Medical Staff of Good Samaritan Regional Medical Center; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 901 0032]

Medical Staff of Good Samaritan Regional Medical Center; Proposed

Consent Agreement With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, the members of the medical staff from

agreeing, or attempting to enter into an agreement, to prevent or

restrict the services offered by Good Samaritan, the clinic, or any

other health care provider by refusing to deal with others offering

health care services, or by withholding patient referrals.

DATES: Comments must be received on or before November 22, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St., and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Mark Horoschak, FTC/S-3115, Washington, DC 20580. (202) 326-2756.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's Rules of Practice (16 CFR 2.34), notice is hereby given

that the following consent agreement containing a consent order to

cease and desist, having been filed with and accepted, subject to final

approval, by the Commission, has been placed on the public record for a

period of sixty (60) days. Public comment is invited. Such comments or

views will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

The Federal Trade Commission, having initiated an investigation of

certain acts and practices of the Medical Staff of Good Samaritan

Regional Medical Center, hereinafter referred to as ``proposed

respondent,'' and it now appearing that the proposed respondent is

willing to enter into an agreement containing an order to cease and

desist from the use of the acts and practices being investigated,

It is hereby agreed by and between the proposed respondent and its

attorney, and counsel for the Federal Trade Commission that:

1. Proposed respondent Medical Staff of Good Samaritan Regional

Medical Center is an unincorporated association, organized and existing

under the laws of the State of Arizona, with its mailing address at

1111 E. McDowell Road, Phoenix, Arizona 85062.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) Any claim under the Equal Access to Justice Act.

4. This agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

agreement is accepted by the Commission it, together with the draft of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information with respect thereto

publicly released. The Commission thereafter may either withdraw its

acceptance of this agreement and so notify the proposed respondent, in

which event it will take such action as it may consider appropriate, or

issue and serve its complaint (in such form as the circumstances may

require) and decision in disposition of the proceeding.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of complaint here attached.

6. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to the proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft of complaint corresponding in form and substance with

the draft of complaint here attached and its decision containing the

following order to cease and desist in disposition of the proceeding

and (2) make information public with respect thereto. When so entered,

the order to cease and desist shall have the same force and effect and

may be altered, modified, or set aside in the same manner and within

the same time provided by statute for other orders. The order shall

become final upon service. Delivery by the United States Postal Service

of the complaint and decision containing the agreed-to order to

proposed respondent's address as stated in this agreement shall

constitute service. Proposed respondent waives any right it may have to

any other manner of service. The complaint may be used in construing

the terms of the order, and no agreement, understanding,

representation, or interpretation not contained in the order or the

agreement may be used to vary or contradict the terms of the order.

7. The representatives and counsel of proposed respondent have read

the proposed complaint and order contemplated hereby. They understand

that once the order has been issued, the Medical Staff of Good

Samaritan Regional Medical Center will be required to file compliance

reports showing that it has fully complied with the order. Proposed

respondent further understands that it may be liable for civil

penalties in the amount provided by law for each violation of the order

after it becomes final.

Order

I

It is ordered That for purposes of this order, the following

definitions shall apply:

A. ``Medical Staff'' means the Medical Staff of Good Samaritan

Regional Medical Center, its successors, assigns, officers, directors,

committees, agents, employees, and representatives.

B. ``Good Samaritan'' means Samaritan Health Systems, formerly

operated as two separate corporations (Samaritan Foundation and its

subsidiary Samaritan Health Services), doing business as Good Samaritan

Regional Medical Center, a non-profit corporation with its principal

offices located at 1111 E. McDowell Road, Phoenix, Arizona 85062, its

subsidiaries, affiliates, successors, assigns, officers,

administrators, directors, committees, agents, employees, and

representatives.

C. ``SPC'' means Samaritan Physicians Center, Inc., an Arizona

Corporation, its subsidiaries, affiliates, successors, assigns,

officers, administrators, directors, committees, agents, employees, and

representatives.

D. ``Integrated joint venture'' means a joint arrangement to

provide health care services in which physicians who would otherwise be

competitors pool their capital to finance the venture, by themselves or

together with others, and share a substantial risk of loss from their

participation in the venture.

