How to avoid antitrust when acquiring practices
Risk managers should take the St. Luke's ruling Idaho as a warning bell and carefully assess any plans for physician group acquisition, says Jason Greis, JD, partner with the law firm of McGuireWoods in Chicago.
He suggests risk managers pay attention to these lessons from the Idaho case:
- Don't think your lofty goals negate antitrust issues. Despite the push for better care coordination, patient outcomes, and efficiency, antitrust law still applies. In the Idaho case, the judge acknowledged that patients would be better off with the acquisition, but he still ruled that it violated the law.
- Analyze the impact on market share before acquiring physician groups. It might be up to the risk manager to put the brakes on a deal when everyone else is enthusiastic about it. Remind the C-suite executives that antitrust violations can be costly and so can unwinding a deal after it is made.
- The purchase price might not be as important as the effect on market competition. Your competitors in the market will raise a ruckus if the deal means they are effectively shut out of most of the healthcare business.
- Include "unwind" provisions in the transaction documents. Greis suggests a statement such as, "In the event that we are required to unwind this transaction due an opinion from the Federal Trade Commission or the state attorney general regarding competitive concerns, the parties agree that the costs of the unwind will be borne by each party in the following way: ..." The division of costs is a negotiable item, and putting the provision in the documents reminds all parties that such an unwind is possible, which should encourage more scrutiny of the antitrust issue.