[Federal Register Volume 68, Number 117 (Wednesday, June 18, 2003)]
[Notices]
[Pages 36558-36560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15367]


-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 021 0006]


Grossmont Anesthesia Services Medical Group, Inc.; Analysis To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before June 30, 2003.

ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments filed in electronic form should be 
directed to:

[[Page 36559]]

[email protected], as prescribed in the Supplementary 
Information section.

FOR FURTHER INFORMATION CONTACT: John Wiegand or Kerry O'Brien, FTC 
Western Regional Office, 901 Market St., Suite 570, San Francisco, CA 
94103, (415) 848-5100.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 2.34 
of the Commission's Rules of Practice, 16 CFR 2.34, notice is hereby 
given that the above-captioned 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 thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for May 30, 2003), on the World Wide Web, at ``http://www.ftc.gov/os/2003/05/index.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Comments filed in paper form should 
be directed to: FTC/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains 
nonpublic information, it must be filed in paper form, and the first 
page of the document must be clearly labeled ``confidential.'' Comments 
that do not contain any nonpublic information may instead be filed in 
electronic form (in ASCII format, WordPerfect, or Microsoft Word) as 
part of or as an attachment to email messages directed to the following 
email box: [email protected]. Such comments will be considered 
by the Commission and will be available for inspection and copying at 
its principal office in accordance with section 4.9(b)(6)(ii) of the 
Commission's Rules of Practice, 16 CFR 4.9(b)(6)(ii)).

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing a proposed consent order 
with Grossmont Anesthesia Services Medical Group, Inc. (``GAS'' or 
``Respondent''). The agreement settles charges that Respondent violated 
section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, by 
facilitating and implementing agreements with Anesthesia Service 
Medical Group, Inc. (``ASMG'') on fees, quantity of anesthesia services 
provided, and other competitively significant terms. The proposed 
consent order has been placed on the public record for 30 days to 
receive comments from interested persons. Comments received during this 
period will become part of the public record. After 30 days, the 
Commission will review the agreement and the comments received, and 
will decide whether it should withdraw from the agreement or make the 
proposed order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. The analysis is not intended to constitute an official 
interpretation of the agreement and proposed order, or to modify their 
terms in any way. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by any Respondent that said Respondent violated the law or that the 
facts alleged in the complaint (other than jurisdictional facts) are 
true.

The Complaint Allegations

    GAS and ASMG are competing anesthesiology groups that provide 
anesthesia services for a fee to patients in San Diego County, 
California. ASMG employs approximately 180 anesthesiologists. GAS is 
composed of approximately 10 anesthesiologists. GAS and ASMG 
anesthesiologists are members of the medical staff of Grossmont 
Hospital in La Mesa, a municipality in central San Diego County, 
California. GAS and ASMG anesthesiologists make up approximately 75 
percent of the anesthesiologists with active medical staff privileges 
at Grossmont Hospital and work on approximately 70 percent of the cases 
that require anesthesia services at the hospital.
    Anesthesiologists provide anesthesia services to patients primarily 
at general acute care hospitals and outpatient surgery centers. Those 
services include evaluating a patient before surgery, consulting with 
the surgical team, providing pain control and support-of-life functions 
during surgery, supervising care after surgery in the recovery unit, 
and medically discharging the patient from the recovery unit. In 
addition to working on scheduled surgical procedures, anesthesiologists 
work on unscheduled obstetric and emergency cases at general acute care 
hospitals. An anesthesiologist who remains available to work on 
unscheduled cases is said to be ``taking call.''
    Anesthesiologists in San Diego County are reimbursed for their 
services from several sources. Health insurance companies and other 
third-party payors typically reimburse anesthesiologists for services 
rendered to their subscribers during scheduled and unscheduled medical 
procedures and obstetrical cases through contracts that establish fees 
and other competitively significant terms. In addition, some hospitals 
pay anesthesiologists ``stipends'' for taking call and/or for rendering 
services to uninsured patients. Some hospitals pay anesthesiologists 
stipends through contracts that establish a stipend amount and other 
competitively significant terms.
    Absent agreements among competing anesthesiologists, competing 
anesthesiologists or anesthesiology groups decide independently whether 
to seek a stipend from a hospital and the amount of the stipend. They 
also decide independently whether they will terminate or restrict the 
services they provide to unscheduled or uninsured patients if the 
hospital refuses to pay them a stipend or if they are dissatisfied with 
the stipend.
    From as early as February 2001 through March 2002, GAS and ASMG 
discussed between themselves a joint strategy to secure stipends from 
Grossmont Hospital for taking obstetric call and for rendering services 
to uninsured emergency room patients. Eventually, GAS and ASMG agreed 
on the stipend amount both groups would demand from the hospital for 
taking obstetric call. GAS and ASMG also discussed reducing their hours 
of availability for taking call to increase their negotiating power 
with the hospital. Furthermore, they agreed to maintain a solid front 
against the hospital to prevent the hospital from (1) negotiating 
separately with each group to reduce the amount of the stipend or (2) 
seeking services solely from one group to the exclusion of the other. 
ASMG and GAS ceased this collusive activity only after the Commission 
contacted them about this conduct. While the Commission's investigation 
prevented any anticompetitive effects from occurring, this conduct is a 
naked restraint, which constitutes an unfair method of competition in 
violation of section 5 of the FTC Act.

