Organized Medicine on Trial: The Federal Trade Commission vs. the American Medical Association

Abstract

During the 1970s, the Federal Trade Commission took on the powerful American Medical Association, hastening the end of the medical profession's domination of the health-care industry. The pivotal confrontation was the FTC's administrative action (the “FTC proceeding”), commenced in 1975, against the AMA. According to the FTC, ethical restrictions on physician advertising, solicitation, and contract practice bore no reasonable relationship to procompetitive concerns, the touchstone of the FTC's public-interest calculus. By eliminating these restraints, FTC commissioners and attorneys cut the ties that bound rank-and-file physicians to their national, state, and local medical societies, thereby undermining the structure of organized medicine. Stripped of its organizing principles and enforcement mechanisms, the medical establishment weakly resisted the formation of large-scale provider networks and the integration of insurance products and delivery systems, known as health maintenance organizations or HMOs.