FOR YOUR INFORMATION............................AUGUST 19, 1992
FTC STAFF COUNSELS TEXAS AGAINST OVERLY-RESTRICTIVE REGULATIONS
FOR HEALTH-CARE PRACTITIONERS
Some provisions of the Texas laws and regulations governing
health care practitioners may limit consumer choice, hinder
competition and could lead to higher prices for health services,
staff of the Federal Trade Commission advised the Texas Sunset
Advisory Commission in comments made public today.
The Texas state commission is currently reviewing 20 state
health-related licensing agencies to consider whether the
agencies' statutes warrant any changes and to make recommenda-
tions to the Texas legislature. At the request of the Sunset
Advisory Commission, the staff of the FTC's Dallas Regional
Office submitted comments on changes that the Advisory Commission
might consider for each agency.
In a letter signed by Thomas B. Carter, Director of the
FTC's Dallas Regional Office, the staff noted that, "the FTC is
particularly interested in restrictions that may adversely affect
the competitive process and raise prices (or decrease quality) to
consumers." The FTC staff comments address a diverse range of
issues -- including restraints on forms of practice, advertising
regulations and bans on solicitation, referral fees, and
physician-dispensing of drugs -- that are affected by the Texas
health-care review boards. Because of the great volume of
regulatory material administered by the respective boards, FTC
staff focused on those statutory provisions they believe hold the
greatest potential for anticompetitive effect.
For example, the Texas statutes governing the practice of
optometry contain types of restraints on advertising and
"commercial" practice that reduce competition without consumer
benefit, the staff said. Texas law tends to inhibit commercial
practice, according to the staff, restricting business
affiliations between optometrists and non-optometrists, such as
manufacturers, wholesalers, or retailers of ophthalmic goods.
The restrictions include prohibiting optometrists from working
for such firms, as employees or under contract; from allowing
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(Texas Health Care Regs--08/19/92)
such firms to influence their practice in such details as office
hours and whether the optometrist can see patients on a walk-in
basis; and even from sharing staff, services, or office space.
Texas law also prohibits the use of the name of an optometrist,
or practice, in advertisements in conjunction with a commercial
business, such as an optician. FTC staff studies in the 1980s
concluded that restrictions of this type result in injury to
consumers in monetary losses and reduced vision care, by limiting
competition, the letter said.
The same principles that apply to commercial practices in
optometry also would apply to dentistry, which is subject to
similar restrictions under Texas law, the FTC staff said. In
addition some aspects of the regulations for dentist advertising
--such as prohibitions against claims regarding the superiority
of services -- may deprive the consumer of information needed to
make an informed choice among dentists, the FTC staff noted.
Prohibiting only those claims that are false or deceptive should
be sufficient to protect consumers, without limiting competition
among dentists, the letter added. The FTC staff also suggested
that similar prohibitions against physicians' and podiatrists'
claims of superiority in advertisements could have a comparable
effect on consumer access to helpful information.
Other limitations on dentists' advertising, such as the
restrictions on the use of statistical data is not reasonably
verifiable "by the public," may deprive the consumer of useful,
truthful information, as well, according to FTC staff. An
alternative, the staff comments suggest, "would be simply to
require advertisers to have a reasonable basis for claims that
refer to statistical data. This substantiation standard is the
criterion that the FTC applies generally to material claims made
in advertisements."
Permitting dentists to solicit business -- "unprofessional
conduct" under current Texas law -- can allow the direct exchange
of information between dentists and prospective clients, the FTC
staff said. A regulation that is appropriately limited -- to
protect, for example, individuals who could be particularly
vulnerable to undue influence, or persons who have made it clear
that they do not wish to be solicited -- could be beneficial and
make it unnecessary to maintain a blanket ban on solicitation,
the FTC staff recommended.
The Texas Board of Medicine's current prohibition on
physician referral fees (so-called "kickbacks") can benefit
consumers by preventing deception or abuse of the doctor-patient
relationship, the FTC staff noted. They added, however, that
regulations adopted to control referral-fee abuse should not be
(Texas Health Care Regs--08/19/92)
so broad that they inhibit pro-competitive practices, such as
health maintenance organizations and legitimate physician
referral services. A similar ban on referral fees applies to
Texas veterinarians. If this ban is applied too broadly, it
could have adverse effects similar to those of the ban affecting
physicians, the FTC letter said.
With limited exceptions, Texas prohibits physicians from
dispensing drugs. The FTC staff said it recognizes the potential
abuses of physician over-prescribing or inappropriate
prescribing, but noted that physician dispensing could lead to
increased competition, and that can result in lower prices and
better services for consumers. Therefore, the FTC staff
recommended that physicians be allowed to dispense drugs subject
to appropriate regulatory controls to ensure public health and
safety.
In conclusion, the FTC staff said, "We recommend that...
restrictions on forms of practice and on communication of
truthful and non-deceptive information to consumers be
eliminated."
The Commission vote to issue the staff comments was 4 - 0.
Chairman Janet D. Steiger did not participate.
These comments represent the views of staff members of the
Federal Trade Commission, and not necessarily the views of the
Commission itself or any individual Commissioner.
Copies of the staff 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: Don Elder, Office of Public Affairs
202-326-2181
STAFF CONTACT: Michael O. Wise, Office of Consumer and
Competition Advocacy, 202-326-3344
(V920019)
(TEXADVO)