TriState Clears Antitrust Hurdle

John Commins, for HealthLeaders Media , April 15, 2009

TriState Health Partners, Inc.'s clinical integration program cleared a major hurdle this week when the FTC issued an advisory opinion that the innovative program does not pose an antitrust threat.

"This favorable advisory opinion means we now can move forward with a comprehensive health management program that will make patients healthier and healthcare more affordable," says Robert J. Cirincione, MD, CMO of Hagerstown, MD-based TriState, a physician-hospital organization owned by 212 physicians and the Washington County (MD) Hospital.

The FTC's Bureau of Competition told TriState that the proposed cooperation among doctors and a hospital at the organization, "while still in the early stages of development in some respects, appears to have the potential to create substantial integration among its participants, with the potential to produce significant efficiencies, including both improved quality and more cost-effective care."

TriState is the third organization in the country to receive a favorable FTC advisory opinion for its clinical integration program. Cirincione says TriState showed the FTC that its program is pro-competitive because physicians are collaborating to produce a superior system for quality care though cooperation, investment in technology, and value-based purchasing and performance incentives. "Our program is designed by the very people who know the patients and their needs best—their doctors" Cirincione says.

The FTC told TriState that its joint negotiation of contracts, including price terms, with payers on behalf of its physician members appears to be "subordinate and reasonably related to TriState's members' . . . integration through the proposed program, and appears reasonably necessary to achieve the potential efficiencies of that program." As a result, the FTC says, the price agreements and joint contracting would be evaluated under the antitrust rule of reason, rather than being summarily condemned as per se illegal price fixing.

The program will provide members access to electronic health records, develop evidence-based quality indicators to ensure achievement of measurable quality improvement, and enhance case and pharmacy benefits management that can control costs. It also will allow TriState to contract on behalf of its 212 physician members with self-insured and fully insured employers.

If the program is operated as proposed, the FTC says, TriState "is unlikely to be able to attain, increase, or exercise market power for itself or its participants as a result of implementing the proposed program." However, the FTC warned that any evidence of exercise of market power or other anticompetitive activities by TriState could result in the revocation of the opinion.

John Commins is a senior editor with HealthLeaders Media.

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