[Federal Register Volume 77, Number 155 (Friday, August 10, 2012)]
[Notices]
[Pages 47844-47846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19591]


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FEDERAL TRADE COMMISSION

[File No. 111 0101]


Renown Health; Analysis of Agreement Containing Consent Orders To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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 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 September 5, 2012.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Renown Health, File 
No. 111 0101'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/renownhealthconsent, by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Jeffrey Klurfeld, Erika Wodinsky (415-
848-5100), FTC Western Region, San Francisco, 600 Pennsylvania Avenue 
NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission 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 August 6, 2012), on the World Wide Web, at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., Washington, DC 
20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before September 5, 
2012. Write ``Renown Health, File No. 111 0101'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is obtained from any person and which is privileged or 
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a

[[Page 47845]]

request for confidential treatment, and you have to follow the 
procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment 
will be kept confidential only if the FTC General Counsel, in his or 
her sole discretion, grants your request in accordance with the law and 
the public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/renownhealthconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Renown Health, File No. 
111 0101'' on your comment and on the envelope, and mail or deliver it 
to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., 
Washington, DC 20580. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before September 5, 2012. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Overview

    The Federal Trade Commission has accepted an agreement containing 
two consent orders with Renown Health. The agreement settles charges 
that Renown Health violated Section 7 of the Clayton Act, 15 U.S.C. 18, 
by substantially lessening competition in the market for cardiology 
services in and around Reno, Nevada, through its acquisition of the two 
largest cardiology practices in the Reno area and its employment of the 
cardiologists whose practices it acquired.
    The Decision and 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 Decision and Order final. The Order to Suspend, 
which is final immediately, will remain in force either until the 
Decision and Order becomes final or the Commission decides not to issue 
an order.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Orders. The analysis is not intended to constitute an 
official interpretation of the agreement and proposed Consent Orders or 
to modify their terms in any way. Further, the proposed Consent Orders 
have been entered into for settlement purposes only and do not 
constitute an admission by Renown Health that it violated the law or 
that the facts alleged in the Complaint (other than jurisdictional 
facts) are true.

II. Background and Structure of the Market

    Renown Health is based in Reno, Nevada, and operates general acute 
care hospitals and commercial health plans which serve the Reno area. 
It is the largest provider of acute care hospital services in northern 
Nevada.
    Prior to the transactions at issue, most of the cardiologists 
practicing in the Reno area were affiliated with two medical groups 
which did business under the names Sierra Nevada Cardiology Associates 
(``SNCA'') and Reno Heart Physicians (``RHP''). Cardiologists are 
generally internal medicine physicians who specialize in the practice 
of cardiology, including the provision of non-invasive services 
(general cardiology), invasive cardiology services (e.g., diagnostic 
cardiac catheterization), interventional cardiology services (e.g., 
catheterizations and the placement of stents), and electrophysiology 
services (e.g., services related to the diagnosis and treatment of 
heart rhythm conditions). The practices of the SNCA and RHP physicians 
did not generally include cardiac surgery or pediatric cardiology. 
Other than the physicians affiliated with SNCA and RHP, there are very 
few cardiologists practicing adult cardiology in the Reno, Nevada, 
area.
    In late 2010, Renown Health reached agreements to acquire SNCA's 
medical practice and to employ the 15 SNCA cardiologists who practiced 
in the Reno area. Prior to Renown Health's acquisition of SNCA, it did 
not employ any cardiologists. With the employment of the SNCA 
cardiologists, Renown Health competed with RHP in the provision of 
cardiology services. In March 2011, Renown Health acquired RHP. As part 
of this acquisition, Renown Health employed the 16 RHP cardiologists 
who practiced in the Reno area.
    Among other terms, the employment agreements between Renown Health 
and the cardiologists from both SNCA and RHP contain covenants that 
prohibit the cardiologists from entering into medical practice in 
competition with Renown Health (``non-compete provisions''). As a 
result of the acquisitions of the two medical groups (and the 
employment of the physicians affiliated with those groups), Renown 
Health now employs approximately 88% of the physicians providing 
cardiology services for adults in the Reno area.

III. The Complaint

    The complaint alleges that Renown Health's acquisitions of the two 
cardiology practices created a highly concentrated market for the 
provision of cardiology services in the Reno area. According to the 
complaint, the consolidation of the two competing groups into a single 
group of cardiologists employed by Renown Health has eliminated 
competition based on price, quality, and other terms of competition. 
The consolidation of the two groups into one increased the bargaining 
power of Renown Health and may lead to higher prices. The complaint 
further alleges that entry into the market at a scale large enough to 
form a competitive alternative for health plans is unlikely to be 
timely or sufficient to deter the likely price increases.

