Collaboration Among Competing Managed Care Organizations for Quality Improvement (1999) / Chapter Skim
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Session 1: Conceptual Issues in Collaboration
Session 1: Conceptual Issues in Collaboration
Pages 6-32
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From page 6... ...
Collaboration among competing health plans need not fundamentally challenge the current competition model in health care, which features vigorous price competition. Health care is not such a unique activity that it is necessary to abandon notions of competition.
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From page 7... ...
Collaboration is another strategy that plans might use to achieve economies of scale and avoid free-rider problems. Potential Areas for Collaboration Within the reasonable constraints of antitrust laws, how might plans collaborate on clinical initiatives that could lead to greater quality and efficiency?
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From page 8... ...
By pooling data, each plan would have a more useful database with which to identify incompetence, to profile comparative performance, and to initiate quality improvement programs. Antitrust laws prevent competing plans from malting joint decisions not to contract with a particular physician but should tolerate information sharing among plans.
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From page 9... ...
Nevertheless, we need to provide better guidance about what forms of collaboration concerning quality the antitrust laws clearly permit, what activities represent per se violations, and where there is uncertainty. More fundamentally, we need to understand what would induce determined competitors to collaborate, even on quality improvement.
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From page 10... ...
Indeed, since the late 1970s, health care providers have been viewed increasingly as economic competitors, and collaboration among them has been subject to scrutiny under federal and state antitrust laws. The most important effect of introducing antitrust constraints on collective action in the health care field was to deprive professional interests of the power to impose direct, coercive sanctions to discourage developments that they did not like.
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From page 11... ...
The principal purpose of this paper is to show that the market paradigm, as embodied in the antitrust laws, would welcome, not oppose, many forms of collaboration by competing health plans that have the potential for improving the quality of care. To be sure, antitrust law prohibits naked agreements by competitors on the nature and quality of the services that they plan to sell as well as the use of coercive measures to enforce a particular standard or definition of quality.
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From page 12... ...
Although private groups should not substitute their judgments for those of the marketplace, there are many things they could do to improve the chances that the interactions of independent buyers and sellers in a competitive market will reflect and give effect to consumers' true preferences with respect to the quality as well as the cost of care. Some Rudiments of Antitrust Law Most of the antitrust issues raised by collaboration to improve the quality of health care would arise under section I of the Sherman Act, which prohibits "every contract, combination ..., or conspiracy in restraint of trade...."7 The first element of a violation-concerted action by multiple actors is easily satisfied when independent professionals or other independent entities (such as competing health plans)
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From page 13... ...
In such cases, there must be inquiry sometimes it can be done quickly and easily into the conduct's actual or probable effects on competition, which may be evidenced by the parties' professed or apparent purposes and the market power they seem capable of exercising. It is necessary to underscore that any assessment of concerted action under the Sherman Act and the Rule of Reason is concerned only with its effect on the competitive process.
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From page 14... ...
In other words, despite the presumption favoring competition for better or for worse, there may be room for a "market failure" defense under which the law would tolerate some attenuation of rivalry when rivalry can be shown not to serve the public welled resee note 8, section 695 (stating that the society's attempt to justify its restraint on price competition "on the basis of the potential threat that competition poses to the public safety and the ethics of its profession is nothing less than a frontal assault on the basic policy of the Sherman Act". reunited States v.
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From page 15... ...
Although it still remains hard in theory and under the language of the statute to justify letting private interests make rules that govern competitive practices, it may be desirable as a matter of practical politics for antitrust law and enforcement agencies not to seem too mindlessly or ideologically committed to the proposition that the "free market" always serves consumers well or to the view that professional groups can never be trusted to act in the public interest. In any event, even though a persuasive case might be made for permitting occasional market-correcting restraints of trade, it would be unwise for competitors designing collective action in local markets to rely on this arguable legal nuance and to count on being able to defend anticompetitive actions by pointing simply to good intentions, some alleged market failure, or arguable improvements in the quality of health care.
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From page 16... ...
Although antitrust law takes a dim view of concerted action that is antithetical to competition, it is clearly not intended to discourage all competitor collaboration, much of which is clearly procompetitive. For example, antitrust law would not stand in the way if a subset of market participants lacking market power combined their efforts through a synergistic, efficiency-enhancing merger or joint venture.
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From page 17... ...
Although unanimity in rejecting the plaintiff s overtures alone would not be enough to establish a boycott, so-called conscious parallelism in business conduct is suggestive of a conspiracy, which may be confirmed by other evidence pointing in the same direction.~7 Boycotts were at one time the medical profession's most effective sanction for enforcing its preferences against those who might be inclined to step out of line. Under the antitrust laws, however, any agreement by competitors on a common policy toward some supplier or customer would properly be treated as unlawful per set Thus, the practice, if proved, will be condemned without any demonstration of actual harm to competition and without any opportunity for the defendants to show that they lacked either anticompetitive intent or the market power necessary to harm consumers.
