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Government settles antitrust cases against doctors

Wednesday, August 21, 2002

WASHINGTON -- Federal regulators on Tuesday settled price-fixing charges against doctors groups in Texas and Colorado, part of an increased effort to combat health care practices that drive up costs for patients.

The Federal Trade Commission has dedicated more resources and staff to antitrust issues involving health care in the last year, said Jeff Brennan, head of the health care division in the FTC's competition bureau.

"Health care costs have risen considerably over the last several years," Brennan said. "We are concerned about the extent to which price increases are the outcome of anticompetitive behavior. When competition is restrained, prices rise and consumers are injured. That's what we're trying to weed out and eradicate."

The Texas settlement involves System Health Providers and its parent company, Genesis Physicians Group Inc., which represent about 1,300 doctors in the Dallas-Fort Worth area. The other case concerns eight Denver doctors groups specializing in obstetrics and gynecology.

The FTC accused the groups of violating antitrust law by collectively bargaining to set fees and contract terms with insurance companies, limiting competition and causing prices to rise for health plans, employers and patients.

Provisions to agreement

The settlements prohibit the groups from such actions in the future and require them to approve insurance company requests to end their contracts. By agreeing to settle, the doctors groups don't admit to breaking any law.

Ron Lutz, chief executive of Genesis Physicians, said the group cooperated with the FTC and the settlement was a "constructive outcome to an awkward situation."

The other doctors groups could not immediately be reached for comment Tuesday.

Brennan said the FTC is also investigating possible anticompetitive actions by insurance companies, hospitals and other physician groups.

Dr. Donald Palmisano, president-elect of the American Medical Association, said the rules that cause the government to automatically clamp down on doctors for violating antitrust laws need to be changed. He said the AMA, one of the largest physician groups, supports proposed legislation that would give doctors more freedom to negotiate with health plans.

"Physicians are at a severe disadvantage," Palmisano said. "Health insurers have substantial leverage over patients and physicians in determining the scope, coverage and quality of medical care."

The FTC plans a two-day workshop next month to examine how competition laws and policies affect the cost, quality and availability of health care.

Earlier this year, the FTC settled price fixing charges against two other doctors groups in Colorado and one in California.

On drug costs, the FTC has been scrutinizing drug industry practices that the agency says keep cheaper generic medicines off the market. In a report last month, the FTC said it wants to limit how drug companies delay marketing generics and to require firms to disclose agreements covering generic drug sales.

Brennan said the agency also has begun looking at completed hospital mergers to see how they affected competition and prices.

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On the Net

Federal Trade Commission: www.ftc.gov

American Medical Association: www.ama-assn.org/


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