Current Issues in Health Care Antitrust Enforcement at the Federal Trade Commission

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The American Bar Association, Antitrust & Health Care: New Approaches and Challenges, Omni Royal Orleans

New Orleans, Louisiana

Date:
By: 
William J. Baer, Former Director

I. INTRODUCTION

It is an honor to be here and join such an impressive group of practitioners, government officials, judges, academics and economists to discuss the cutting edge issues confronting health care and antitrust.

The antitrust enforcement agencies have been actively involved in health care markets for quite a number of years now. I think it fair to say that our actions have had a positive impact, and have helped pave the way for an increased reliance on a market-based health care system. It has not been easy for anyone. The peculiar characteristics of health care services and the history of the industry have posed challenges both for those caught up in the dynamics of evolving markets and for the enforcement agencies charged with ensuring the competitiveness of those markets. The continuing rapid evolution of health care markets compounds those challenges.

After briefly reviewing the history of the Commission's health care program, I would like to spend the time today discussing some recent actions by the Commission, and offering a few thoughts about where we are headed in the future.(1)

Our fundamental goals have not changed. Our job is to ensure that markets operate competitively. As in the past, we will bring enforcement actions where necessary to stop activities that harm consumers by unreasonably restricting competition. At the same time, we will continue to view education -- explaining antitrust policy to the industry and the public -- as a key part of our mission. We will keep our guidance up-to-date as markets evolve, and provide additional guidance as new market structures and new forms of competition develop. We see our role as important but limited. Our function is to permit the market to respond to the demands of consumers, not to regulate the market.

A lot has happened during the past few months. The Commission has issued new guidance on health care provider joint ventures and brought another challenge to a hospital merger in federal court. Just yesterday we provisionally accepted a consent order involving a physician association and physician-hospital organization ("PHO"). These recent actions demonstrate how we are trying to meet these goals, and they illustrate just how difficult the task sometimes is.

II. OVERVIEW OF OUR HEALTH CARE PROGRAM

Let me begin by looking back. A key focus of our effort over the past 20 years or more has been to assure that new and potentially more efficient ways of delivering and financing health care services can compete for acceptance by purchasers. The development of these new arrangements depends on vigorous competition among market participants. Our challenges to the creation of artificial barriers to competition among health care providers have been a major factor in assuring the emergence of competition among health plans for the patronage of consumers and employers.

The Commission's efforts to eliminate ethical restrictions on the dissemination of truthful information and restraints on physician participation in HMOs and other types of managed care organizations,(2)

and to stop efforts by some health care providers to block innovation in health care financing and delivery or to stifle cost-containment programs,(3)

are well known. Although health care markets have changed dramatically, the prospect of effective antitrust enforcement remains crucial to the ability of the marketplace to develop better methods of responding to consumers' demand for high-quality and cost-effective health care services. Collective action by health care providers to obstruct cost-conscious purchasing remains a significant threat to consumers. In the past five years, the Commission, the Department of Justice, and state attorneys general have brought numerous enforcement actions challenging price fixing and boycotts by groups of physicians or other providers.(4)

In addition, just this past spring the Commission issued an order prohibiting certain restrictions on the dissemination of truthful information imposed on its members by the California Dental Association.(5)

While many of our cases have focused on efforts to obstruct managed care plans, the Commission, of course, does not favor any particular model for competition or any particular type of competitor. Our goal is to deter private restraints that limit the options available, or raise prices, to consumers. Managed care has been an important vehicle for bringing competition to health care markets, and we have taken action against physicians and others who attempted to thwart this type of innovation. We continue to consider it extremely important to keep this option available for purchasers who prefer it.

At the same time, we will continue to review the activities of other actors in health care markets that may restrict competition. We hear concerns expressed by buyers and consumers in some areas that health care providers may obtain market power that will permit them to raise prices or limit access or choice. We will continue to review mergers among hospitals and other health care providers, despite some setbacks in our cases that I will refer to in a moment. In addition, market developments may pull us into new areas. For example, we are aware of the increasing pace of mergers among HMOs. Where we find evidence of anticompetitive potential in a properly defined market, we will not hesitate to recommend Commission action.