II

It is ordered That respondent Medical Staff, directly or

indirectly, or through any device, shall cease and desist from entering

into, maintaining, or continuing, or attempting to enter into,

maintain, or continue, any agreement or understanding, either express

or implied, between or among its members or with other physicians,

providers of health care services, medical societies, hospitals, or

medical staffs, for the purpose or with the effect of preventing or

restricting the offering or delivery of health care services by Good

Samaritan, SPC or any other provider of health care services, including

any agreement to:

A. Refuse to deal, threaten to refuse to deal, or attempt to induce

others to refuse to deal or threaten to refuse to deal; and

B. Withhold patient referrals, threaten to withhold patient

referrals, or attempt to induce others to withhold patient referrals or

threaten to withhold patient referrals.

III

A. It is further ordered That this order shall not be constructed

to prohibit the Medical Staff or its members from offering to

participate or participating with other physicians, pursuant to the

Medical Staff's bylaws, in bona fide utilization review, quality

assurance, or credentialling activities in connection with the

provision of physician services.

B. It is further ordered That this order shall not be construed to

prohibit any individual member of the Medical Staff from entering into

an agreement or combination with any other physician or health care

practitioner with whom the individual Medical Staff member practices in

partnership or in a professional corporation, or who is employed by the

same person as said Medical Staff member.

C. It is furthered ordered That this order shall not be construed

to prohibit respondent Medial Staff from forming, facilitating the

formation of, or participating in, an ``integrated joint venture'' that

limits the number of participating physicians, as long as the

physicians participating in the joint venture remain free to deal with

other persons or entities other than through the joint venture.

IV

It is further ordered That the Medical Staff shall:

A. Within thirty (30) days after the date this order becomes final,

mail a copy of this order and the accompanying compliant to each member

of the Medical Staff as of the date this order becomes final, and for a

period of three (3) years after the date this order becomes final,

distribute to each new member of the Medical Staff a copy of this order

and the accompanying compliant within thirty (30) days after he or she

is officially admitted to the Medical Staff.

B. For a period of three (3) years after the date this order

becomes final, maintain records adequate to describe in detail any

action taken in connection with the activities covered by this order

and, upon reasonable notice, make such records available to the Federal

Trade Commission staff for inspection and copying.

C. Within sixty (60) days after the date this order becomes final,

annually for three (3) years on the anniversary of the date this order

becomes final, and at such other times as the Federal Trade Commission

may by written notice require, file with the Federal Trade Commission a

report setting forth in detail the manner and form in which it has

compiled and is complying with this order.

D. Notify the Commission at least thirty (30) days prior to any

proposed change in the respondent, such as dissolution, assignment, or

sale resulting in the emergence of a successor corporation or

association, or any other change in the association which may affect

compliance obligations arising out of this order.

Medical Staff of Good Samaritan Regional Medical Center Analysis of

Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from the Medical Staff of Good Samaritan

Regional Medical Center (``the Medical Staff''). The Agreement settles

charges by the Federal Trade Commission that the Medical Staff

restrained competition by, among other things, combining or conspiring

to threaten to boycott Good Samaritan Regional Medical Center (``Good

Samaritan'') in order to induce termination of Good Samaritan's

involvement with a multispecialty physicians' clinic.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

The purpose of this analysis is to facilitate public comment on the

agreement. The analysis is not intended to constitute an official

interpretation of either the proposed complaint or the proposed consent

order or to modify their terms in any way.

The Complaint

Under the terms of the agreement, a proposed complaint would be

issued by the Commission along with the proposed consent order. The

proposed complaint alleges that members of the Medical Staff joined in

a common plan to threaten to boycott Good Samaritan in order to induce

termination of Good Samaritan's involvement with the Samaritan

Physician Center multispecialty physicians' clinic (``SPC''). At

various times during, and in furtherance of, the conspiracy, the

Medical Staff allegedly:

A. Threatened to boycott Good Samaritan by representing to Good

Samaritan that doctors would jointly withhold patient admissions if

Good Samaritan continued its relationship with SPC; and

B. Solicited physicians on the Medical Staff to threaten to

withhold patient admissions from Good Samaritan if Good Samaritan

continued its relationship with SPC.

