FTC Will Not Challenge Proposed Clinically Integrated Health Network

The Federal Trade Commission (FTC) said February 13 that it will not take any enforcement action against Norman Physician Hospital Organization (Norman PHO) in relation to its proposed formation or operation of a clinically integrated healthcare network.

FTC said in a staff opinion letter that the network’s proposed activities “appear unlikely to unreasonably restrain trade.” Instead, the letter concluded the “proposed clinical integration program offers the potential to create a high degree of interdependence and cooperation among its participating physicians and to generate significant efficiencies in the provision of physician services.” 

Norman’s network includes approximately 280 participating physicians and hospitals but the proposal contemplates horizontal combinations or pricing agreements only in the provision of physician services.

Norman represented that the network’s “operations will not involve horizontal agreements among competing providers of inpatient hospital services, or outpatient hospital and ambulatory care services, because Norman Regional Health System is the only provider of such services that will participate in the network.”

Because FTC concluded the proposed joint contracting “appears to be subordinate” to the network’s effort to improve efficiency and quality through the clinical integration of its participating physicians, the agency analyzed the proposal using a rule-of-reason analysis, rather than subjecting it to a per se bar under the antitrust laws.

The letter noted concerns about market power are mitigated by Norman PHO’s representations that it will not attempt to force payors to contract with it, and payors who do not want to contract with the network for any reason may bypass the network and contract individually with the participating providers, either directly or through other networks, and without interference from Norman PHO.


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