horizon for Anesthesiologists and other Physicians
- Drug Manufacturers' Payments to Anesthesiologists are Now Reportable Under the Sunshine Act
- Revisiting Readmissions as a Quality Metric for Hospitals and Anesthesiologists
- Will the Health Insurance Exchanges Mean More Patients for Anesthesiologists?
- New PQRS Reporting Requirements in the Proposed 2014 Medicare Fee Schedule Rule—Limited Impact on Anesthesia
- Looking at Bundled Payments from an Anesthesiology Perspective
- Preventable Hospital Readmissions—Opportunities for Anesthesiologists
- Do the Payers Understand Nerve Blocks for Post-Anesthesia Pain?
- Lessons from Bundled Payment Initiatives for Anesthesiologists
- Anesthesia Group Communications and the Attorney-Client Privilege
- Update on the SGR for Anesthesiologists and Pain Physicians
- Is Your Hospital Ripe for a Merger or Acquisition? What Anesthesiologists Need to Know Now
- When is an Anesthesiologist “Immediately Available?”
- Anesthesiologist Compensation
- Insights for Anesthesiologists: Participating in Hospitals’ New Strategies
- Anesthesiologists and Pain Physicians: Make Sure You are Enrolled in PECOS Now
- Hospitals May Pay for Anesthesia and Pain Medicine EHRs without Violating the Self-Referral or Anti-Kickback Laws
- Proposed “Medical Necessity” Restrictions on Post-Anesthesia Pain Blocks
- PQRS, the Value-Based Payment Modifier and Large Anesthesia Groups
- PQRS Refresher for Anesthesiologists, CRNAs and Pain Physicians
- ACOs, Antitrust and Anesthesiologists
- New Ways for Anesthesiologists to Add Value to the Management of their O.R.s
- Do ACOs Matter to Anesthesiologists and Pain Physicians Yet?
- How Safe Are Anesthesia Practices From a RAC Attack?
- The Sun Shines on Payments from Drug Companies to Anesthesiologists and other Physicians
- What Anesthesiologists and Pain Physicians Should Know about Health Insurance Exchanges
- The Company Model Presents Risks for Anesthesiologists and for ASCs
- Update Your Anesthesia Compliance Program: The Final HIPAA Privacy, Security and Breach Notification Rules Are Here
- Medicare Locality Conversion Factors for Anesthesia Services Through 2013
- 2013 CPT Coding Changes Pain Management and Anesthesia
- What Anesthesiologists Should Know About Health Insurance Exchanges
- Rental Networks, Claims Repricers and Anesthesia Practices
- Anesthesia Managed Care Contract Rates
- Giving Thanks for Anesthesiologists
- The Fiscal Cliff and What it Means to Anesthesiologists
- Final Fee Schedule Rule for 2013 Cuts Conversion Factors, Allows Payment to Nurse Anesthetists for Chronic Pain Services
- Anesthesiologists and Payment for Acute Pain Services
- Sedation by Non-Anesthesia Providers
- The SGR and Anesthesiology — It’s That Time of Year Again
- Anesthesia Business Consultants to Aid Anesthesiologists in Securing the Benefits of Meaningful Use through Complete EHR with F1RSTUse
- Compensating Anesthesiologists for Attending Group Meetings
- The OIG Targets “Personally Performed” Anesthesiologist Services
- A Warning for Anesthesiologists and Pain Physicians about Increased Billings through Better Technology
- Value-Based Purchasing for Hospitals Starts Now—and for Anesthesiologists, in 2015
- Anesthesiologists’ Role in Helping Surgery Centers Meet Their Quality Reporting Requirements
- Protect the Privacy and Security of Your Anesthesia Patients’ Electronic HIPAA Information
- New Hardship Exception for Anesthesiologists to Avoid the EHR Penalty
- Effective Hospital-Anesthesia Group Contracting: Understanding the Relationships Between Finance, Operations and Compliance
- When Negotiations with Carriers Force Anesthesiologists to Go Out of Network
- Anesthesiologists’ Investments in ASCs
- Proposed Changes for Anesthesiologists and Pain Physicians Who Report Measures to the PQRS
- Payment and Quality Changes Affecting Anesthesiologists in the 2013 Proposed Fee Schedule Rule
- What Anesthesia Practices Should Do With Unclaimed Funds Belonging to Patients
- After the Supreme Court Decision: Anesthesiologists Must Proceed With a Perioperative Care Model
- What Does Medicare’s 3-Day Payment Rule Mean for Anesthesia and Pain Practices?
