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Physicians Exit After FTC Approves a Settlement of Antitrust Complaints Involving Physician Practice Acquisition

On November 30, 2012, the Federal Trade Commission (“FTC”) voted to approve a settlement with the Reno, Nevada health network Renown Health concerning Renown’s acquisition of two cardiology practices in 2010 and 2011.  The FTC alleged that Renown’s acquisition of 31 doctors from the two practices gave it control over 88% of the cardiology market in violation of federal antitrust laws.

Under the terms of the settlement, Renown does not have to unwind the deals—a common outcome in situations involving antitrust claims.  Instead, Renown agreed to waive the non-competition clauses in its employment agreements for up to 10 cardiologists.  As of December 5, 2012, reports stated that 10 cardiologists had already given notice of their intent to leave.

The FTC’s scrutiny of hospital acquisitions of physician practices is likely to continue, especially with the pressures put on hospitals to control costs and re-engineer care delivery systems in light of the Affordable Care Act (“ACA”).  Hospital acquisition of physician practices is growing in an effort to achieve potential efficiencies and to place hospitals in a position to better deal with change effected by the ACA.  Antitrust implications of hospital-physician mergers should be carefully scrutinized given the growing rate of activity and the FTC’s intentions to monitor that activity more closely.  Hospital-physician mergers are not the only option.  Additional models enabling physicians and hospitals to achieve efficiencies should be considered, especially when antitrust laws could be implicated.