The complaint alleges that the effects of the Medical Staff's

conduct have been to restrain trade unreasonably and hinder competition

in the provision of health care services in Maricopa County, Arizona in

the following ways, among others:

A. Depriving consumers of the price and quality benefits of

competition between SPC and independent fee-for-service practitioners;

B. Depriving consumers of the full array of services that Good

Samaritan sought to offer consumers in Maricopa County;

C. Hindering SPC's ability to offer health care services to

consumers by raising its costs, reducing its efficiency, and delaying

or preventing SPC from offering specialty and subspecialty services;

D. Limiting competition among physicians in Maricopa County to the

extent that physicians agreed not to compete with each other, but

rather act only on collectively determined terms, in deciding whether

to admit patients to Good Samaritan, to refer patients to SPC

physicians, or otherwise to deal with Good Samaritan; and

E. Raising impediments to entry into the physician services market

by innovative or nontraditional providers of health care services.

The Proposed Consent Order

The proposed consent order would prohibit the Medical Staff from

entering into, or attempting to enter into, any agreement or

understanding between or among its members or with other physicians,

providers of health care services, medical societies, hospitals, or

medical staffs, for the purpose or with the effect of preventing or

restricting the offering or delivery of health care services.

The proposed consent order specifically would prohibit any

agreement to:

A. Refuse to deal, threaten to refuse to deal, or attempt to induce

others to do so; and

B. withhold patient referrals, threaten to withhold patient

referrals, or attempt to induce others to do so.

The proposed order would not prohibit:

1. The Medical Staff or its members from participating with other

physicians, pursuant to the Medical Staff's bylaws, in bona fide

utilization review, quality assurance, or credentialling activities in

connection with the provision of physician services;

2. Any individual member of the Medical Staff from entering into an

agreement with any other physician or health care practitioner with

whom the individual Medical Staff member practices in partnership or in

a professional corporation, or who is employed by the same person as

said Medical Staff member; or

3. The Medical Staff from forming, facilitating the formation of,

or participating in, an ``integrated joint venture'' that limits the

number of participating physicians, as long as the physicians

participating in the joint venture remain free to deal with other

persons or entities other than through the joint venture.

The Medical Staff agreed to the order for settlement purposes only,

and the Medical Staff's agreement to the order does not constitute an

admission by the Medical Staff that the law has been violated as

alleged in the complaint.

Benjamin I. Berman,

Acting Secretary.

Statement of Commissioner Roscoe B. Starek, III

I do not agree with the Commission's decision to accept the consent

agreement in this matter because I do not find the evidence sufficient

to support reason to believe that the proposed respondent violated the

law.

The centerpiece of this case is a resolution adopted by the medical

staff of Good Samaritan Regional Medical Center concerning plans under

consideration by the Medical Center to develop a multispecialty medical

clinic that would compete with staff members' private practices. That

resolution--approved on November 14, 1988, following certain medical

staff members' complaints about plans for the clinic--declared that

those plans ``were instituted without the approval of any [m]edical

[s]taff member or committee.'' In the wake of the resolution, the

Medical Center decided to ``freeze'' the development and planned

expansion of the clinic, and eventually the Medical Center severed its

financial and other ties to the clinic.

Neither the language of the medical staff resolution nor the other

information unearthed in this investigation establishes to my

satisfaction the validity of the core allegation here--that in order to

end the Medical Center's involvement with the clinic, medical staff

members combined to threaten a boycott of the Medical Center (which

they would effect by referring patients to other area hospitals).

Although individual physicians on the medical staff made clear to the

Medical Center's administration their displeasure with the Medical

Center's role in support of the clinic, the November 14, 1988

resolution and surrounding events are insufficient to show an agreement

to threaten a boycott. This case rests almost exclusively--and in my

view precariously--on the purported boycott victims' characterization

of the medical staff's collective state of mind. Because of the

ambiguities and weaknesses that plague the evidence in the present

case, I respectfully dissent from the decision to accept the consent

agreement.

[FR Doc. 94-23581 Filed 9-22-94; 8:45 am]

BILLING CODE 6750-01-M