FTC Staff Comment to the Alabama State Senate Regarding HB 241 and SB 243, Which Would Exempt Health Care Collaborations From Federal Antitrust Laws

Page 1 of 12
Office of Policy Planning
Bureau of Economics
Bureau of Competition
May 2, 2016
The Hon. Larry C. Stutts
Alabama State Senate
Alabama State House
11 South Union Street, Suite 735
Montgomery, Al 36130 – 4600
Dear Senator Stutts:
The Federal Trade Commission (“FTC”) Office of Policy Planning, Bureau of
Competition, and Bureau of Economics (collectively, the “staff”) appreciate your request
for comments on Alabama House Bill 241 / Senate Bill 243 (collectively, the “Bill”).1
The Bill would permit any public university that operates a school of medicine to form a
new type of corporation in Alabama, to be known as an “authority,” in collaboration
“with all types of health care providers.”2 FTC staff submit this letter to address the Bill’s
attempt to exempt authorities, their “collaborative activities,” and their “university
affiliates, as well as the public or private entities and individuals with which they
collaborate” from the federal antitrust laws.3
If effective, the broad antitrust exemption the Bill purports to provide would
immunize anticompetitive mergers, price fixing, boycotts, and a wide variety of other
anticompetitive conduct that harms consumers. Many health care provider collaborations
can be efficient and beneficial, and no antitrust exemption is needed to permit them from
occurring. Indeed, the Bill appears to reflect mistaken beliefs about the antitrust laws and
the benefits of competition among health care providers. If enacted, the exemption would
not improve patient care, but would likely raise health care costs and decrease access to
care. As we discuss below,
• 	First, the antitrust laws permit health care collaborations that do not harm
consumers. As the FTC and its staff have consistently explained, many
competitor collaborations – including health care provider collaborations
and mergers – can be efficient and procompetitive, and are therefore
lawful.
• 	Second, because the antitrust laws already permit procompetitive health
care collaborations, the Bill’s purported “immunization” provision would
foster anticompetitive mergers, collective negotiations, and other conduct
that would not pass muster under the antitrust laws. Hence, the antitrust
immunity contemplated by the Bill would likely increase health care costs,
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

Page 2 of 12
diminish incentives to improve quality, and decrease access to health care
services for Alabama consumers.
I. 	Interest and Experience of the Federal Trade Commission
Congress has charged the Federal Trade Commission (“FTC” or “Commission”)
with enforcing the Federal Trade Commission Act, which prohibits unfair methods of
competition and unfair or deceptive acts or practices in or affecting commerce.4 The FTC
also enforces Section 7 of the Clayton Act, which prohibits transactions that may
substantially lessen competition or tend to create a monopoly.5 Competition is at the core
of America’s economy,6 and vigorous competition among sellers in an open marketplace
gives consumers the benefits of lower prices, higher quality goods and services, greater
access to goods and services, and innovation.7 Pursuant to its statutory mandate, the FTC
seeks to identify business practices and governmental laws and regulations that may
impede competition without also providing countervailing benefits to consumers.
