In party payers since 1995, but the main practice

In year 2003 Federal Trade
Commission (File No. 01 0222) proposed a consent order after a year-long
investigation against the respondent the South Georgia Health Partners, L.L.C.
(SGHP)_ a large for profit Georgia physician hospital organization (PHO). SGHP
was composed of five smaller PHOs which consisted of total 15 hospital and
three independent practice associations (IPAs) encompassing of  500 physicians, covering almost 90% of the
patient population in several counties of the South Georgia region.

            The
federal trade commission (FTC) compliant detailed that SGHP’s  was jointly contracting with third party payers
since 1995, but the main practice discount highlighted in the case was that
SGHP and its members would illegally enter into agreements to fix physician and
hospital prices and refused to deal with third party payers individually and
only through collective negotiation. Secondly, FTC also alleged that SGHP
members cancelled existing contracts with payers, and would directing the
payers to contact SGHP for a new agreement. The mentioned allegation were
direct violation of section 5 of the federal trade commission act, 15 U.S.C.45,
as SGHP succeeded in forcing numerous payers to pay higher prices to its member
physicians and hospitals that is SGHP maintained artificially higher prices
which contributed to an increase in the cost of the healthcare.  

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            The
proposed consent order prohibited SGHP and its members from entering into or
facilitating any agreement between or among any physicians to negotiate with
payers on any physician’s behalf. But the consent permitted FTC approved form
of risk sharing model that is joint activities by the PHOs and IPAs that are
reasonably related to achieving clinical or financial integration. The proposed
order will continue in force for 20 years, but in light of the FTC’s
restriction, the SGHP group announced that it will cease all its operation by
end of the same year as the charges. The FTC settling the price fixing charges
against the SGHP is an effective and appropriate law enforcement response and
example to the allegedly anticompetitive behavior in the healthcare arena that
is effecting the healthcare relating cost of significant amount of people in
the society.

Recommendations

            SGHP
should have focused on developing a system of clinically integrated network
(CIN) amongst the PHOs and IPAs under the FTC guidelines, a tool for providers
looking to embrace fee for value methodologies. In CINs model , provider have
to embrace some financial risk in their payer contracts, develop benchmarks
relating to quality and utilization of services, evaluate performance against
the set benchmarks, make necessary changes at physician and network level to
attain the desired result would improve the efficiency of the group and quality
of the healthcare services eventually less likely to come under scrutiny by the
FTC.

             IPAs could have really benefited by the
clinical  integration and using different
technological tools to interconnect all the PHOs to communicate data and
information with regards to administrative and clinical aspects, which would
had greatly help in controlling the cost, reducing process wastes and improving
the overall health of patient population as a result of highly coordinated
care.

            SGHP
should have employed messenger model by employing a non-physician employee
whose responsibility would have been to collect a minimum required
reimbursement level from each member within the group and then contract on
behalf of the group and its provider with any payer whose offer was at or above
the cumulated minimum reimbursement level.