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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
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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 
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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
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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 
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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 
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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.
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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/competitionpolicy-guidance/hcupdaterev.pdf; see also Fed. Trade Comm’n, Competition in the Health Care 

Marketplace: Formal Commission Actions, https://www.ftc.gov/tips-advice/competitionguidance/industry-guidance/health-care.

9 See, e.g., FED. TRADE COMM’N & U.S. DEP’T OF JUSTICE (“DOJ”), IMPROVING HEALTH CARE:
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A DOSE OF COMPETITION (2004), http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf

[hereinafter FTC & DOJ, IMPROVING HEALTH CARE]. 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-tradecommission-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 CARE, 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-commentregarding-oregon-senate-bill-231a-which-includes-language-intended-providefederal/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-yorkstate-senator-ranzenhofer-new-york-state-assemblyman-abinanticoncerning/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-tennesseedepartment-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-commentconnecticut-general-assembly-labor-and-employees-committee-regardingconnecticut/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-
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puerto-rico-house-representatives-concerning-s.b.2190-permit-collective-bargaining-health-careproviders/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. TRADE COMM’N & U.S. DEP’T OF JUSTICE,

ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG COMPETITORS (2000), 

https://www.ftc.gov/sites/default/files/documents/public_events/joint-venture-hearings-antitrustguidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf; U.S. DEP’T OF JUSTICE &

FED. TRADE COMM’N, STATEMENTS OF ANTITRUST ENFORCEMENT POLICY IN HEALTH CARE 

(1996), https://www.ftc.gov/sites/default/files/documents/reports/revised-federal-tradecommission-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-hospitalorganization/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/advisoryopinions/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-
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independent-practice-association-inc./gripa.pdf.

23 U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, STATEMENTS OF ANTITRUST ENFORCEMENT 

POLICY IN HEALTH CARE, supra note 22, at 2.

24 Edith Ramirez, Antitrust Enforcement in Health Care – Controlling Costs, Improving Quality, 

371 NEW ENG. J. MED. 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. TRADE COMM’N & U.S. DEP’T OF JUSTICE, HORIZONTAL MERGER 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-westvirginia-house-delegates-regarding-sb-597-competitive-implicationsprovisions/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-commentconnecticut-general-assembly-labor-and-employees-committee-regardingconnecticut/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).
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 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 MODERNIZATION 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 WOOD JOHNSON FOUNDATION: THE 

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-highlandpark-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.