Because of the importance of health care competition to the economy and
consumer welfare, anticompetitive conduct in health care markets has long been a key
focus of FTC law enforcement,8 research,9 and advocacy.10 Of particular relevance, the
Commission and its staff have long advocated against federal and state legislative
proposals that seek to create antitrust exemptions for collective negotiations by health
care providers because such exemptions are likely to harm consumers.11
II. 	Alabama House Bill 241 / Senate Bill 243
The Bill “would authorize public universities operating schools of medicine to
form a new type of public corporation to be called an authority.”12 The Bill would grant
numerous corporate powers, in addition to those generally assigned under Alabama
corporate law, to such authorities. These corporations and their affiliates might extend
well beyond what are traditionally thought of as academic medical centers, both
geographically and in terms of the services they provide. For example, such a corporation
would have the power
[t]o acquire, construct, equip, and operate those health care facilities it
considers necessary or desirable,13 . . . [to] create, establish, acquire,
operate, or support subsidiaries and affiliates, either for-profit or nonprofit,
to assist an authority in fulfilling its purposes,14 . . . [and to] participate as
a shareholder in a corporation, as a joint venturer in a joint venture, as a
general or limited partner in a general or limited partnership, as a member
of a nonprofit corporation, or as a member of any other lawful form of
business organization, that provides health care or engages in activities
related thereto.15
Once established, an authority could accept grants or gifts from any source,16 and
“[t]he state, any university, any governmental entity, and any public corporation [would
be] authorized to give, transfer, convey, or sell to any authority . . . with or without

Page 3 of 12
consideration: (1) Any of its health care facilities and other properties, real or personal,
and any funds and assets, tangible or intangible, relative to the ownership or operation of
any such health care facilities,” among other assets.17 In addition, the Bill would vest the
power of eminent domain in authorities.18
There appears to be no requirement that all facilities owned or operated by
authorities, their subsidiaries, or their affiliates participate directly in medical education,
research, or training, or that all such facilities engage directly in the provision of health
care to Alabama citizens. Under the terms of the Bill, even the determination of what
counts as a “health care facility” would be left to the authority’s discretion.19
As noted above, the Bill purports to insulate these many and diverse entities, and
their conduct, against the safeguards and consumer protections provided by the antitrust
laws.20
III. 	The Bill Is Unnecessary Because the Antitrust Laws Already Permit
Efficient Health Care Collaborations
The Bill appears to assume that antitrust laws prohibit efficient health care
mergers, acquisitions, and collaborations to the detriment of health care and consumers in
Alabama. That assumption is wrong.
Cooperation among competing health care providers, including academic medical
centers, often can benefit competition and health care consumers. Many of the Bill’s
stated goals—e.g., the promotion of public health and the potential contributions of
academic medical centers to it21—are not objectionable and frequently result from robust
provider competition. Consequently, seeking to immunize the Bill’s proposed corporate
authorities, their affiliates, and their subsidiaries from any potential antitrust liability
seems unnecessary, and as explained in Part IV below, also likely harmful.
The antitrust laws already recognize that competitor collaborations can be
procompetitive. As the FTC and the U.S. Department of Justice (collectively, “the
Antitrust Agencies”) have repeatedly explained,22 this position extends to collaborations
among competing health care providers. For example, the Antitrust Agencies have stated
that “[n]ew arrangements and variations on existing arrangements involving joint activity
by health care providers continue to emerge to meet consumers’, purchasers’, and payors’
desire for more efficient delivery of high quality health care services.”23 More recently,
FTC officials have emphasized that
[t]he FTC supports the key aims of health care reform, and . . .
recognize[s] that collaborative and innovative arrangements among
providers can reduce costs, improve quality, and benefit
consumers. But these goals are best achieved when there is healthy
competition in provider markets fostering the sort of dynamic,
high-quality, and innovative health care that practitioners seek and
patients deserve.24

Page 4 of 12
Turning specifically to mergers, the Horizontal Merger Guidelines issued jointly
by the Antitrust Agencies recognize that merger-generated efficiencies “may result in
lower prices, improved quality, enhanced service, or new products.”25 Those efficiencies
are routinely assessed in merger investigations as part of an evaluation of the potential
anticompetitive harm stemming from a merger or acquisition. For those reasons, and
because many mergers do not threaten competition, the Antitrust Agencies have
challenged few of the thousands of health care provider mergers, joint ventures, and other
types of collaborations that have occurred in recent years, and have “brought those
challenges only after rigorous analysis of market conditions showed that the acquisition
was likely to substantially lessen competition.”26 These outcomes confirm that the
antitrust laws already consider likely benefits, as well as competitive harms, and therefore
already accomplish many of the Bill’s objectives.
Moreover, the goals of antitrust law are consistent with the policy goals of
fostering the coordination and integration of health care delivery via collaboration among
health care providers through, for example, the formation of Accountable Care
Organizations.27 Despite what some health care industry participants have claimed, the
antitrust laws do not prohibit the kinds of collaboration necessary to achieve the health
care reforms contemplated by the Affordable Care Act and other policy initiatives.28
Specifically, antitrust does not impede Alabama health care providers from forming
procompetitive collaborative arrangements that are likely to reduce costs and benefit
health care consumers through increased efficiency and improved coordination of care.29
IV. 	The Purported Antitrust Exemption Poses a Substantial Risk of Consumer
Harm
FTC staff understand that Alabama may take particular interest in fostering its
academic medical centers. Still, because antitrust law already allows efficient
collaborations among health care providers that benefit consumers, the Bill’s exemption
provisions would encourage mergers and conduct that likely would not pass muster under
the antitrust laws because they would tend to reduce competition, raise prices, diminish
incentives to improve quality, and provide little or no benefits to consumers.
