By Susan Feigin Harris, Carsten Reichel, and Gerald Stein

Norton Rose Fulbright attorneys evaluate the DOJ Antitrust Division and Federal Trade Commission’s withdrawal of support for health-care antitrust policies, saying this move will broadly alter enforcement and industry transactions.

The Department of Justice’s Antitrust Division recently withdrew its support for three joint policies with the Federal Trade Commission, which each created antitrust safety zones in the health-care industry.

These included a 1993 policy with safety zones for mergers, participation in exchanges of price and cost information, and joint purchasing arrangements.

In addition, a 1996 policy clarified and expanded the 1993 safety zones and provided additional guidance for conduct that fell outside the safety zones. And finally, a 2011 policy created a safety zone for accountable care organizations.

This move shifts the landscape for antitrust enforcement and may change longstanding analyses for health-care industry transactions and collaborations.

Announcing the change, Jonathan Kanter, the Antitrust Division’s top official, criticized the policies as outdated in light of changes in the health-care landscape, saying they were “overly permissive” on subjects like sharing information.

Kantor encouraged the industry to obtain guidance from the DOJ’s enforcement actions and pledged that the agency would take a case-by-case approach to evaluate competition concerns in health care.

In a speech a day before withdrawing the policies, the division’s principal deputy, Doha Mekki, cited changes in health-care delivery models, industry consolidation, and an “evolved” view of health-care economics as rationales. Mekki also mentioned information exchanges between competitors, noting the increasing importance of health data and use of machine learning, AI, and other tools.

Even if information is exchanged via a third-party intermediary, Mekki said anticompetitive effects could be the same as if they had resulted from a direct exchange with a competitor, raising concerns about price fixing and collusion.

While the impact of DOJ’s withdrawal from these policies will become clearer through subsequent enforcement actions, the move sends an unmistakable signal to the health-care industry: consider or reconsider transactions and other collaborations previously protected by the safety zones, and take exceptional caution with regard to any information sharing practices.

The withdrawn policies originally intended to “as completely as possible, [resolve] any antitrust uncertainty that might deter beneficial mergers or joint ventures that promise to reduce health care costs.”

The DOJ’s withdrawal of them reintroduces uncertainty in several areas in which the health-care industry had relied on the guidance.

This includes financial and clinical integration in joint negotiations with managed care entities, sharing of patient data between co-owned health-care providers and health plans, and the structure of Medicare ACOs and their lookalike ACOs.

The withdrawn policies provided a safe harbor for mergers involving small hospitals that no longer exists.

Eliminating this safe harbor is only part of US antitrust enforcement efforts to combat consolidation in the health-care sector. A 2021 executive order decried “[h]ospital consolidation [that] has left many areas, particularly rural communities, with inadequate or more expensive healthcare options.”

And last year, the FTC chair said that “consolidation and monopoly problems” were widespread in the industry and committed that the FTC would “vigilant across the board” in dealing with them.

Additionally, revised merger guidelines that may further alter the landscape for health-care transactions are expected soon.

The DOJ also withdrew the 2011 policy on ACOs in the Medicare Shared Savings program, part of 2010’s Affordable Care Act.

After passage, physicians, providers, and others came together to create new entities—ACOs—that could work together to meet the ACA’s goals of improved patient experience, reductions in costs, and improvements in health outcomes.

The advent of Medicare ACOs also led to the widespread creation of other kinds of ACOs that do not contract with the Medicare program.

One area of immediate concern for ACOs is the treatment of competitively sensitive information, such as compensation arrangements with competing providers, or other financial information that would be relevant to accounting for shared savings.

ACOs should reevaluate both their ongoing need for any information exchange and the safeguards in place to avoid any implication that the information facilitates potential collusion, such as price fixing.

Numerous health-care industry joint ventures are potentially impacted by DOJ policy withdrawals.

For example, physician networks such as individual practice associations and physician hospital organizations relied on the 1996 policy’s guidance regarding clinical and financial integration to set the boundaries between health insurers and providers when structuring arrangements between the two.

Similarly, the 1993 policy created a safety zone for joint purchases of high-tech or expensive equipment. Originally contemplated for expensive medical equipment, such as MRI and CT scanners, this change could impact joint collaborations to acquire and deploy technologies like proton therapy or cyberknife radiation.

Both the recently announced and anticipated further changes from the DOJ arrive as health-care providers seek to create efficiencies, provide better care, and achieve cost savings.

Resolving the tension between changed enforcement realities and industry pressures has become more complex with the withdrawal of these safety zones. Industry participants should consider the antitrust aspects of any proposed transaction, affiliation, or joint agreement, particularly the benefits to competition.

Withdrawal of safety zones does not place lawful conduct in harm’s way. But the DOJ’s promise that determinations will be made on a case-by-case basis could result in delayed transactions and additional costs for health-care institutions.

Likewise, the DOJ’s advice to look to its actions and statements will require keen, real-time attention to agency actions moving forward. As the enforcement environment changes, so too must the industry.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Susan Feigin Harris advises hospitals, physician groups, lab companies, post-acute providers, telehealth and health-care innovations companies.

Carsten Reichel is an experienced former federal prosecutor with the Department of Justice, where he prosecuted complex white collar and economic crimes across industrial sectors.

Gerald Stein has had a comprehensive career as an antitrust litigator and as a former attorney with the Bureau of Competition at the Federal Trade Commission.

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