III. HEALTH CARE GUIDANCE

Law enforcement actions are not the only way to get the message out. The Commission and the Department of Justice have increasingly recognized that providing antitrust guidance to the healthcare industry is an integral part of our role as enforcers of the antitrust laws. As you know, in 1993 the agencies issued a set of six policy statements concerning a variety of cooperative activities of concern to healthcare providers.(6)

Within a year, the agencies produced an expanded set of guidelines(7) that addressed several additional areas of concern to the healthcare industry, provided a more comprehensive explanation of how the agencies apply antitrust standards and analyze cooperative arrangements under the law, and provided detailed examples of the application of antitrust laws to various factual situations.

We also have responded to individual requests for guidance in specific situations. When the first policy statements were issued, the agencies promised that they would respond to requests for advice concerning healthcare issues within defined time limits. We have met that commitment. Since the guidelines were issued in 1993, both the Commission staff and the Department of Justice have issued a large number of letters approving various forms of provider collective action.(8)

While the advice formally comes only from one agency, you can take some comfort from the fact that we consult closely with each other before formal written guidance is publicly released.

The FTC and the Department of Justice are committed to updating the policy statements as necessary. True to this promise, this past August we further revised the statements that cover physician networks and other health care multiprovider networks such as physician-hospital organizations (PHOs).(9)

The revised statements emphasize that the same antitrust principles that govern all other industries also apply to health care providers. Likewise, we apply the same basic principles to all types of competitors in the market. What our policy statement does is describe, based on our extensive experience in the area, just how these basic principles are applied to the health care sector.

One important aspect of the revised guidelines is clarification of when agreements among otherwise competing providers on the prices at which they will sell their services through a network will be considered per se illegal price-fixing agreements, and when they will be considered ancillary to a potentially procompetitive joint venture and analyzed under the rule of reason. Like the 1993 and 1994 statements, the revised guidelines treat financial risk-sharing among network participants as an indicator of integration sufficient to bring related price agreements within the rule of reason. But this latest iteration of our guidance goes further. The revised statements provide additional examples of financial risk-sharing, including percentage of premium or revenue arrangements, bonuses based on meeting utilization targets, and some global or all-inclusive case rates, and emphasize that other forms of acceptable risk sharing may exist. The revised statements focus directly on integration among network participants that has the potential for generating efficiencies, and make it clear that integrated provider arrangements that offer the potential for creating significant efficiencies for consumers, regardless of their precise form, will be evaluated under the rule of reason.

The statements discuss one example of such integration: "clinical integration" that involves a network implementing active and ongoing systems to evaluate and modify practice patterns by network participants and that create a high degree of interdependence and cooperation among the providers to control costs and assure quality. Moreover, the statements make it clear that we will evaluate other types of efficiencies as well. For example, networks involving hospitals, non-physician health professionals, or ancillary service providers may use different kinds of mechanisms or strive for different kinds of efficiencies than are likely to be common in many physician networks. We will consider the particular nature of the services provided by the network, and the demands of its potential customers, in assessing its potential to produce efficiencies.

One overriding theme of the revised statements is that in evaluating both potential efficiencies and competitive effects, we will look at the substance of the arrangement, not just its form. Arrangements designed primarily to impede or prevent competitive forces from operating in the market, rather than to achieve efficiencies, will continue to be condemned summarily. But, where the underlying substance of the arrangement has a plausible efficiency rationale, we will still investigate but under the rule of reason.

This theme also underlies the revised discussion of the various forms of the "messenger model" that can be used by unintegrated networks to avoid agreements on price-related terms while reducing the cost of contracting with payers. We have attempted to make clear that the critical question is not the form of the mechanism used, but whether in fact there is a horizontal agreement on price or price-related terms.

