Magazine article Medical Economics

Physicians Can't Unite to Stifle Competition

Magazine article Medical Economics

Physicians Can't Unite to Stifle Competition

Article excerpt

A physician recently asked whether he and his colleagues in a local medical society could write on their prescriptions that they could be not be filled at a specific pharmacy, which had recently opened a walk-in clinic staffed by a nurse practitioner.

While the desire of the physicians to avoid sending their prescription business to a competitor is certainly understandable, once they launched a concerted effort to impose some sort of economic sanction on a competitor, they essentially embarked on an activity that would constitute an unlawful attempt at restraint of trade. This could expose them to a successful lawsuit by the pharmacy- or even action by government regulators.

Moreover, it is questionable whether such a restrictive endorsement would be effective in preventing the pharmacy from filling the prescriptions.

Physicians are increasingly frustrated by the pressures and requirements that are put on them by thirdparty payers, regulators, hospitals, and others, and there is a natural tendency for them to try to band together in an effort to deal with these forces. However, physicians would be well advised to avoid undertaking such concerted activities with their colleagues, or at the very least undertaking them only after obtaining competent legal advice.

A classic example of physicians running afoul of legal constraints occurred in Florida a number of years ago when a group of physicians that comprised the ob/gyn department at a local hospital banded together and refused to take emergency room call at the hospital unless they were paid.

The matter came to the attention of the Federal Trade Commission, which initiated an investigation. The FTC concluded that the physicians' actions constituted an "unfair method of competition" that restrained trade and "deprived consumers of the benefit of competition."

Ultimately, the chair of the ob/gyn department was forced to enter into a consent decree with the FTC that prohibited him from entering into an agreement with any physician to withhold emergency room call services at a hospital.

There are many other situations where physicians can run afoul of anti-trust, restraint of trade, and unfair competition laws. For example, physicians have generally been aware that if they band together and agree to cooperate in refusing to accept payments from managed-care organizations and third-party payers that are below a certain level, they would undoubtedly be guilty of illegal conduct and restraint of trade. …

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