Even though an “authority” can only be established by a public university that
operates a school of medicine, the Bill does not require that the authority be limited to
that school of medicine, its academic medical center, or the university community. To the
contrary, as noted above, the Bill expressly contemplates that authorities will “collaborate
with all types of health care providers,” and that they may “create, establish, acquire,
operate, or support subsidiaries and affiliates, either for-profit or nonprofit, to assist an
authority in fulfilling its purposes.”30 In fact, the Bill contemplates that a university may
incorporate more than one authority,31 even if it operates only one academic medical
center. Hence, any competitive harm inflicted by such agreements might originate from
the loss of competition between two or more other hospitals, or other health care
providers, and the effects might originate or spread well beyond a teaching hospital and
its surrounding community. Any effort to shield such harmful conduct from antitrust

Page 5 of 12
enforcement—including attempts to confer state action immunity—is likely to harm
Alabama’s health care consumers, including patients as well as both public and private
third-party payors.
In its 2007 report, the congressionally established, bipartisan Antitrust
Modernization Commission32 succinctly stated a widely recognized proposition:
“[t]ypically, antitrust exemptions create economic benefits that flow to small,
concentrated interest groups, while the costs of the exemption are widely dispersed,
usually passed on to a large population of consumers through higher prices, reduced
output, lower quality and reduced innovation.”33
Yet, in the face of this proposition, health care providers repeatedly have sought
antitrust immunity for various forms of joint conduct, including agreements on the prices
they will accept from payors, asserting that immunity for joint bargaining is necessary to
“level the playing field” so that providers can create and exercise countervailing market
power.34
Here, at least with respect to antitrust treatment of health care providers, we
disagree with the Bill’s assertion that “academic medical centers often are at a
competitive disadvantage as a result of limitations on their ability to form networks and
delivery systems and otherwise collaborate with other health care providers to form joint
ventures or other entities with shared ownership.” No such competitive disadvantage is
imposed by the federal antitrust laws. If the legislature finds that Alabama’s corporate
law, or its university charters, unduly burden the state’s academic medical centers, we
respectfully suggest that you seek more targeted, and less competitively harmful, ways to
reform those provisions.35
V. 	Antitrust Exemptions Deprive Consumers of the Substantial Benefits That
Competition Provides in Health Care
The U.S. Supreme Court recently reiterated its long-standing position that, “given
the antitrust laws’ values of free enterprise and economic competition, ‘state-action
immunity is disfavored.’”36 As the Court recognized, this general principle applies with
full force in the health care industry, where consumers benefit from vigorous
competition, and where anticompetitive conduct can cause significant harm.37 As
discussed above, antitrust law permits many forms of procompetitive collaborations
among health care providers, and seeks only to protect health care consumers from
anticompetitive forms of joint conduct that are likely to harm them. To confer antitrust
immunity on provider collaborations, regardless of whether they are procompetitive or
anticompetitive, thus would be overbroad and likely to harm consumers.