- Tips for Anesthesia Practices to Get the Surgeons to the OR on Time
- OIG to Anesthesia Practices: Think Again Before You Pay Your ASC for the “Franchise”
- Latest Government Fraud Reports and How They Affect Anesthesiologists and Pain Physicians
- As an Anesthesiologist, What Should I Do About Meaningful Use if I am a Medicaid Provider?
- Collecting Payments from Anesthesia and Pain Medicine Patients
- Anesthesiology Plays a Role in Coordinating Management of Knee Replacement Patients, Contributing to Better Outcomes
- What the Proposed 60-Day Overpayment Refund Rule Means for Anesthesia Practices
- A New Quality Tool for Anesthesia Departments
- Managing Compensation for Anesthesiologists, CRNAs and AAs
- Medicare ACOs Are Blooming (With or Without Anesthesiologists)
- The Affordable Care Act, the Supreme Court and Anesthesiologists – Just the Facts, Please
- ICD-10 Delay Will Benefit Anesthesia and Pain Medicine Practices
- Medicare Updates of Interest to Anesthesiologists and Pain Physicians
- Practice Management Companies’ Acquisitions of Anesthesia Practices
- What Anesthesiologists Should Know about Medicare Prepayment Reviews
- Performance Based Compensation: Benchmarking, Monitoring and Improving Quality
- Performance-Based Compensation in Contracts between Hospitals and Anesthesia Groups: Measures
- Demystifying “Meaningful Use” for Anesthesiologists
- The Anesthesia Conversion Factor and the Medicare Fee Schedule, 20 Years Later
- Postoperative Pain Management Procedures Can Still Be Reported Separately from the Anesthesia Service
- Hospital Value-Based Purchasing Program: An Introduction for Anesthesiologists
- 2011 Medicare Rates for Anesthesia and Other Services Extended Through February
- Texas Statute Requires Anesthesia Informed Consent
- Results of Survey Regarding a Network of Anesthesia Practices
- PQRS 2012 for Anesthesiologists and Pain Specialists
- Anesthesia and the Version 5010 Standard
- How Will the Affordable Care Act Affect Anesthesiologists After the Supreme Court Rules?
- Information Technology, Patient Safety and Anesthesia Practice
- Be Careful With What You Say About One Another
- Do the Finalized ACO Regulations Help Anesthesiologists?
- A Major Change to the Perioperative/Anesthesia IT Integration Landscape
- 1 Anesthesia Group + 1 Anesthesia Group > 2 Anesthesia Groups
- Federal Budget Proposals and Medicare Payments for Anesthesia Services
- E-Prescribing by Anesthesiologists and Pain Physicians: Web Portal to Request Exemption is Up and Running
- HIPAA Privacy Rule Update for Anesthesiologists
- Electronic Prescribing: Anesthesiologists Will Soon Be Able to Request Their Exemptions
- The Medicare Bundled Payment Iniative and Anesthesia Services
- Anesthesia Providers: Plan to Revalidate Your Medicare Enrollment When Your Carrier Asks
- Medicare’s eRx and EHR Incentive Programs – Clearing Up the Confusion for Anesthesiologists
- Anesthesia and Social Media
- A Manual for all Anesthesiologists
- The IPAB Threat to Anesthesiologists and All Other Physicians
- Anesthesiology and the Proposed Rule for the 2012 Medicare Fee Schedule
- When is an Anesthesiologist's Signature Good Enough for Medicare?