In the same spirit, we have attempted to place the safety zones for certain physician networks in the larger context of the principles contained in the statements. We have not changed these provisions or added any additional safety zones. Because the safety zones need to be simple to apply, they are based on very rough approximations of market share and do not entail the detailed analysis of the specific conduct and market characteristics that often is necessary to assess the impact of an arrangement on competition in the market. For these reasons, the safety zones apply in only limited circumstances. Many arrangements that are not within a safety zone will be procompetitive and legal. Our goal is to encourage providers to focus on developing innovative ways to serve consumers better, rather than on the safety zones. This is how we approach merger analysis. The merger guidelines delineate a safety zone for horizontal mergers in unconcentrated markets. But many transactions in the moderately to highly concentrated zone still pass muster. We just need to take a look. The bottom line is that health care providers should not view the safety zones as the limit of what federal enforcement will tolerate. Rather, it is the starting point for a close thoughtful inquiry.

As the guidelines explain, rule of reason analysis likely will apply to many forms of provider collaboration, and each arrangement will need to be evaluated individually to determine its actual effect on competition. As an unavoidable consequence, we will not always be able to provide the clear answers that many providers would like. While simple bright-line rules offer certainty, by their nature they tend to be regulatory and often more restrictive than necessary. Because they often cannot anticipate future market developments, they may discourage innovation. We have taken an alternative approach, and through the use of illustrative examples and an explanation of the underlying antitrust principles, have attempted to provide useful guidance, while at the same time assuring the flexibility that will permit health care providers to respond creatively to market demands. Clearly, issues remain that will need to be fleshed out in the future. Further guidance no doubt will be forthcoming as we respond to advisory opinion requests and bring future enforcement actions.

This effort to provide specific guidance entails a significant expenditure of resources, but we believe it is a central part of our mission and we trust it is of real value to the intended audience. In addition, by increasing the level of antitrust compliance in the industry, it makes our job easier. We recognize too that this is an ongoing process, and our guidance will require refinements and additions as markets evolve and the antitrust issues that are associated with new developments are identified.

IV. ENFORCEMENT ACTION IN NON-MERGER CASES

While we at the Commission are determined to tailor both our enforcement actions and our guidance so that they do not impede the development of new and innovative health care arrangements that can benefit consumers, we are equally determined to continue to take vigorous action to ensure that consumers are protected from anticompetitive activity. In other words, we are not all bark and no bite. This determination is reflected in a consent order that the Commission provisionally accepted this week, settling charges that physicians in Billings, Montana, acting first through Montana Associated Physicians, Inc. (MAPI) and later through a PHO -- Billings Physician Hospital Alliance, Inc. (BPHA), had agreed on prices they would accept from payers and obstructed the entry of managed care into Billings. As this case indicates, we will continue to take enforcement action against health care providers who act together to obstruct competition and cost-containment efforts, thus raising prices and limiting the options available to consumers.

According to the complaint, MAPI includes 115 physicians in about 36 independent practices, who constitute over 80% of independent Billings physicians, that is, physicians who are not part of the large multispecialty clinic in Billings and who are not employed by a hospital. Consequently, payers seeking contracts with a physician panel that can provide a wide range of services must contract either with the clinic or with many MAPI members. The complaint charges that MAPI was formed in substantial part to be a vehicle for its members to deal collectively with managed care plans. Their goal was to obtain greater bargaining power with payers and thereby to resist competitive pressures to discount fees or to accept reimbursement on other than a fee-for-service basis. In furtherance of this purpose, according to the complaint, MAPI negotiated with payers on behalf of its members and orchestrated boycotts and agreements among its physician members in order to fix the prices they would accept from payers. As a result, the entry of managed care and other forms of alternative health care financing was impeded, and fee levels were maintained.

