Executive Summary
Action:
On March 28, 2006, the FTC issued a staff advisory opinion rejecting SHO’s proposed joint contracting that would have allowed it to become the exclusive contracting entity for eight hospitals and 192 primary care physicians based on the claimed clinical integration of its independent providers. The FTC concluded that, although the Plan had the potential to create limited efficiencies in the provision of primary care physician services, the aspects of the Plan calling for the joint negotiation of contracts by SHO on behalf of the member hospitals and physicians were not reasonably necessary to achieve those efficiencies.
Impact:
The FTC’s rejection of the SHO Plan once again demonstrates that the federal antitrust agencies will closely scrutinize arrangements for joint contracting on behalf of competing health care providers. A provider invoking the clinical integration exception to the general rule prohibiting joint contracting by independent providers must
