FTC Staff Has Advised the Southwest Florida Oral Surgery Associates (SFOSA) Its Proposal To Form a "Cooperative" Does Not Appear To Violate the Antitrust Laws

The Federal Trade Commission staff has advised the Southwest Florida Oral Surgery Associates (SFOSA) that its proposal to form a "Cooperative" for the purpose of jointly marketing their services to employers, managed care plans and other payers does not appear to violate the antitrust laws. In a letter to SFOSA's attorney, Guy E. Whitesman of Henderson, Franklin, Starnes & Holt, P.A., in Fort Myers, Florida, Robert F. Leibenluft, Assistant Director for Health Care in the FTC's Bureau of Competition, said that based on the description of the proposed structuring of SFOSA's operation, it does not appear to involve a horizontal agreement on price-related terms.

SFOSA is a group of oral and maxillofacial surgery practices that provide oral and maxillofacial surgery services to residents in Charlotte, Collier, DeSoto, Glades, Hendry, Lee, and Sarasota, counties in southwest Florida. The members of the proposed Cooperative are Dr. Patricia Nickelson, D.D.S; Drs. Gerald Laboda and Frank P. DiPlacido, P.A., doing business as Southwest Florida Oral Surgery Associates; and Dr. Harvey S. Satz, D.M.D., P.A., d/b/a Gulfcoast Oral and Maxillofacial Surgery Associates. The three practice groups are located in different cities in Southwest Florida.

According to SFOSA, the Cooperative will engage in group purchasing, joint marketing and sharing of medical information systems. Each practice will continue to operate individually and to provide its own claims processing and other administrative functions. The Cooperative will designate an employee of one of the practices to serve as a "marketing representative" -- a conduit for communication between the membership and third party payors. The marketing representative will not negotiate with payers or enter into contracts on behalf of the practices, but will circulate any proposed contract or offers to the members individually. They will be free to accept or reject such offers, or to negotiate terms directly with the payer. Participating members will not discuss among themselves the terms of any contract offers. Member participation in SFOSA will be non-exclusive -- members will have the ability to join in other networks and to market their practices independently of SFOSA. The Cooperative will not require that all practices enter into any particular service agreement, or bar participants from entering into other arrangements not offered through the cooperative.

The staff opinion letter states that based on SFOSA's description of the proposed operation, "no issue regarding a horizontal agreement on prices appears to be presented under the facts as we understand them. ... SFOSA maintains that it will not enter into other potentially anticompetitive agreements on terms of dealing with payers, and the facts do not suggest other reasons that would raise concerns about anticompetitive effects."

NOTE: This letter sets out the views of the staff of the FTC's Bureau of Competition, as authorized by the Commission's Rules of Practice. It has been reviewed or approved by the Commission. As the Commission's rules explain, the staff's advice is rendered "without prejudice to the right of Commission later to rescind the advice and, where appropriate, to commence enforcement proceeding."

Copies of letter 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 FTC news as it is announced, call the FTC's 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: http://www.ftc.gov