The complaint describes other conduct engaged in by MAPI that was designed to increase physicians' fees. MAPI collected detailed fee information from its members, used this information to determine the maximum reimbursement allowed by Blue Cross/Blue Shield of Montana for many services, and advised some physicians to raise their fees to that level. In another instance, MAPI indicated that its members would contract with a health plan if it paid physicians their usual fees. When the plan tried to collect fee information from MAPI members so that it could present them with a proposed fee schedule, MAPI urged its members to submit prices higher than those they actually charged.

The complaint also alleges that MAPI later carried on its unlawful activities through BPHA, a physician-hospital organization that negotiated on behalf of physicians with payers. BPHA includes one of Billings' two hospitals and 126 members of its medical staff, most of whom are MAPI members. The complaint charges that BPHA's structure and governance gave MAPI substantial control over BPHA's dealing with payers regarding physician contracting, so that MAPI was able to continue to exercise the collective power of it physicians in dealing with payers.

The proposed consent order would prohibit MAPI and BPHA from negotiating or refusing to deal with payers on behalf of physicians; determining the terms on which physicians deal with payers; or fixing the fees charged for physicians' services. In addition, MAPI would be prohibited from advising physicians to raise or adjust their fees, or encouraging adherence to any fee schedule.

There are a number of factors to bear in mind concerning this action. First, the complaint recites that the physicians did not integrate their practices in any economically significant way, and operation of MAPI and BPHA did not produce any efficiencies that would justify the challenged conduct. The proposed order would not prevent MAPI or BPHA from operating or participating in joint ventures that do hold promise of producing significant efficiencies. The parties are permitted to operate ventures that enter into agreements with physicians regarding terms of dealing with payers if the physicians share substantial financial risk and are free to deal individually with payers. MAPI and BPHA also would be permitted to operate or participate in other types of joint ventures involving collective price setting by physicians if they receive prior approval of the Commission. In accordance with the health care guidelines, through this prior approval mechanism the order allows for a variety of types of potentially procompetitive joint ventures (including those that do not involve sharing of substantial financial risk), while not attempting to define in advance all the possibilities that would be permitted. Thus, the remedy is tailored to permit MAPI and BPHA to respond to changes in health care markets in ways that promote competition.

Second, the consent demonstrates that we will look closely at the substance rather than the form of potentially anticompetitive conduct. For example, while MAPI and BPHA did not explicitly prohibit members from dealing with managed care plans individually, in fact most of the physicians dealt with plans principally through those organizations. MAPI, BPHA, and their individual members told payers to deal through the organizations, and few members participated in any managed care plans. As the guidelines indicate, we will consider whether a venture that is non-exclusive on paper is actually exclusive.

Third, a way in which MAPI's conduct differs from some of our earlier cases in that MAPI did not engage in explicit threats of group action. Instead, it purported to negotiate on behalf of its members, and their collective price demands emerged through a course of dealing. MAPI did not categorically state to managed care plans that any contracts would be unacceptable: instead its strategy was to obstruct managed care by engaging in negotiations for an extended period of time without agreeing on terms.

The case also demonstrates how we evaluate the actual impact of that conduct in specific factual contexts. MAPI's members constituted slightly less than half of the physicians in Billings. However, because most of the other physicians were members of an integrated group practice, the impact of the conduct was to create and maintain a noncompetitive duopoly, and to leave payers with no alternatives.

Finally, it should be understood that, although a PHO was involved, this case is about physician resistance to competition and managed care, and has only limited applicability to PHOs in general. The complaint recites that BPHA -- ostensibly a PHO -- operated essentially as a vehicle through which MAPI carried on its illegal activities, and that the organization did not involve any meaningful integration among its members. While this is the first complaint in which the Commission has named a PHO as a respondent, it is important to note that the consent does not indicate how we would analyze PHOs that operate in other contexts.

Likewise, the provisions of the order that permit BPHA to use a messenger model to facilitate contracting between its physician members and payers are remedial, and do not constitute a blueprint for how messenger models must operate in other circumstances. As I mentioned earlier, the health care guidelines discuss the general principles underlying the messenger model, and provide some additional examples of ways that messengers can facilitate contracting without creating a horizontal price agreement.

