FTC Staff Takes Positive Second Look at MedSouth’s Clinical Integration

Article by Mintz Levin's Antitrust Group

An important and often vexing issue for health care provider joint ventures is determining when the venture is sufficiently clinically integrated so that if it contracts collectively with providers, its activities will be tested under the more forgiving antitrust rule of reason. One touchstone in the limited amount of guidance that has emerged since clinical integration was first added to the U.S. Department of Justice's and Federal Trade Commission's Antitrust Health Care Guidelines1 in 1996 was the FTC's 2002 staff advisory opinion in MedSouth, Inc.2 At that time, the FTC staff indicated that it reserved the right to come back and monitor MedSouth's activities in practice. The staff has now done so, and on June 18, 2007 issued a follow-up letter to MedSouth that indicated that the staff had no reason to rescind or modify the views it expressed in 2002.

Clinical Integration

To the FTC, clinical integration in a provider network involves a degree of interaction and interdependence among the provider participants in their provision of medical services, in order to jointly achieve cost efficiencies and quality improvements in providing those services, both individually and as a group. Successfully achieving clinical integration requires the establishment and operation of active and ongoing processes and mechanisms to facilitate, encourage, and assure the necessary cooperative interaction.

As the FTC follow-up letter to MedSouth put it:

Typically, clinically integrated programs will involve some or all of the following aspects or characteristics, development of adoption of appropriate performance standards or goals, referral guidelines or requirements, or other performance criteria and measures for the participants, both individually or as a group; establishment of mechanisms, including information systems that permit collection and analysis of relevant data to monitor and evaluate both individual and group performance relative to the established standards, goals and measures; and provision for appropriate educational, behavior modification, and remedial action, where warranted, to improves both individual and overall group performance. The test [of integration] is what the participants, through the network, actually doi.e. how they use those tools to create cooperation and interdependence in their provision of medical care, thereby facilitating their efforts to jointly reduce unnecessary costs...