- Health Plans Tighten the Belt – Around Anesthesiologists’ and Others’ Midsections
- Information from ASA on (1) Joint Commission Requirements and (2) Anesthesia Information Management
- Most Anesthesiologists Will Be Exempt from Medicare Electronic Prescribing Penalties ">
- Anesthesiologists' and CRNAs' Error Rates in Reporting PQRS Measures
- More Facet Joint Injection Pain
- Developing Leaders in Anesthesiology
- Anesthesiologists Visit Congress
- Compliance Update for Anesthesiologists
- Anesthesiologist and CRNA Participation Rates in the Physician Quality Reporting Initiative (PQRS), and New Compensation Data
- Preparing Your Anesthesia Practice for the 5010 Eletronic Transactions Standard
- ACO Proposed Rules–Will the Potential Waivers from Medicare Fraud Laws Benefit Anesthesiologists?
- Anesthesia Practice Cost and Revenue Data
- The Future As Seen From the Anesthesia Administration Assembly Conference
- What Should Anesthesiologists Know About the RACs?
A BRAKE ON HOSPITAL MEREGERS—A BREATHER FOR ANESTHESIA GROUPS?
April 9, 2012
Consolidation in the hospital sector has proceeded at a rapid pace in the last few years. Hospitals, like anesthesiologists and other health care professionals and organizations, are seeking the advantages of combined size to secure their future in a marketplace undergoing a revolution with an unknown outcome. Oral argument before the Supreme Court on the constitutionality of the Affordable Care Act, discussed in our Alert of April 2nd, did nothing to mitigate the uncertainty.
The Federal Trade Commission (FTC) scored a significant victory last week when a federal District Court judge in Rockford, Illinois halted the acquisition of Rockford Health System by a competitor, OSF Healthcare System, until the FTC can conclude an administrative review of the deal (including all appeals, which means a delay of at least a year even if the hospitals ultimately prevail).
According to the FTC, the acquisition would violate antitrust law by reducing competition in two distinct “product” markets in the Rockford area: (1) general acute care inpatient services and (2) primary care physician services. The FTC contended that the deal would give the combined entity control over 64% of the local market for general inpatient services and over 37% of the market for primary care services and would leave just one competitor, Swedish American Hospital, in both service lines. Together with Swedish American, the combined entity would control almost 60% of local primary care services.
The FTC also argued that the deal as proposed would increase the incentives and ability for the two hospitals to collude in anticompetitive behavior such as coordinating managed care contracting strategies, sharing confidential information and holding off on competitive initiatives.
Taking opposite views, the FTC contended that non-price competition would be eliminated between the parties to the transaction, reducing the quality, convenience and breadth of services available to Rockford residents, while the hospitals claimed that their consolidation would increase efficiency and improve operational and clinical effectiveness.
The case came before the District Court on the FTC’s motion for a preliminary injunction, which is an order that preserves the status quo pending some event such as the resolution of a related proceeding. In granting a motion for a preliminary injunction, a judge decides only that the requesting party has demonstrated a likelihood of success on the merits and that more harm will come from denying than from granting the injunction. Thus the Rockford court has not decided whether either the FTC or the hospitals have proven their contentions.
The FTC has been increasingly hostile to reductions in competition, which is assumed when there are reductions in the numbers of competitors. Its 2010 Horizontal Merger Guidelines tightened up the applicable definitions and principles.
There is a certain tension between the FTC and the Department of Justice, on the one hand, and the Department of Health and Human Services, on the other: the capital costs of restructuring the delivery of healthcare services, including the installation of more and more health information technology, dictate larger entities, but the antitrust model prefers many small competitors. Another instance of this tension was last year’s antitrust guidance for Accountable Care Organizations.
