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Will ACOs Face Tough Antitrust Scrutiny?

Posted on August 2, 2017 I Written By

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

For some reason, I’ve always been interested in antitrust regulation, not just in the healthcare industry but across the board.

To me, there’s something fascinating about how federal agencies define markets, figure out what constitutes an unfair level of market dominance and decide which deals are out of bounds. For someone who’s not a lawyer, perhaps that’s a strange sort of geeking out to do, but there you have it.

Obviously, given how complex industry relationships are, healthcare relationships are fraught with antitrust issues to ponder. Lately, I’ve begun thinking about how antitrust regulators will look at large ACOs. And I’ve concluded that ACOs will be on the radar of the FTC and U.S. Department of Justice very soon, if they aren’t already.

On their face, ACOs try to dominate markets, so there’s plenty of potential for them to tip the scales too far in their favor for regulators to ignore. Their business model involves both vertical and horizontal integration, either of which could be seen as giving participants too much power.

Please take the following as a guide from an amateur who follows antitrust issues. Again, IANAL, but my understanding is as follows:

  • Vertical integration in healthcare glues together related entities that serve each other directly, such as health plans, hospitals, physician groups and skilled nursing facilities.
  • Horizontal integration connects mutually interested service providers, including competitors such as rival hospitals.

Even without being a legal whiz, it’s easy to understand why either of these ACO models might lead to (what the feds would see as) a machine that squeezes out uninvolved parties. The fact that these providers may share a single EMR could makes matters worse, as it makes the case that the parties can hoard data which binds patients to their network.

Regardless, it just makes sense that if a health plan builds an ACO network, cherry picking what it sees as the best providers, it’s unlikely that excluded providers will enjoy the same reimbursement health plan partners get. The excluded parties just won’t have as much clout.

Yes, it’s already the case that bigger providers may get either higher reimbursement or higher patient volume from insurers, but ACO business models could intensify the problem.

Meanwhile, if a bunch of competing hospitals or physician practices in a market decide to work together, it seems pretty unlikely that others could enter the market, expand their business or develop new service lines that compete with the ACO. Eventually, many patients would be forced to work with ACO providers. Their health plan will only pay for this market-dominant conglomerate.

Of course, these issues are probably being kicked around in legal circles. I’m equally confident that the ACOs, which can afford high-ticket legal advice, have looked at these concerns as well. But to my knowledge these questions aren’t popping up in the trade press, which suggests to me that they’re not a hot topic in non-legal circles.

Please note that I’m not taking a position here on whether antitrust regulation is fair or appropriate here. I’m just pointing out that if you’re part of an ACO, you may be more vulnerable to antitrust suits than you thought. Any entity which has the power to crush competition and set prices is a potential target.

ACOs Make Healthcare Providers More Like Health Insurers

Posted on April 16, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I’m not sure why I haven’t seen more people talking about this idea. When you start to look at the ACO financial models, I think there are some real comparisons between what health insurance companies do with patient populations and what ACOs will have to do with patient populations.

Should ACOs be looking to insurance companies on how to manage patient populations?

Another interesting dynamic at play here is that many insurance companies are acquiring provider organizations. Is this because insurance companies want to leverage their expertise with patient populations to get at the ACO money that is getting ready to flow?

I admit that I’m not an expert on all the various methods of insurance companies. Maybe they were under a very different model than ACOs, but even then it seems like the principles could still apply. Even just starting with the way insurance companies use data to analyze patient populations. Shouldn’t that same data analysis be able to be applied to an ACO?

I’m sure just thinking about the idea makes most doctors wonder if they want to keep practicing medicine. No doctor I know wants to be in the insurance business. They want to care for patients. Anything that takes them away from that is a distraction.

What are your thoughts? Can an ACO learn from insurance companies?