Anti Trust Concerns Greatly Affect Healthcare Reform – Part 1: The Basics

Anti-trust laws are one of the greatest obstacles to healthcare reform.  Here’s why?  They limit the way competing physicians, hospitals and the like can do business together.  Healthcare reform requires competing providers of all kinds to come together to deliver care in the most cost effective and quality enhancing way, and yet federal and state anti-trust restrictions frustrate nearly every effort to do so.  Let’s take a quick peek behind the curtain. 


The Sherman Act is a key federal law which is comprised of two sections: Section 1, prohibits concerted action which unreasonably restrains competition; and Section 2, generally prohibits monopolies.

For there to be a violation of Section 1, there must be an Aagreement@ and it must unreasonably restrain competition.  For there to be an agreement, there must be more than one Aeconomic unit@ involved.  That is, there can be no such agreement by one economic unit with itself.  For example, generally speaking, shareholders in the same corporation are, for antitrust purposes, legally incapable of engaging in illegal concerted action together if they share substantial economic risk.  They are generally considered to be part of a single economic unit.  Conversely, members of two or more competing economic units, separate professional corporations, for example, may not agree to a whole host of things, because such agreements would violate one or more antitrust laws.

Some agreements are considered to be so egregious that they need not even restrain competition.  The mere fact that such an agreement has occurred is enough, and there is no defense.  Some of these Aper se@ violations of the antitrust laws include: agreement among two or more independent physicians to charge a particular amount for a particular service (Aprice fixing@); agreement among two or more independent physicians not to contract with a particular HMO (Aboycotting@); agreement among two or more independent physicians regarding their hours of operation, the services they will offer, or the geographic areas they will serve (Amarket allocation@).  This is by no means a complete list or a complete description of the antitrust laws, but describes some types of activities that will violate antitrust laws.

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