In March, the Federal Trade Commissioners voted 4-0 to uphold an administrative law judge’s decision ordering ProMedica Health System of Toledo, Ohio, to divest St. Luke’s Hospital in nearby Maumee. ProMedica is a non-profit healthcare system that operates three hospitals (excluding St. Luke’s) in Lucas County, Ohio and also provides healthcare services in other parts of Ohio and in Michigan. St. Luke’s in southwest Toledo is also a non-profit, widely recognized as a high-quality, low-cost hospital. ProMedica, according to the FTC, is equally widely recognized as having the highest rates in the county.
ProMedica acquired control of St. Luke’s in August 2010, under a “hold separate” agreement structured to preserve St. Luke’s as an independent competitor while the FTC investigated the deal. If St. Luke’s were to be integrated into ProMedica, the combined system would have a market share of almost 60% in general acute-care inpatient services, while reducing the number of competitors in Lucas County from four to three. It would have a market share of more than 80% in inpatient obstetrical services.
The FTC ruled the merger between ProMedica and St. Luke's presumptively illegal. It did not accept ProMedica's argument that St. Luke's was a weakened competitor, and it found that “substantial evidence buttresses the presumption that the Joinder will substantially lessen competition, leading to a significant increase in ProMedica's bargaining leverage with insurers and an increase in prices&mdash both at St. Luke's and at ProMedica's legacy hospitals.” It ordered ProMedica to divest St. Luke’s to an approved buyer within 180 days.
ProMedica has 60 days to appeal the FTC decision to the appropriate federal Court of Appeals, which it has stated that it will do.
Finally, also in late March, the FTC filed a petition to have the U.S. Supreme Court review a decision by the 11th U.S. Circuit Court of Appeals in Atlanta to allow the $198 million acquisition of Palmyra Medical Center, an HCA facility in Albany, Georgia by the public hospital authority that owns the other hospital in town, Phoebe Putney Health System. The Court of Appeals had affirmed the decision of the District Court dismissing the FTC’s lawsuit seeking to block the acquisition. The rationale for the two lower courts’ decisions was the “state action doctrine,” which provides an exception to the antitrust laws for anticompetitive conduct if it is an act of government. The combined entity would have a greater than 80% share of the geographic market for general inpatient services – and Phoebe Putney did not contest the fact that the effective merger would tend to create a monopoly, relying solely and successfully on the state action doctrine, The Court of Appeals agreed with the FTC that the joint operation of the two hospitals would substantially lessen competition or create a monopoly and would have ordered the transaction halted if state action were not involved.
The pattern of the FTC seeking to suspend hospital acquisitions and mergers that would result in a combined market share greater than 50%-60% while it performs a full review of the transactions’ implications for competition is clear. In the Rockford case, a federal District Court agreed with the FTC and granted a preliminary injunction that may end up derailing the deal altogether. Several commentators (Robert Pear in the New York Times; healthcare antitrust expert Professor Thomas L. Greavey at St. Louis University; Washington DC healthcare antitrust expert Jeff Miles, Esq.) have noted that ProMedica and Rockford could slow the consolidation of hospitals around the country, since hospitals will be “scrutinized extremely closely if [they] undertake a merger with a close competitor.”
When hospitals merge, frequently one anesthesiology group loses its contract and its employees need to find new positions. A brake on the race between hospitals to acquire their competitors will at a minimum give anesthesiologists more time to secure their own future. One way in which many groups are trying to secure their future, of course, is gaining market share through mergers with other groups. They need to be aware that they may themselves become the focus of FTC interest – and that the quality improvements and efficiencies of greater size may not shield them against injunctions. Anesthesiologists should consider obtaining the advice of experienced antitrust counsel as soon as they identify other groups with whom they might merge if the resulting market share would be significant and the reduction in the number of competing groups would drop by one-third or more.
With best wishes,
President and CEO