Empirical evidence on competition in health care markets generally has
demonstrated that consumers benefit from lower prices when provider markets are more
competitive.38 Retrospective studies of the effects of provider consolidation by FTC staff
and independent scholars suggest that, “increases in hospital market concentration lead to

Page 6 of 12
increases in the price of hospital care.”39 Moreover, additional empirical evidence
suggests that, “[a]t least for some procedures, hospital concentration reduces quality.”40
For example, recent research indicates that “health spending on the privately
insured varies by more than a factor of three across the 306 hospital referral regions
(HRRs) in the US.”41 For individual procedures, hospital prices can vary even more. The
same study found that, “[h]ospitals’ negotiated transaction prices routinely vary by over a
factor of eight or more across the nation and by a factor of three within HRRs.”42
Different factors may contribute to this variation but “hospital market structure stands out
as one of the most important factors associated with higher prices, even after controlling
for costs and clinical quality.”43
Academic medical centers are no less responsive than other health care providers
to changes in market structure and conditions, and therefore may respond to changes in
market concentration in ways that harm consumers. For example, a retrospective study of
a merger involving an academic medical center found that “four of the five commercial
insurers experienced large and statistically significant price increases at the merged
hospital.”44 Moreover, those insurers “were forced to raise their prices by at least 10
percentage points more at the merged hospital relative to other Chicago area hospitals.”45
Furthermore, the study found that the relative price increase could not be explained by
changes in case mix, patients’ severity of illness, payer mix, or teaching intensity.46
Empirical evidence also suggests that greater competition incentivizes providers
to become more efficient and innovative. A recent study shows that hospitals faced with a
more competitive environment have better management practices.47 In sum, ample
evidence exists that competition can and does work in health care markets.48
The FTC has engaged in significant enforcement efforts to prevent
anticompetitive behavior in health care provider markets precisely because consumers
benefit from competition and, conversely, are harmed by anticompetitive mergers and
conduct.49
VI. 	Conclusion
Competitor collaborations, mergers, and acquisitions can be procompetitive,
benefitting patients and payors alike. Interest in such collaboration among health care
providers is understandable and, indeed, important. As we have explained both in this
comment and in numerous and detailed guidance documents, however, the antitrust laws
already permit efficient, pro-consumer collaborations among competing health care
providers, and already permit efficient and pro-consumer mergers. The Bill’s apparent
attempt to confer antitrust immunity is therefore unnecessary for collaborations that
would benefit Alabama’s citizens. If such immunity were conferred, it would prevent
antitrust authorities from scrutinizing, moderating, or preventing anticompetitive mergers
and conduct that would seriously harm Alabama consumers. In some cases, it also could
encourage groups of private health care providers to engage in blatantly anticompetitive
conduct.

Page 7 of 12
We appreciate your consideration of these issues.
Respectfully submitted,
Marina Lao, Director
Office of Policy Planning
Ginger Jin, Director
Bureau of Economics
Deborah Feinstein, Director
Bureau of Competition
1 Letter from the Hon. Larry C. Stutts, Alabama State Senate, to the Hon. Edith Ramirez,
Chairwoman, Fed. Trade Comm’n (March 10, 2016).
2 Alabama House Bill 241 / Senate Bill 243, proposed § 3(b)(2) (the companion bills will be cited
hereinafter as Senate Bill 243).
3 Id.
4 Federal Trade Commission Act, 15 U.S.C. § 45.
5 Clayton Act, 15 U.S.C. § 18.
6 Standard Oil Co. v. FTC, 340 U.S. 231, 248 (1951) (“The heart of our national economic policy
long has been faith in the value of competition.”).
7 See Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (The antitrust laws
reflect “a legislative judgment that ultimately competition will produce not only lower prices, but
also better goods and services. . . . The assumption that competition is the best method of
allocating resources in a free market recognizes that all elements of a bargain – quality, service,
safety, and durability – and not just the immediate cost, are favorably affected by the free
opportunity to select among alternative offers.”).
8 See generally Fed. Trade Comm’n, An Overview of FTC Antitrust Actions In Health Care
Services and Products (Mar. 2013), https://www.ftc.gov/system/files/attachments/competition-
policy-guidance/hcupdaterev.pdf; see also Fed. Trade Comm’n, Competition in the Health Care
Marketplace: Formal Commission Actions, https://www.ftc.gov/tips-advice/competition-
guidance/industry-guidance/health-care.
9 See, e.g., FED. T RADE COMM ’ N & U.S. DEP ’ T OF J USTICE (“DOJ”), IMPROVING HEALTH C ARE :

Page 8 of 12
A DOSE OF COMPETITION (2004), http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
[hereinafter FTC & DOJ, IMPROVING HEALTH C ARE ]. The report was based on, among other
things, 27 days of formal hearings on competitive issues in health care, an FTC-sponsored
workshop, independent research, and the Agencies’ enforcement experience.
