From: Nigel Allen <nigel.allen@canrem.com>
Subject: DOJ Issues Business Review Letter of Cleveland Area Hospitals
Followup-To: alt.activism.d
Originator: rich@pencil.cs.missouri.edu
Organization: Echo Beach, Toronto
Date: Mon, 11 Jan 1993 19:44:27 GMT

[Note from NDA: Here is a press release from the U.S. Department of 
Justice. It is an interesting reflection on the bureaucracy inherent in 
the U.S. health care system. In Canada, negotiations between 
provincial health ministries and doctors occur on a province-wide 
basis and cover all doctors, except in Quebec where family physicians 
(general practitioners) negotiate separately from specialists.]

DOJ Issues Business Review Letter of Cleveland Area Hospitals
 To: National Desk, Ohio Correspondents
 ontact: Gina Talamona of the U.S. Department of Justice,
          202-514-2007

   WASHINGTON, Jan. 7  -- The Department of Justice announced 
today that it does not intend to challenge under the antitrust laws 
a proposal by Case Western Reserve University School
of Medicine (Case Western) and University Hospitals of Cleveland
(UHC) to use a single agent to negotiate contract terms and fees with
third-party payers on behalf of the 19 separate physician practice
groups that provide medical care at UHC.
   The department's position was set forth in a business review
letter from J. Mark Gidley, acting assistant attorney general in
charge of the Antitrust Division, to Gregory G. Binford, counsel for
UHC, a teaching hospital affiliated with Case Western.
   Under the proposal, UHC would designate a single agent to
negotiate with third-party payers on behalf of all the physicians who
are organized into different practice groups according to medical
specialties.  Each practice group would provide the agent with a list
of medical procedures and related ranges of prices for negotiating
fees for each procedure.
   Third-party payers would be advised that they would be free to
conduct negotiations directly with any practice group.  Each practice
group, similarly, would be free to conduct negotiations directly with
a third-party payer.  If the negotiations proceeded through the
agent, each practice group still would be free to accept or reject
the agent-negotiated contract.  If any group rejected the negotiated
contract, that practice group could renegotiate or decide not to
contract.  Any contract entered into for a practice group would be
independent from any other practice group's contract.
   Although there are overlapping procedures between some of the
physician practice groups, the practice groups do not compete
meaningfully with each other.  Further, the safeguards built into the
proposal ensure that it is unlikely to increase the availability of
fee and cost information among competing providers and therefore is
unlikely to facilitate collusion.  For example, third-party payers
can contract directly with the practice groups if they prefer, and
maintain confidentiality of fee information received from each
practice group.
   Moreover, there appears to be a procompetitive justification for
the proposal.  Each of the 19 practice groups separately negotiates
and contracts with third-party payers.  This system has become
burdensome and unwieldy because it results in 19 different
negotiations and contracts.  Changing the method of negotiation is
expected to lower the costs associated with contracting by expediting
negotiations and facilitating the bargaining process.
 -30-
--
Nigel Allen, Toronto, Ontario, Canada         nigel.allen@canrem.com
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