On July 14, 2023, the Federal Trade Commission (FTC) announced that it was withdrawing two antitrust policy statements related to enforcement in healthcare markets. The policy statements contained important “antitrust safety zones” that would not be challenged by federal agencies under antitrust laws.
The FTC Announcement
In a July 14, 2023 press release, the FTC announced that it would be withdrawing two antitrust policy statements relating to enforcement in healthcare markets: (i) the 1996 “Statements of Antitrust Enforcement Policy in Healthcare” and (ii) the 2011 “Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.”1 Both policy statements were issued jointly by the FTC and the U.S. Department of Justice (DOJ) and contained certain antitrust safe harbors that those in the healthcare industry relied upon in structuring healthcare transactions over the last thirty years. The FTC’s recent announcement comes as no surprise, given the DOJ’s withdrawal of the policy statements earlier this year.2
Citing “profound changes” in the healthcare markets, the FTC noted that “[m]uch of the statements are outdated and no longer reflect market realities.”3 Instead, the FTC will continue enforcement by evaluating transactions on a “case-by-case basis” and pointed to its “extensive record of enforcement actions, policy statements, and competition advocacy in healthcare [to] provide more up-to-date guidance to the public.”4 The rationale given by the FTC for withdrawing the statements tracks closely with the DOJ’s, which stated that the statements were “overly permissible on certain subjects, such as information sharing, and no longer serve[d] their intended purposes.”5
1996 Policy Statement
The 1996 policy statement expanded upon previous FTC and DOJ guidance and set forth certain “antitrust safety zone[s]” that—absent extraordinary circumstances—would not be challenged by the agencies under antitrust laws.6 The safety zones included the following general categories of protected transactions:
- Hospital mergers;
- Hospital joint ventures involving high-technology or other expensive healthcare equipment;
- Providers’ collective provision of non-fee-related information to purchasers of healthcare services;
- Provider participation in exchanges of price and cost information;
- Joint purchasing arrangements among healthcare providers; and
- Physician network joint ventures.
2011 Policy Statement
The 2011 policy statement addressed FTC and DOJ enforcement policy for Accountable Care Organizations (“ACOs”) participating in the Affordable Care Act’s Medicare Shared Savings Program.7 Under the Medicare Shared Savings Program, “groups of providers of services and suppliers” meeting certain criteria were permitted to “work together to manage and coordinate care for Medicare fee-for-service beneficiaries through an [ACO].”8 If the ACO met certain quality performance standards, it could share a portion of any savings it created.
To encourage the formation and operation of ACOs, the 2011 policy statement was “intended to ensure that healthcare providers [had] the antitrust clarity and guidance needed to form procompetitive ACOs.”9 In issuing the statement, the FTC and DOJ established an antitrust safety zone for certain ACOs that were “highly unlikely to raise significant competitive concerns and, therefore, [would] not be challenged … under the antitrust laws, absent extraordinary circumstances.”10
Implications of the Withdrawal of the Policy Statements
The FTC and DOJ originally designed the policy statements to advise the healthcare community and “to address, as completely as possible, the problem of uncertainty” concerning antitrust enforcement policy that could “deter mergers, joint ventures, or other activities that could lower healthcare costs.11 Therefore, withdrawal of the 1996 and 2011 policy statements creates uncertainty for those in the healthcare sector who now must structure activities without the security of antitrust safety zones or guidelines. Now, the FTC and DOJ will evaluate transactions on a case-by-case basis, and industry leaders must look to recent enforcement actions and “competition advocacy in healthcare” in structuring market conduct.
Withdrawal of the policy statements has not come without industry criticism. For example, the American Hospital Association released a statement sharing its disappointment with the agencies’ withdrawal of the policies and urging for the modernization of the guidelines “to accommodate the need for more flexibility in enforcement actions to support hospitals’ ability to navigate a changing healthcare landscape.”12