The Proposed Consent Order

    The proposed consent order is designed to prevent recurrence of the 
illegal concerted actions alleged in the

[[Page 36560]]

complaint while allowing Respondent to engage in legitimate joint 
conduct.
    Paragraph II.A prohibits Respondent from entering into or 
facilitating agreements between or among medical practices: (1) To 
negotiate, to fix, or to establish any fee, stipend, or any other term 
of reimbursement for the provision of anesthesia services; (2) to deal, 
to refuse to deal, or to threaten to refuse to deal with any payor of 
anesthesia services; or (3) to reduce, or to threaten to reduce, the 
quantity of anesthesia services provided to any purchaser of anesthesia 
services. A ``medical practice'' is defined as a bona fide, integrated 
business entity in which physicians practice medicine together as 
partners, shareholders, owners, members, or employees, or in which only 
one physician practices medicine.
    Paragraph II.B prohibits Respondent from attempting to engage in 
any action prohibited by Paragraph II.A. Paragraph II.C prohibits 
Respondent from encouraging, pressuring, or attempting to induce any 
person to engage in any action that would be prohibited by Paragraphs 
II.A and II.B.
    Paragraph II contains a proviso that allows Respondent to engage in 
conduct that is reasonably necessary to the formation or operation of a 
``qualified risk-sharing joint arrangement'' or a ``qualified 
clinically-integrated joint arrangement.'' To be a ``qualified risk-
sharing joint arrangement,'' an arrangement must satisfy two 
conditions. First, all participating providers must share substantial 
financial risk through the arrangement and thereby create incentives 
for the participants jointly to control costs and improve quality by 
managing the provision of services. Second, any agreement concerning 
reimbursement or other terms or conditions of dealing must be 
reasonably necessary to obtain significant efficiencies through the 
joint arrangement. To be a ``qualified clinically-integrated joint 
arrangement,'' an arrangement must satisfy two conditions. First, all 
participants must join in active and ongoing programs to evaluate and 
modify their clinical practice patterns, creating a high degree of 
interdependence and cooperation among providers to control costs and 
ensure the quality of services provided. Second, any agreement 
concerning reimbursement or other terms or conditions of dealing must 
be reasonably necessary to obtain significant efficiencies through the 
joint arrangement. Both definitions reflect the analyses contained in 
the 1996 FTC/DOJ Statements of Antitrust Enforcement Policy in Health 
Care.
    Paragraphs III through V of the proposed order are reporting and 
compliance provisions. Paragraph VI is a provision ``sunsetting'' the 
order after 20 years.

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-15367 Filed 6-17-03; 8:45 am]
BILLING CODE 6750-01-P