Justice Department Withdraws Three Longstanding Health Care Antitrust Guidance Documents

Bruce D. Armon, Michael A. Finio, Alyson M. Leone

In February, 2023, the Antitrust Division of the Department of Justice (“DOJ”) announced they are withdrawing three (3) antitrust policy statements – two of which date from the 1990s – which have been relied upon by healthcare providers and their counsel guiding them through their merger and acquisition transactions.

What You Need to Know:

  • Antitrust enforcement and compliance is rapidly evolving under the Biden Administration.
  • Health Care providers continue to face fiscal headwinds and regularly explore strategic options which could implicate antitrust issues.
  • In the absence of official DOJ guidance documents, parties should give additional attention to potential antitrust implications if a transaction moves forward.

As part of its announcement, the DOJ stated this decision “is the best course of action for promoting competition and transparency,” while making clear that they believe these policies have become too lax in light of changes in the healthcare marketplace. The DOJ is now encouraging  healthcare providers and counsel to review its prior and current enforcement actions for guidance, which clearly coincides with DOJ’s expanding preference  to analyze each collaboration on a case-by-case basis to determine whether it will harm competition.

The first policy statement withdrawn by DOJ is from September 15, 1993, which established antitrust safety zones, or circumstances which would not be challenged by the DOJ or Federal Trade Commission (“FTC”)[1] in the following categories:  (1) hospital mergers; (2) hospital joint ventures involving high-technology or other expensive medical equipment; (3) physicians' provision of information to purchasers of health care services; (4) hospital participation in exchanges of price and cost information; (5) joint purchasing arrangements among health care providers; and (6) physician network joint ventures.  As part of this policy statement, the DOJ and FTC agreed to review conduct that fell outside these safety zones on an expedited basis and provide responses within 90 days. This statement was revised and expanded in September, 1994.

The DOJ also withdrew its policy from August 1, 1996 which revised its previous statements on physician network joint ventures and multi-provider networks, and made clarifications to both its September, 1993 and September, 1994 guidance. This policy is notable in that Statement 5 has been used by healthcare providers (and others) over the years to guide the exchange of confidential and competitively sensitive information among competing providers. It set forth, for example, a safety zone for sharing the amounts, levels or methods of fees or reimbursement with a buyer that will not be challenged under the antitrust laws. Generally, the DOJ and FTC agreed not to object to, absent extraordinary circumstances, sharing of fee-related information if (i) the information was provided to a third-party to manage; (ii) the information provided was more than 3 months old; and (iii) there was at least 5 providers giving the information, no one provider’s data constituted more than 25% of the information, and the information was de-identified.

The third statement withdrawn by DOJ is the Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program, dated October 20, 2011.  This document provided antitrust guidance for collaborations among independent providers seeking to become jointly accountable for a group of patients through the integrated delivery of health care. It also created another safety zone, which if the stated criteria were met, would ensure that the anticipated accountable care organization activity did not present competitive concerns.

These three (3) guidance documents have been used for decades within the healthcare industry to structure transactions that are beneficial to patients and reduce health care costs, and provided some certainty that antitrust scrutiny would not impede their plans. 

The withdrawal of these guidelines without any replacement policies may result in ambiguity in certain deals and, for example, may lead to a decrease in the sharing of information by competitors despite the utility of such sharing and the lack of any real competition concerns relating to it. Nonetheless, mergers and acquisitions in the healthcare industry are likely to continue in 2023 for interested parties to achieve economies of scale.  Participants in a potential deal will not stop doing due diligence and exchanging confidential information, but rather will need to be more mindful of their approach and the lack of even informal guardrails. While the guidelines might be “gone” they are still out there as substantive and qualitative waypoints to keep in mind as helpful insights for when conduct is likely to cross the line and raise anticompetitive concerns. The guidelines, though ingrained over many years, were just that – guidelines. Their withdrawal means that parties will need to perhaps be ever more mindful of antitrust issues their activities present, and to carefully evaluate the specific facts and circumstances of their arrangement and be sure to document the procompetitive nature and impact of those activities. While no longer effective policy statements of the DOJ (and perhaps, soon also the FTC), reviewing these guidelines (and specific DOJ enforcement activities) will continue to be an important consideration in assessing whether or not anti-competitive effects will result from a potential business arrangement. 

[1] While the FTC has not yet taken similar action to withdraw its support for any of the guidelines acted on by DOJ, a divergence from the DOJ’s approach seems to be unlikely in the current antitrust enforcement environment.

Bruce Armon Headshot
Michael A. Finio
Alyson Leone
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