The MAPI consent demonstrates our continuing resolve to prosecute collective action by providers that harms consumers. We will closely evaluate the potential of competitors' joint action to produce valuable efficiencies, but if that potential is lacking or is outweighed by anticompetitive effects, we will not hesitate to take action to protect consumers.

Looking ahead, I expect that we will see fewer cases that involve the relatively clear price-fixing or boycotts found in some of our past conduct cases. Instead, I anticipate that we will see more instances in which cartels attempt to dress themselves up as procompetitive arrangements. We will look closely at whether there is any substance to such claims. In addition, I expect we will be called upon to make more difficult judgements about ventures that provide some real efficiencies but also have a significant anticompetitive impact, or that impose anticompetitive restraints that go beyond what is necessary to produce those efficiencies.

V. HOSPITAL MERGERS

Much of our enforcement effort in recent years has been directed to hospital mergers. While federal hospital merger enforcement overall has been quite successful, the enforcement agencies, as you are aware, recently have suffered several defeats in the federal district courts in cases challenging such mergers. In two cases, the courts refused to accept the government's asserted geographic markets, finding instead that the merging hospitals faced competition within a broader area that would make anticompetitive effects flowing from the merger unlikely.(10)

One of these cases currently is on appeal.

Our most recent foray into this area involved the merger of Butterworth Health Corporation and Blodgett Memorial Medical Center in Grand Rapids, Michigan. Last month, the district court issued its opinion. It made for interesting reading. The court found that the Commission had established a prima facie case of violation of Section 7. The judge accepted the government's product and geographic markets, agreed with us that entry into these markets was unlikely and found that the merged hospitals would have substantial market power.(11)

Nonetheless, the court refused to enjoin the transaction, finding that the hospitals had successfully rebutted the presumption that anticompetitive effects would result from the merger. In reaching this conclusion, the court relied on research suggesting a connection between nonprofit hospitals with high market shares and lower prices; the fact that the hospitals were governed by community-based boards of directors that were believed to represent the interests of the local community, including large employers who were customers of the hospitals; the hospitals' undertaking commitments to certain provisions relating to their post merger-activities, including limiting some price increases and operating margins; and the potential of the merger to save money through the avoidance of capital expenditures and reduced operating costs. The court also discounted the Commission's evidence relating to the likely impact of the merger on competition for contracts with managed care plans, on the theory that discounts given to such plans were not real cost savings, but only resulted in shifting costs to other consumers, and thus did not benefit consumers in general.

There are a number of troubling aspects to the Grand Rapids opinion, but because it currently is under review at the Commission, I would prefer not to discuss it specifically. Instead, I would like to talk about some of the larger issues that lie behind these recent hospital merger decisions. In particular, I would like to discuss the assertion that mergers among hospitals are properly a local concern, and should be addressed by local actors rather than under the federal antitrust laws. That may well be a not-so-subtle subplot in the three recent cases where the court refused to enjoin a transaction. It is a point of view that merits candid discussion.

It is also is a point of view with which we do not agree. We continue to believe that consumers require the protection of vigorous competition in local hospital and other health services markets, and are entitled to the protections of competition that are afforded by the federal antitrust laws. In health care, as in other industries, competition is a more reliable guarantor of efficient behavior and consumer benefit than is the community spirit of nonprofit hospital boards. In the Blodgett case, for example, there was undisputed real evidence that price competition between these two nonprofit hospitals diminished from the moment their merger plans were announced.

Moreover, while individual health care markets are local, health care spending in aggregate has a tremendous impact on the entire national economy. Hospital costs are a significant part of that spending. Consequently, the economic performance of local hospitals is of more than local significance. In addition, our employer, the federal government, is a very large consumer of health care services, and it has a great stake in local hospital competition. Most hospitals receive a large proportion of their revenues from federal sources, including Medicare and Medicaid. In the past these programs used administratively-determined prices rather than price competition. Increasingly, however, these programs are moving toward managed care and other competitive models, which are directly dependent upon competition among hospitals and other providers.