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From page 18... ...
Agreements surrendering that independence to a group, when not required to achieve an objective compatible with competition, will very likely fail to pass Sherman Act muster. Standard Setting As can be sensed from the foregoing discussion, one collaborative quality assurance strategy that may be lawfully pursued by health care providers or competing health plans at the local level involves the production and dissemination of information and opinion that better inform purchasing and other decisions at various levels.
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From page 19... ...
better judgment. If such statements should be false or misleading or incomplete or just plain mistaken, the remedy is not antitrust litigation but more speech the marketplace of ideas.22 Other courts that have been called upon to examine accrediting programs under the antitrust laws have been more willing to view competitor-sponsored accrediting as a restraint subject to a reasonableness test.23 Such an approach to applying the Sherman Act to accrediting appears most clearly in a 1983 study of product standards and certification by the staff of the Federal Trade Commission's (FTC's)
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From page 20... ...
.25 In any event, however the matter is framed, it is probable that programs for collecting and disseminating information or opinion related to the quality of care will not be viewed as per se violations of the antitrust laws and that well-run, fairly administered programs can be expected to survive scrutiny under the Rule of Reason, however it is applied.26 Standard setting by a competitor group can also give rise to another difficult conceptual problem. Although the standards produced may serve as procompetitive benchmarks useful to independent decisionmakers, they may also be viewed as embodying the sponsors' agreement to abide by the standards in their own competitive endeavors.
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From page 21... ...
On the other hand, a standard-setting or accrediting program unaccompanied by an actual agreement to abide by the agreed standards has a different appearance. Indeed, the Supreme Court's dictum in the Allied Tube case makes doctrinal sense only if read as an appreciation that some degree of common understanding with respect to compliance is inherent in the act of setting standards and cannot, without more, violate the Sherman Act.
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From page 22... ...
In a 1914 case in which some retail lumber dealers' associations published a list of wholesalers who also traded at retail in competition with the associations' members, the Supreme Court said, "When, in this case, by concerted action the names of wholesalers who were reported as having made sales to consumers were periodically reported to the other members of the associations, the conspiracy to accomplish that which was the natural consequence of such action [i.e., refusals to deal] may be readily inferred." Eastern States Retail Lumber Dealers' Ass 'n v.
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From page 23... ...
A conspiracy to boycott could not be inferred from an exchange of information and opinion, however, if that exchange had value other than as a signal for concerted action. Quality-related information can be viewed as having such value.
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From page 24... ...
Nevertheless, antitrust law would almost certainly still bar concerted refusals to deal even if motivated by quality concerns and would apply in the normal fashion to other kinds of quality assurance efforts undertaken by multiple entities (rather than by one of the entities defined by the act)
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From page 25... ...
378, 393 (1981) (federal health planning legislation held not to create "a 'pervasive' repeal of the antitrust laws as applied to every action taken in response to the health-care planning processed; Havighurst CC.
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From page 26... ...
Nevertheless, it would be hard to maintain that antitrust law was intended by Congress to limit the political power of well-positioned interest groups.39 Limitations on the Noerr principle 29:225 (1984) (concluding that usual antitrust tests should be relaxed in the presence of publicly authorized health planning)
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From page 27... ...
The resulting state or local legislation or regulation, even if highly anticompetitive, would not itself be invalidated or overridden by the federal antitrust laws as long as certain conditions were met. The general rule is that federal antitrust law will defer to state law only if (1)
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From page 28... ...
In states lacking such legislation, such arrangements would be highly problematic. Moreover, most of the state laws are aimed at immunizing hospital agreements, not agreements between competing health plans or competitors of other kinds.
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From page 29... ...
Although antitrust law has often been invoked by competitors injured by the circulation of information, modern courts are increasingly inclined to recognize that the Sherman Act was intended by Congress to protect "competition, not competitors."44 Thus, if a private injury results only from competition itself, the complainant should soon be out of court. Although losers in the competitive race will always look for scapegoats and significant costs can be incurred in establishing that the competitive process was not interfered with in some way, collaboration in pursuit of quality goals should not be deterred by fears about antitrust consequences.
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From page 30... ...
However, it created a myth about collaboration and how it works that has served the Japanese badly in other areas. Since a change in the antitrust law in 1988, 15 research consortia have been established by domestic automobile makers.
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From page 31... ...
The project involved joint funding: About $5 million came from the Advanced Technology Program of the federal government and about $9 million came from the joint venture partners. Universities were also involved.
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From page 32... ...
Organizations need to understand that collaborative activities can be costly, but they can also present potential advantages.
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