Removing Restrictions on Veterinary Practices in Tennessee could Result in Lower Prices, Better Services, FTC Staff Says.

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A bill pending before the Tennessee legislature that would permit veterinarians to practice as employees of non-veterinarians under certain conditions could result in lower prices and wider selection of veterinary services for Tennessee consumers, Federal Trade Commission staff said in comments made public today. "Permitting a variety of business formats, subject to appropriate supervision to protect consumers' interests in the quality of care, could lead to efficiencies benefitting consumers," the staff said.

The FTC staff was responding to a request for comment by Representative John T. Bragg of the Tennessee House of Representatives on House Bill 2542. Tennessee law now prohibits a licensed veterinarian from practicing as an employee of any entity not engaged primarily in the practice of veterinary medicine, and bars the sale of a veterinary practice except to a licensed veterinarian. H.B. 2542 would repeal these restrictions.

The comments, signed by Harold Kirtz, Assistant Director of the FTC's Atlanta Regional Office, noted that the Commission encourages competition in the licensed professions, including the health care professions. According to FTC staff, laws and regulations limiting "commercial practice" by professionals have been promoted based on the argument that they are necessary to maintain quality of service and protect the professional's independent judgment. According to the comment, however, "the effect on such restrictions in licensed businesses is usually to reduce competition and increase prices. That effect should be weighed carefully against effects, if any, on quality of care or service that the restrictions are intended to promote."

As an example, the comment cited the FTC's case with the American Medical Association (AMA), in which the FTC challenged various ethical codes enforced by the AMA. The Commission found that AMA rules prohibiting physicians from working on a salaried basis for hospitals or other lay institutions and from entering into partnership or similar business relationships with non-physicians unreasonably restrained competition, and as a result violated federal antitrust laws. "The Commission concluded that the AMA's prohibitions kept physicians from adopting potentially efficient business formats and precluded competition from organizations not directly and completely under the control of physicians," FTC staff said.

The staff comments concluded by encouraging the removal of provisions prohibiting veterinarians from working for lay persons or other professionals. "Restrictions on these types of business formats may prevent formation and development of forms of professional practice that may be innovative and efficient, provide comparable quality service, and offer competition to traditional providers.

These comments are the views of the staff of the Federal Trade Commission, and do not necessarily represent the views of the Commission or any individual Commissioner.

Copies of the staff's comment 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 for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at:


(FTC File No. V960005)

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