Are Clinically Integrated Physician Networks Candy-Coated Cartels?

Gregory Pelnar, Oct 11, 2010

Are “clinically integrated” physician networks that jointly contract with third-party payors such as Blue Cross little more than “candy-coated” cartels? If the answer is not necessarily, then how can one distinguish the good (i.e., those that raise consumer welfare) from the bad (i.e., those that do not)? While the Antitrust Division of the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) (collectively, “the Agencies”) have provided some general guidance on this issue, there has been a call for the Agencies to provide additional guidance.

In what follows, I review the variety of organizational forms that populate the market for physician services. I then discuss the antitrust treatment of one type of organizational form-the clinically integrated physician network joint venture. Then I present an economic analysis of clinical integration. I conclude with some thoughts on additional guidance.