S.C. Advocacy--01/11/93

FOR YOUR INFORMATION...........................JANUARY 11, 1993

   SOME SOUTH CAROLINA RESTRICTIONS ON HEALTH CARE PROFESSIONS
        COULD HINDER COMPETITION, RAISE CONSUMER PRICES,
                        FTC STAFF ADVISES

     Some of South Carolina's laws and regulations restricting
the advertising and other activities of health care professionals
in the state could unduly limit competition, raise prices, and
reduce services for consumers, according to staff members of the
Federal Trade Commission in comments made public today.  The FTC
staff recommended that the South Carolina Legislative Audit
Council repeal such restrictions, or modify them to ban only
behavior that is likely to injure consumers.

     Legislative Audit Council Director George L. Schroeder had
sought the FTC staff comments in the course of reviewing the
activities of certain state agencies charged with enforcing the
restrictions at issue.  The FTC staff letter was signed by
Michael O. Wise, Acting Director of the FTC's Office of Consumer
and Competition Advocacy.

     Various of the troublesome restrictions fall in the areas of
optometry, dentistry, psychology, speech pathology and audiology,
and occupational therapy.  The FTC staff letter suggested the
Legislative Audit Council target laws and regulations such as the
following for repeal or modification:

     -- Prohibitions on advertising claims that a health care
professional is superior or unique in some way, or requirements
that certain professionals' advertisements be in keeping with
"the esteem of the profession" or "the highest standards of the
community."  According to the FTC staff letter, such vague
standards may chill truthful, nondeceptive ads containing
information that is useful to consumers.

                            - more -
S.C. Advocacy--01/11/93)

     -- Bans on referral fees.  While prohibitions on kickbacks
can prevent deception or abuse of the provider-patient relation-
ship, the FTC staff suggested narrowing such regulations so that
they do not interfere with procompetitive practices -- for ins-
tance, integrated health care delivery systems, such as health
maintenance organizations or preferred provider organizations,
and legitimate referral services.

     -- Restrictions on discounts or premiums, and against pac-
kaging products and services together.  "Banning premiums and
bonuses can deprive consumers of an important form of price
competition, one that can be conveyed readily through non-
deceptive advertising," the FTC staff said, noting that general
prohibitions against untruthful or deceptive claims should be
sufficient to deal with deception.  Similarly, the staff said,
regulations requiring separate pricing of goods and services may
discourage package discounts.

     -- Location restrictions.  South Carolina regulations pro-
hibiting optometric offices from being located in retail outlet
settings -- such as in department stores -- may deprive consumers
of convenience, as well as cost savings from higher volumes of
sales that might be passed on to them in the form of lower
prices, the FTC staff said.  By the same token, a state Board of
Dentistry regulation requiring that dental hygienists practice
only under the "direct supervision" of a dentist who is on the
premises may raise costs and preclude hygienists from practicing
in less traditional settings, such as nursing homes and schools. 
This provision could be modified to require only the "general
supervision" of a dentist, the staff suggested.

     -- Bans on the offering of guarantees by speech pathologists
and audiologists.  Noting that this could prohibit "satisfaction"
guarantees -- that is, refunds to consumers who are dissatisfied
with services -- the FTC staff suggested that this restriction is
broader than necessary to prevent deception.

     -- Price advertising disclosure requirements for optome-
trists and opticians.  Current South Carolina regulations require
that ads stating "sale" prices include reference prices and their
sources, and specify several other pieces of additional infor-
mation that must be included.  These requirements may reduce
price advertising by increasing its cost, the staff said, and
recommended that disclosures be mandated only where necessary to
prevent deception.

     -- Finally, the staff said it could see no consumer benefit
from a state Optometry Board rule prohibiting optometrists from
displaying eyeglass signs, lenses or frames, or their licenses or
diplomas, in their offices.
(S.C. Advocacy--01/11/93)

     The comments represent the views of FTC staff, and are not
necessarily the views of the Commission or any individual
Commissioner.

     Copies of the comments 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 1-866-653-4261.

                              # # #

MEDIA CONTACT:      Bonnie Jansen, Office of Public Affairs
                    202-326-2161

STAFF CONTACT:      Michael O. Wise, Office of Consumer and
                    Competition Advocacy, 202-326-3344

(FTC Matter No. V920023)
(SCLAC)