10 FTC and staff advocacy may take the form of letters or comments addressing specific policy
issues, Commission or staff testimony before legislative or regulatory bodies, amicus briefs, or
reports. See, e.g., FTC Staff Letter to the Honorable Theresa W. Conroy, Connecticut House of
Representatives, Concerning the Likely Competitive Impact of Connecticut House Bill 6391 on
Advance Practice Registered Nurses (“APRNs”) (Mar. 2013),
https://www.ftc.gov/reports/improving-health-care-dose-competition-report-federal-trade-
commission-department-justice (competitive impact of statutorily required “collaborative practice
agreements” for nurse practitioners); FTC and DOJ Written Testimony Before the Illinois Task
Force on Health Planning Reform Concerning Illinois Certificate of Need Laws (Sept. 2008),
http://www.ftc.gov/os/2008/09/V080018illconlaws.pdf; Brief of the Fed. Trade Comm’n as
Amicus Curiae, St. Joseph Abbey, et al. v. Castille, 712 F.3d 215 (5th Cir. 2013) (No. 11-30756)
(refuting argument that the policies of FTC funeral rule support restrictions of sort challenged by
petitioner); FTC & DOJ, IMPROVING HEALTH C ARE , supra note 9.
11 See, e.g., FTC Staff Comment Regarding Oregon Senate Bill 231A, Which Includes Language
Intended To Provide Federal Antitrust Immunity To Conversations, Information Exchanges, and
Agreements Among Participants (Including Competitors) In Oregon’s Health Care Markets (May
2015), https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-
regarding-oregon-senate-bill-231a-which-includes-language-intended-provide-
federal/150519oregonstaffletter.pdf; FTC Staff Comment to New York State Senator
Ranzenhofer and New York State Assemblyman Abinanti Concerning SB 2647 and AB 2888
Authorizing Certain Agreements for the Creation and Operation of a Health Care Delivery
System Network (June 2015),
https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-new-york-
state-senator-ranzenhofer-new-york-state-assemblyman-abinanti-
concerning/150605nypublichealthletter.pdf; FTC Staff Comment to the Tennessee Department of
Health Regarding the Implementation of Laws Relative to Cooperative Agreements and the
Granting of Certificates of Public Advantage (Sept. 2015),
https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-tennessee-
department-health-regarding-implementation-laws-relative-cooperative/151015tennesseedoh.pdf;
FTC Staff Comment Before the Connecticut General Assembly Labor and Employees Committee
Regarding Connecticut House Bill 6431 Concerning Joint Negotiations by Competing Physicians
in Cooperative Health Care Arrangements (June 2013),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-
connecticut-general-assembly-labor-and-employees-committee-regarding-
connecticut/130605conncoopcomment.pdf; FTC Staff Comment to the Hon. Elliott Naishtat
Concerning Texas S.B. 8 to Exempt Certified Health Care Collaboratives From the Antitrust
Laws (May 2011), http://www.ftc.gov/os/2011/05/1105texashealthcare.pdf; FTC Staff Comment
to Rep. Tom Emmer of the Minnesota House of Representatives Concerning Minnesota H.F. No.
120 and Senate Bill S.F. No. 203 on Health Care Cooperatives (Mar. 2009),
http://www.ftc.gov/opp/advocacy/V090003.pdf; FTC Staff Comment to the Hon. William J. Seitz
Concerning Ohio Executive Order 2007-23S to Establish Collective Bargaining for Home Health
Care Workers (Feb. 2008), http://www.ftc.gov/os/2008/02/V080001homecare.pdf; FTC Staff
Comment Before the Puerto Rico House of Representatives Concerning S.B. 2190 to Permit
Collective Bargaining by Health Care Providers (Jan. 2008),
https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-

Page 9 of 12
puerto-rico-house-representatives-concerning-s.b.2190-permit-collective-bargaining-health-care-
providers/v080003puerto.pdf.
12 Alabama Senate Bill 243, at Synopsis.
13 Id. § 9(a)(3).
14 Id. § 9(a)(8).
15 Id. § 9(a)(9) (emphasis added).
16 Id. § 9(a)(14).
17 Id. § 18(a).
18 Id. § 10.
19 Id. § 2(6) (“A determination by a board that an asset constitutes a health care facility shall be
conclusive, absent manifest error.”).
20 Id. § 19(3) (“[T]he collaborative activities expressly authorized by this act, an authority and its
university affiliates, as well as the public or private entities and individuals with which they
collaborate, shall be immunized from liability under the federal and state antitrust laws.”).