As an aside, I note that one of the more fascinating efficiencies asserted in a recent hospital merger we reviewed was that the deal would eliminate the only competing hospital in town and thereby would entitle the surviving hospital to increased federal funding as a "sole community hospital" under Medicare regulations. There, one man's efficiency was the federal government's price increase.

The Commission's mandate is to enforce the antitrust laws, and the law is clear that the competitive model, in which the antitrust laws are fully applicable, is to prevail unless government displaces competition through regulation. The requirements for state displacement of competition are well established: the state must clearly articulate its intent to displace competition with regulation, and it must actively supervise private parties in carrying out the state's intentions.(12)

For several reasons, community governance of hospitals is not a substitute for the requirements of competition. The law relies on the forces of the market, not the subjective judgments of the courts or of nonprofit board members, for the protection of consumers. Intense competition provides direct incentives for hospitals to keep prices and costs low and quality standards high. In the absence of effective competition, community governance is not likely to provide consumers with the best combination of price and quality. It is not realistic, in my judgment, to believe that community boards, however well-intentioned, can do a better job of ensuring efficient behavior than can the presence of vigorous competitors in the market. Indeed, studies suggest that state regulation of hospital prices has not effectively reduced hospital costs or promoted efficient behavior,(13) and a number of states that long have regulated hospital prices are moving toward a competitive market.

Even when hospitals enter into commitments concerning limitations on price increases, as occurred in Butterworth and in some state decrees regulating hospital mergers, the interests of consumers may not be adequately protected. Commitments concerning price limitations are likely to be easy to circumvent, for example, by lowering quality. Moreover, it is unlikely that those undertakings will match the prices that would prevail in a competitive market, as buyers continue to press for lower costs.

Of course, we recognize that there is excess capacity in many hospital markets, and that in many cases consolidation is inevitable and efficient. And we routinely take possible efficiencies into account in evaluating when to challenge hospital mergers. But efficiency claims are often made in support of proposed hospital mergers. Those claims, being necessarily prospective, are difficult to assess, not only for the enforcement agencies and for the courts, but for the communities involved as well. Cost savings, moreover, are not the end of the analysis. As was pointed out in the FTC staff report on global competition, it is important to look not only at whether a merger will result in credible efficiencies, but also at how those efficiencies are likely to change the merged firm's abilities and incentives in ways that deter anticompetitive effects or increase competition. Efficiencies are of most direct benefit to consumers when they permit the merging parties to be more effective competitors or otherwise increase competition in the market.(14)

Conveying unregulated market power on private entities in exchange for the possible realization of some efficiencies is not likely to serve consumers well.

We are open, of course, to innovative ways in which hospitals can reduce costs while preserving competition. For example, the healthcare guidelines discuss a number of types of potentially procompetitive hospital joint ventures, including those to obtain or operate expensive equipment and those to provide specialized clinical or other expensive health care services.(15)

Neither we nor the Department of Justice has ever challenged such a joint venture. These kinds of arrangements might be able to target areas where efficiencies from joint conduct are greatest, while preserving overall competition among the joint venturers.

In sum, we are very sensitive to efforts to improve the efficiency of hospitals and to eliminate excess capacity. At the same time, however, we recognize that in many communities, mergers will irrevocably eliminate much of the effective competition faced by the surviving hospitals, as entry of new firms is not likely. In the absence of enforcement action, then, consumers would be left without practicable alternatives to the merged entity, and the hospitals would face reduced incentives to operate efficiently or to develop innovative ways of meeting consumers' needs.

VI. CONCLUSION

The Commission remains committed to its fundamental mission of protecting competition in health care markets. Those markets are undergoing a period of tremendous change, and we must, and will, adapt our analysis and our enforcement strategies to the changing realties of those markets. As always, our efforts are directed to stopping specific activities that harm consumers, while providing market participants with the understanding they need to avoid antitrust pitfalls as they respond to market challenges.