IV. The Consent Orders

    The goal of the Consent Orders in this matter is to restore 
competition for cardiology services in the Reno area as quickly as 
possible. The Commission believes that competition is likely to be 
restored if Renown Health is required to release a certain number of 
its cardiologist employees from their employment contracts freeing them 
to practice either as employees of other health care entities or as 
part of independent medical groups in the Reno area. Renown Health has 
entered in an Agreement Containing Consent Orders, which includes the 
Order to

[[Page 47846]]

Suspend Enforcement of Renown Non-Compete (``Order to Suspend'') and 
the Decision and Order.
A. Order To Suspend Enforcement of Renown Non-Compete
    The Order to Suspend establishes a period of time during which the 
former SNCA and RHP cardiologists currently employed by Renown Health 
in Reno may explore other employment and professional opportunities in 
the Reno area confidentially, whether as an employee, a member of a 
medical group, or in private practice. During this period, Renown 
Health is prohibited from interfering with the cardiologists' 
employment discussions and from enforcing the provisions in their 
employment contracts prohibiting such activities. The purpose of this 
Order to Suspend is to allow Renown Health's cardiologists to 
communicate with possible employers without the risk of violating the 
non-compete provisions in their current employment contracts. In order 
to facilitate this process, the Order to Suspend requires Renown Health 
to inform all of its cardiologists through an explanatory letter, as 
well as copies of the Orders and this Analysis to Aid Public Comment 
within two days of the Orders being placed on the public record.
    The Order to Suspend is effective immediately, i.e., without a 
public comment period, upon the Agreement Containing Consent Orders 
being placed on the public record, and operates for at least 30 days 
while the Commission receives and considers public comment on the 
Decision and Order. Cardiologists may decide during this period to 
terminate employment, and may notify the special monitor (who has been 
appointed) to ensure their inclusion in the group of up to ten 
cardiologists who will be allowed to leave Renown Health in the event 
that the Commission issues the Decision and Order. However, nothing in 
the Order to Suspend requires Renown Health to release any physician 
from his or her employment agreement until the Decision and Order 
becomes final.
B. Decision and Order
    If the Commission issues the final Decision and Order, a second 30-
day period (``Release Period'') will begin. During this period, 
cardiologist employees can terminate their employment with Renown 
without penalty so long as the following conditions are met:
    (1) The cardiologist must submit notice of an intention to 
terminate employment with Renown Health to the monitor who has been 
appointed for the purpose of assuring confidentiality;
    (2) The cardiologist must state his or her intention to continue to 
practice in the Reno area for at least one year;
    (3) The cardiologist must be among the first 10 physicians to 
submit notice to terminate employment. Renown Health is not required to 
release more than 10 cardiologists from their employment contracts. To 
protect the confidentiality of the doctors who want to leave, the 
monitor will submit to Renown Health no more than the first 10 notices 
received; and
    (4) The cardiologist may not leave prior to the monitor delivering 
notice to Renown Health, but must leave employment with Renown Health 
within 60 days of Renown Health receiving notice from the monitor.
    At any time during the Release Period, after the monitor has 
informed Renown that 10 physicians have met the requirements to 
terminate without penalty, Renown may request that the Release Period 
be terminated.
    If at the end of this Release Period fewer than six doctors have 
notified the monitor of their intent to terminate employment, the 
period in which cardiologists may continue to explore other employment 
opportunities and leave Renown's employment without penalty will remain 
open until six cardiologists have terminated their employment with 
Renown. This provision is included in the Decision and Order to ensure 
that at least six physicians can leave.
    Paragraph II describes the basic terms under which cardiologists 
may terminate their employment with Renown Health. It prohibits Renown 
from (1) enforcing any non-compete, non-solicitation, or non-
interference provisions in their employment agreements, (2) pursuing 
any breach of contract action for violation of any of these provisions, 
or (3) taking any retaliatory action against any physician who either 
leaves under the terms of the Orders or who decides not to leave after 
exploring other employment as allowed by the Orders.\2\ The Order does 
not, however, require Renown to allow cardiologists to terminate their 
employment agreements in a manner other than that specified in the 
Decision and Order.
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    \2\ The Order does not require that any doctor terminate 
employment with Renown or to work for any other entity. Similarly, 
it does not require Renown to fire any doctor. It also does not 
prohibit Renown from negotiating with a doctor to reach a mutual 
agreement for that physician's employment to be terminated.
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    Paragraph III provides for the extension of the period for 
cardiologists to terminate their employment if at least six 
cardiologists do not terminate during the initial period.
    Paragraph IV includes a number of provisions to ensure that Renown 
Health will not take any actions to discourage physicians from 
exploring opportunities to leave or from leaving its employment 
pursuant to the Decision and Order. In addition, Paragraph IV.A.6 
prohibits Renown Health, for a period of three years, from denying, 
terminating or suspending the medical staff privileges of any physician 
who leaves Renown Health's employment pursuant to the Consent Orders.
    Paragraph V preserves Renown Health's obligation to provide 
transition services to cardiologists whose employment contracts include 
such provisions, excluding transitional services relating to 
negotiating with health plans. Paragraph VI requires Renown Health to 
give advance notification for future acquisitions affecting this 
market. Paragraph VII specifies the rules governing the work of the 
special monitor.
    The remaining order provisions are standard reporting requirements 
to allow the Commission to monitor on-going compliance with the 
provisions of the Order.

V. Renown Health's Agreement With the Nevada Attorney General

    The State of Nevada, through its Attorney General, worked with the 
Commission staff in the investigation and resolution of this matter. 
The Nevada Attorney General filed her own complaint containing 
allegations similar to those in the Commission's complaint, and Renown 
Health has entered into a stipulated agreement with the Nevada Attorney 
General that contains obligations similar to those in the Commission's 
orders. This agreement is embodied in a document called a Final 
Judgment, and is subject to court approval. Copies of these documents 
can be obtained from the Nevada Attorney General's Office.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-19591 Filed 8-9-12; 8:45 am]
BILLING CODE 6750-01-P