21 Id. § 3(a)(1)–(3).
22 To assist the business community in distinguishing between lawful and potentially harmful
forms of competitor collaboration, the Agencies have issued a considerable amount of guidance
over the years. Key sources of guidance include the Agencies’ general guidelines on
collaborations among competitors, as well as joint statements specifically addressing the
application of the antitrust laws to the health care industry, including physician network joint
ventures and other provider collaborations. FED. T RADE COMM ’ N & U.S. DEP ’ T OF J USTICE ,
ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG COMPETITORS (2000),
https://www.ftc.gov/sites/default/files/documents/public_events/joint-venture-hearings-antitrust-
guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf; U.S. DEP ’ T OF J USTICE &
FED. T RADE COMM ’ N, STATEMENTS OF ANTITRUST E NFORCEMENT POLICY IN H EALTH C ARE
(1996), https://www.ftc.gov/sites/default/files/documents/reports/revised-federal-trade-
commission-justice-department-policy-statements-health-care-antritrust/hlth3s.pdf (see, e.g.,
Statement 8 regarding physician network joint ventures, Statement 7 regarding joint purchasing
arrangements among providers of health care services, and Statement 6 regarding provider
participation in exchanges of price and cost information).
In addition, FTC staff have issued and made public numerous advisory opinion letters containing
detailed analyses of specific proposed health care collaborations. These letters have helped the
requesting parties avoid potentially unlawful conduct as they seek to devise new ways of
responding to the demands of the marketplace. They also have provided further guidance to the
health care industry as a whole. See, e.g., Letter from Markus H. Meier, Fed. Trade Comm’n, to
Michael E. Joseph, Esq., McAfee & Taft, Re: Norman PHO Advisory Opinion, Feb. 13, 2013,
https://www.ftc.gov/sites/default/files/documents/advisory-opinions/norman-physician-hospital-
organization/130213normanphoadvltr_0.pdf; Letter from Markus H. Meier, Fed. Trade Comm’n,
to Christi Braun, Ober, Kaler, Grimes & Shriver, Re: TriState Health Partners, Inc. Advisory
Opinion, Apr. 13, 2009, https://www.ftc.gov/sites/default/files/documents/advisory-
opinions/tristate-health-partners-inc./090413tristateaoletter.pdf; Letter from Markus H. Meier,
Fed. Trade Comm’n, to Christi Braun & John J. Miles, Ober, Kaler, Grimes & Shriver, Re:
Greater Rochester Independent Practice Association, Inc. Advisory Opinion, Sept. 17, 2007,
https://www.ftc.gov/sites/default/files/documents/advisory-opinions/greater-rochester-

Page 10 of 12
independent-practice-association-inc./gripa.pdf.
23 U.S. DEP ’ T OF J USTICE & FED. T RADE COMM ’ N, STATEMENTS OF ANTITRUST E NFORCEMENT
POLICY IN HEALTH C ARE , supra note 22, at 2.
24 Edith Ramirez, Antitrust Enforcement in Health Care – Controlling Costs, Improving Quality,
371 NEW ENG. J. M ED. 2245 (2014), http://www.nejm.org/doi/pdf/10.1056/NEJMp1408009. See
also Deborah L. Feinstein, Dir., Bureau of Competition, Remarks at the Fifth National
Accountable Care Organization Summit in Washington, DC: Antitrust Enforcement in Health
Care: Proscription, not Prescription, 26 (June 19, 2014),
https://www.ftc.gov/system/files/documents/public_statements/409481/140619_aco_speech.pdf
(“We continue to hear claims that antitrust principles are at odds with the mandates of the
Affordable Care Act. I believe these arguments misunderstand the focus and intent of federal
antitrust enforcement. . . . In the final analysis, our actions make clear the important role of
antitrust in health care policy. Ultimately, we believe that the imperatives of developing lower
cost, higher quality health care can coexist with continued enforcement of the antitrust laws.”).
25 FED. T RADE COMM ’ N & U.S. DEP ’ T OF J USTICE , HORIZONTAL M ERGER GUIDELINES , § 10
(2010), https://www.ftc.gov/tips-advice/competition-guidance.
