Advisory Opinion to Dunn (09-28-95)

September 28, 1995

John D. Dunn, M.D.
Recording Secretary
Central Texas Medical Group
309 North Fisk
Brownwood, TX 76801

Dear Dr. Dunn:

This is in response to your letter requesting an advisory opinion from the Federal Trade Commission staff on the legality under federal antitrust laws of a proposed method of operation to be undertaken by the Central Texas Medical Group ("CTMG"). According to the information contained in your letter, the CTMG is an independent practitioners' association ("IPA") in Brownwood, Texas. According to your letter, the primary purposes of CTMG are to distribute information and to educate its physician members on managed care and community issues. In particular, the objectives of the IPA include educating the physician community on various managed care entities which might desire to conduct business in the region; providing a forum for discussion of issues related to managed care development in the region; providing analysis and a systematic approach to the analysis of managed care contracts proposed to individual practitioners; and developing cooperative efforts with the community and with the hospital on providing high-quality, lowest possible cost health care. CTMG will not, however, engage in any discussion of fees to be charged by any physicians in the community. Furthermore, CTMG will not serve as a contracting agent with managed care entities on behalf of a group of physicians, nor will it offer recommendations to its physician members for or against any particular managed care proposal offered to physicians in the area. Finally, we understand that CTMG physicians will not be restricted from entering into any contracts with any managed care entities or restricted from participating in any other insurance arrangements he or she chooses.

Based on our understanding of the facts as summarized above, it appears that the proposed method of operation of CTMG is unlikely to violate the federal antitrust laws. The antitrust laws prohibit, among other things, agreements among competitors that unreasonably restrain competition among them. Providing information does not, of itself, restrain competition among the recipients of the information; the restraint, if any, arises only if the recipients agree among themselves to act in a common way based on the information received.(1) As your letter acknowledges, an agreement among competing doctors to negotiate collectively with managed care organizations would raise serious antitrust issues. On the other hand, CTMG's providing information to its physician members, without more, is not likely to raise antitrust concerns.(2) Indeed, cooperative efforts to obtain and disseminate information about managed care organizations can be procompetitive and efficiency-enhancing. In general, markets function better when participants have more complete information about market conditions, and it is efficient for doctors in an area to share the cost of obtaining that information. In sum, the proposed activities of CTMG, subject to the limitations set out in your letter, appear to be consistent with the antitrust laws.(3)

This letter sets out the views of the staff of the Bureau of Competition, as authorized by the Commission's Rules of Practice. Under Commission Rule § 1.3(c), 16 C.F.R. § 1.3(c) (1994), the Commission is not bound by this staff opinion and reserves the right to rescind it at a later time. In addition, this office retains the right to reconsider the questions involved and, with notice to the requesting party, to rescind or revoke the opinion if implementation of the proposed program results in substantial anticompetitive effect, if the program is used for improper purposes, or if it would be in the public interest to do so.

Sincerely yours,

Mark J. Horoschak
Assistant Director

(1) Of course, for the purposes of determining whether or not there has been an antitrust violation, an agreement to restrain competition need not be explicit. The existence of the agreement may be inferred from the surrounding circumstances.

(2) Under Statement 4 of the Statements of Antitrust Enforcement Policy in the Health Care Area jointly issued by the Commission and the Department of Justice, the federal antitrust enforcement agencies will not challenge, absent extraordinary circumstances, "[p]roviders' collective provision of underlying medical data that may improve purchasers' resolution of issues relating to the mode, quality, or efficiency of treatment," or "providers' development of suggested practice parameters . . . that also may provide useful information to patients, providers, and purchasers." United States Department of Justice and Federal Trade Commission, Statements of Antitrust Enforcement Policy in the Health Care Area at 45 (September 27, 1994). The Enforcement Policy Statement notes that such activities pose little risk of anticompetitive effects and may be procompetitive. The Statement does not specifically discuss the exchange of non-fee related information among competing providers.

(3) Your letter does not provide sufficient information for us to comment on CTMG's plans to "develop cooperative efforts" with hospitals and the community. The Enforcement Policy Statements address the antitrust implications of a number of types of cooperative activities among health care providers.