1. As always, I emphasize that the views expressed here do not necessarily represent those of the Commission or any individual Commissioner.

2. See, e.g., American Medical Association, 94 F.T.C. 701 (1979), aff'd as modified, 638 F.2d 443 (2d Cir. 1980), aff'd by an equally divided Court, 455 U.S. 676 (1982); Medical Staff of Doctors' Hospital of Prince George's County, 110 F.T.C. 476 (1988) (consent order) (boycott of a hospital that was planning to open an HMO facility).

3. See, e.g., Michigan State Medical Society, 101 F.T.C. 191 (1983); FTC v. Indiana Federation of Dentists, 476 U.S. 447 (1986).

4. See, e.g., Southbank IPA, 114 F.T.C. 783 (1991) (consent order); Trauma Associates of North Broward, Inc., C-3541 (FTC consent order), 59 Fed. Reg. 63,805 (December 9, 1994); Puerto Rican Physiatrists (La Associacion Medica de Puerto Rico), C-3583 (FTC consent order), 60 Fed. Reg. 35,907 (July 12, 1995); Physicians Group, Inc., C-3610 (FTC consent order), 61 Fed. Reg. 10,349 (March 13, 1996); U.S. v. Health Choice of Northwest Missouri, Inc., No. 95-6171-CV-SJ-6 (W.D. Mo. filed September 13, 1995); U.S. and State of Connecticut v. Healthcare Partners, Inc., No. 395CVO1946RNC (D. Conn. filed September 13, 1995); U.S. v. Classic Care Network, Inc., 1995-1 Trade Cas. (CCH) 70,997 (E.D.N.Y. 1995); Commonwealth of Virginia v. Physicians Group, Inc., No. 95-0015-D (W.D Va. filed May 16, 1995).

5. California Dental Association, opinion and order issued March 25, 1996. That matter currently is under appeal to the 9th Circuit Court of Appeals.

6. U.S. Department of Justice and Federal Trade Commission, Statements of Antitrust Enforcement Policy in the Health Care Area, 4 Trade Reg. Rep. (CCH) 13,151 (September 15, 1993).

7. U.S. Department of Justice and Federal Trade Commission, Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust, 4 Trade Reg. Rep. (CCH) 13,152 (September 27, 1994).

8. Copies of advisory opinion and business review letters are available on the Internet at http://www.ftc.gov and http://www.usdoj.gov.

9. U.S. Department of Justice and Federal Trade Commission, Statements of Antitrust Enforcement Policy in Health Care, 4 Trade Reg. Rep. (CCH) 13,153 (August 18, 1996).

10. FTC v. Freeman Hospital, 69 F.3d 260 (8th Cir. 1995); United States v. Mercy Health Services, 902 F.Supp. 968 (N.D. Iowa 1995), appeal filed, No. 95-4253 (8th Cir. Mar. 1, 1996).

11. FTC v. Butterworth Health Corp., No. 1:96-CV-49 (W.D. Mich. September 26, 1996).

12. See, e.g., FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992). Some states have adopted regulatory schemes intended to displace operation of the antitrust laws. Where a state has chosen to displace competition, the regulatory burden imposed on health care providers may be substantial. See, e.g., Letter from Robert F. Leibenluft to Joe Sims (June 28, 1996) (FTC staff closing letter discussing application to a hospital merger of Montana's law concerning certificates of public advantage).

13. See, e.g., Antel et Allied., State Regulation and Hospital Costs, 77 Review of Economics and Statistics 416 (1995).

14. FTC Staff Report, "Anticipating the 21st Century: Competition Policy in the New High-Tech, Global Marketplace" (1996).

15. The statements also discuss hospital joint purchasing arrangements. See, e.g., Robert F. Leibenluft, "Antitrust Analysis of Hospital Networks and Shared Services Arrangements," presented at the American Hospital Association Sixth Annual OGC/Allied Legal Counsel Seminar (Oct. 10, 1996).