26 Feinstein, supra note 24, at 9.
27 These widely shared policy goals are central to the Accountable Care Organizations
contemplated under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 3022,
14 Stat. 119, 395 (“Affordable Care Act”). Ctrs. Medicare & Medicaid Servs., Fast Facts, All
Shared Savings Program and Pioneer ACOs Combined (Apr. 2015) (404 shared savings ACOs
and 19 Pioneer ACOs with 7.92 million assigned beneficiaries in 49 states plus Washington, DC
and Puerto Rico). The FTC has not challenged any of these 423 ACOs. See also Medicare
Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed.
Reg. 67,802, 67,822 (Nov. 2, 2011) (codified at 42 C.F.R. pt. 425) (“[T]he intent of the Shared
Savings Program and the focus of antitrust enforcement are both aimed at ensuring that
collaborations between health care providers result in improved coordination of care, lower costs,
and higher quality, including through investment in infrastructure and redesigned care processes
for high quality and efficient service delivery.”).
28 FTC Staff Comment to the West Virginia House of Delegates Regarding SB 597 and the
Competitive Implications of Provisions regarding “Cooperative Agreements” Between – and
Possible Exemptions from the Federal Antitrust Laws for – Health Care Providers (Mar. 2016),
https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-west-
virginia-house-delegates-regarding-sb-597-competitive-implications-
provisions/160310westvirginia.pdf; FTC Staff Comment Before the Connecticut General
Assembly Labor and Employees Committee Regarding Connecticut House Bill 6431 Concerning
Joint Negotiations by Competing Physicians in Cooperative Health Care Arrangements (June
2013), https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-
connecticut-general-assembly-labor-and-employees-committee-regarding-
connecticut/130605conncoopcomment.pdf.
29 See id.; Feinstein, supra note 24. As Feinstein points out, antitrust challenges to mergers
involving health care providers of complementary – or “vertical” – services are rare. For example,
the FTC has not once “challenged a purely vertical merger involving a hospital and a physician
practice.” Feinstein, supra note 24, at 8.
30 Alabama Senate Bill 243, § 9(a)(8).

Page 11 of 12
31 Id. § 4(b).
32 The Antitrust Modernization Commission was created pursuant to the Antitrust Modernization
Commission Act of 2002, Pub. L. No. 107-273, §§ 11051-60, 116 Stat. 1856.
33 ANTITRUST M ODERNIZATION COMM ’ N, REPORT AND RECOMMENDATIONS 335 (2007),
http://govinfo.library.unt.edu/amc/report_recommendation/amc_final_report.pdf.
34 In general, the Supreme Court has flatly rejected the notion that members of the learned
professions should be free from antitrust scrutiny: “The nature of an occupation, standing alone,
does not provide sanctuary from the Sherman Act . . . nor is the public-service aspect of
professional practice controlling in determining whether § 1 includes professions.” Goldfarb v.
Va. State Bar, 421 U.S. 773, 787 (1975); see also Nat’l Soc’y of Prof’l Eng’rs v. United States,
435 U.S. 679, 695 (1978) (Supreme Court rejection of argument that competition itself poses a
“potential threat . . . to the public safety”); FTC v. Indiana Fed’n of Dentists, 476 U.S. 447
(1986).
35 For example, the legislature might consider whether some of the corporate powers the Bill
would vest in the authorities—such as the power of eminent domain—would serve not to level
the competitive playing field but further distort it, potentially in ways that are both costly and
largely unrelated to academic medicine.
36 FTC v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003, 1010 (2013) (quoting FTC v. Ticor
Title Ins. Co., 504 U. S. 621, 636 (1992)); see also North Carolina State Bd. of Dental Exam’rs v.
FTC, 135 S. Ct. 1101, 1117 (2015) (no state action immunity for dental board that sought to
exclude non-dentist competitors in teeth whitening services).
37 Phoebe Putney, 133 S. Ct. at 1015 (state legislature’s objective of improving access to
affordable health care does not logically suggest contemplation of anticompetitive means, and
“restrictions [imposed upon hospital authorities] should be read to suggest more modest aims.”).
As the U.S. Court of Appeals for the Fourth Circuit has observed, “[f]orewarned by the [Supreme
Court’s] decision in National Society of Professional Engineers . . . that it is not the function of a
group of professionals to decide that competition is not beneficial in their line of work, we are not
inclined to condone anticompetitive conduct upon an incantation of ‘good medical practice.’”
