Antitrust and Health Care: Provider Controlled Health Plans and the Maricopa Decision

Abstract

AbstractThe health care industry is one which traditionally has discouraged its members from engaging in competition. For years, many within the profession have espoused a guild mentality and have viewed professional societies as the proper centers of health care’s economic universe. This guild mentality has recently been challenged by proponents of a market mentality, theoreticians who argue that limited combinations of health care providers called “health plans,” which serve insurance as well as service functions, can make the health care industry more efficient. Proponents of the guild mentality have been dealt a severe blow by the Supreme Court and its decision in Arizona v. Maricopa County Medical Society. There the Court found the price-fixing by two Arizona medical societies to be illegal per se under applicable antitrust law. This Article outlines the background on competition and the guild mentality in the health care industry. After a brief discussion of the standards of antitrust analysis, the Article analyzes the Maricopa case, by first summarizing the Court’s use of strict antitrust criteria, and then by extending the analysis to an application of a more lenient standard. Next, the Article compares the provider controlled independent practice association (“IPA”)—one form of insurance plan proposed by market model advocates—with the Maricopa-type plan. Finally, the Article concludes that, not only is the special form of IPA that qualifies as a “health plan” an excellent way to promote efficiency in the health care industry, but also its procompetitive goals and effect allow it to survive even the strictest, Maricopa-type antitrust scrutiny.