Virginia Acad. of Clinical Psychologists v. Blue Shield of Virginia, 624 F.2d 476, 485 (4th Cir.
1980).
38 See, e.g., Zack Cooper, Stuart V. Craig, Martin Gaynor, & John Van Reenen, The Price Ain’t
Right? Hospital Prices in Health Spending on the Privately Insured, Nat’l Bureau Econ. Res.,
NBER Working Paper 21815 (Dec. 2015) (finding tremendous variation in hospital prices, and
observing that “hospital prices are positively associated with indicators of hospital market power.
Even after conditioning on many demand and cost factors, hospital prices in monopoly markets
are 15.3 percent higher than those in markets with four or more hospitals.”); Gautam
Gowrisankaran, Aviv Nevo & Robert Town, Mergers When Prices Are Negotiated: Evidence
from the Hospital Industry, 105 AM . ECON. REV . 172 (2015); Martin Gaynor & Robert Town,
The Impact of Hospital Consolidation – Update, ROBERT W OOD J OHNSON FOUNDATION: T HE
SYNTHESIS PROJECT (2012) [hereinafter Impact of Hospital Consolidation] (synthesizing research
on the impact of hospital mergers on prices, cost, and quality and finding that hospital
consolidation generally results in higher prices, hospital competition improves quality of care,
and physician-hospital consolidation has not led to either improved quality or reduced costs);
Martin Gaynor & Robert J. Town, Competition in Health Care Markets (Nat’l Bureau of Econ.
Research, Working Paper 17208 (2011) (critical review of empirical and theoretical literature
regarding markets in health care services and insurance).

Page 12 of 12
39 Gaynor & Town, Impact of Hospital Consolidation, supra note 38, at 1 (citing, e.g., Deborah
Haas-Wilson & Christopher Garmon, Hospital Mergers and Competitive Effects: Two
Retrospective Analyses, 18 INT’ L J. ECON. BUS . 17, 30 (2011) (post-merger review of Agency
methods applied to two hospital mergers; data “strongly suggests” that large price increases in
challenged merger be attributed to increased market power and bargaining leverage); see also
Leemore Dafny, Estimation and Identification of Merger Effects: An Application to Hospital
Mergers, 52 J. L. & ECON. 523, 544 (2009) (“hospitals increase price by roughly 40 percent
following the merger of nearby rivals”); Joseph Farrell et al., Economics at the FTC:
Retrospective Merger Analysis with a Focus on Hospitals, 35 REV. INDUS . ORG. 369 (2009)
(mergers between not-for-profit hospitals can result in substantial anticompetitive price
increases); Cory Capps & David Dranove, Hospital Consolidation and Negotiated PPO Prices,
23 HEALTH AFFAIRS 175, 179 (2004) (“Overall, our results do not support the argument that
efficiencies from consolidations among competing hospitals lead to lower prices. Instead, they are
broadly consistent with the opposing view that consolidations among competing hospitals lead to
higher prices.”)).
40 Gaynor & Town, Impact of Hospital Consolidation, supra note 38, at 3; see also Patrick S.
Romano & David J. Balan, A Retrospective Analysis of the Clinical Quality Effects of the
Acquisition of Highland Park Hospital by Evanston Northwestern Healthcare (Fed. Trade
Comm’n Bureau of Econ., Working Paper No. 307, 2010),
https://www.ftc.gov/reports/retrospective-analysis-clinical-quality-effects-acquisition-highland-
park-hospital-evanston.
41 Cooper et al., supra note 38, at 2.
42 Id. at 33.
43 Id.
44 Haas-Wilson & Garmon, supra note 39, at 27.
45 Id. at 28.
46 Id. at 30.
47 See, e.g., Nicholas Bloom et al., The Impact of Competition on Management Quality: Evidence
from Public Hospitals, 82 REV . ECON. STUDIES 457, 457 (2015) (“We find that higher
competition results in higher management quality.”).
48 Indeed, similar arguments made by engineers and lawyers in defense of anticompetitive
agreements on price—that competition fundamentally does not work in certain markets, and in
fact is harmful to public policy goals—have been rejected by the courts, and private restraints on
competition have been condemned. See, e.g., FTC v. Superior Court Trial Lawyers Ass’n, 493
U.S. 411, 424 (1990); Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978).
49 See note 8 supra.