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Antitrust and Health Care: Provider Controlled Health Plans and the Maricopa Decision

Published online by Cambridge University Press:  24 February 2021

Charles D. Weller
Charles D. Weller*
Affiliation:
Yale University, Case Western Reserve University
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Abstract

The health care industry is one which traditionally has discouraged its members from engaging in competition. For years, many within the profession have espoused a guild mentality and have viewed professional societies as the proper centers of health care’s economic universe. This guild mentality has recently been challenged by proponents of a market mentality, theoreticians who argue that limited combinations of health care providers called “health plans,” which serve insurance as well as service functions, can make the health care industry more efficient. Proponents of the guild mentality have been dealt a severe blow by the Supreme Court and its decision in Arizona v. Maricopa County Medical Society. There the Court found the price-fixing by two Arizona medical societies to be illegal per se under applicable antitrust law. This Article outlines the background on competition and the guild mentality in the health care industry. After a brief discussion of the standards of antitrust analysis, the Article analyzes the Maricopa case, by first summarizing the Court’s use of strict antitrust criteria, and then by extending the analysis to an application of a more lenient standard. Next, the Article compares the provider controlled independent practice association (“IPA”)—one form of insurance plan proposed by market model advocates—with the Maricopa-type plan. Finally, the Article concludes that, not only is the special form of IPA that qualifies as a “health plan” an excellent way to promote efficiency in the health care industry, but also its procompetitive goals and effect allow it to survive even the strictest, Maricopa-type antitrust scrutiny.

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Articles
Information
American Journal of Law & Medicine , Volume 8 , Issue 3 , Fall 1982 , pp. 223 - 249
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2020

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Footnotes

The author, now a member of the Cleveland firm of Jones, Day, Reavis & Pogue, based this article on a paper prepared for the September, 1981, ABA Conference “Antitrust and the Health Care Industry” when he was an Assistant Ohio Attorney General, Antitrust Section.

References

1 McClure, The Medical Care System Under National Health Insurance: Four Models, 1 J. Health Pol., Pol’y & L. 22 (1976)Google ScholarPubMed; Enthoven, Health Care Costs: Why Regulation Fails, Why Competition Works, How to Get There From Here, 11 Nat’l J. 885 (May 26, 1979)Google Scholar.

2 HEW, Forward Plan for Health: Fiscal Years 1980-1982, at 34 (1976). See abo S. Rep. No. 1285, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. &. Ad. News 7842, 7878; McClure, supra note 1, at 33.

3 Egdahl, Fee For Service Health Maintenance Organizations, 241 J.A.M.A. 588 (Feb. 9, 1979)CrossRefGoogle ScholarPubMed.

4 Am. Med. News, June 22, 1979 at 9 (quoting Dr. Darrell Cannon).

5 See, e.g., V. Fuchs, Who Shall Live? 92-95 (1974); Enthoven, Cutting Cost Without Cutting the Quality of Care, 298 New Eng. J. Med. 1229, 1234-35 (1978)Google ScholarPubMed (curtailing “flat of the curve” medicine); McNerney, Why Does Medical Care Cost So Much?, 282 New Eng. J. Med. 1458 (1970)CrossRefGoogle ScholarPubMed.

6 See generally Areeda, P. & Turner, D. 1 Antitrust Law 221-227 (1978)Google Scholar (competition regulated industries).

7 See, e.g., Competition in Health Care: Would it Bring Costs Down?, Cong. Q. Weekly 1587 (August 4, 1979) for a discussion of the legislative proposals.

The policy analysis presented here applying market principles to the health care sector is taken from the writings of others, particularly the writings of Walter McClure. See generally Enthoven, Health Plan 70-113 (1980); W. Mcclure, Comprehensive Market and Regulatory Strategies for Medical Care (1980); Ellwood, Models for Organizing Health Services and Implications of Legislative Proposals, 50 Milbank Memorial Fund Q. Part 2, 73 (Oct., Enthoven, Cutting Cost Without Cutting the Quality of Care, supra note 5; Enthoven, Health Costs, supra note 1; McClure,supra note I. See also Havighurst, Health Maintenance Organizations and the Market for Health Services, 35 Law & Contemp. Probs. 716 (1970).

For the effects of provider competition in health care, see Christianson, & McClure, Competition in the Delivery of Medical Care, 301 New Eng. J. Med. 812 (1979)CrossRefGoogle ScholarPubMed.

8 Ellwood, The Importance of the Market, 2 J. Health, Pol., Pol’y & L. 447, 448 (1978)CrossRefGoogle Scholar.

9 [T]he truth is that hospitals have always competed with each other in multihospital settings. The competition has been for physicians, reputation, patients, and other prizes as opposed to reduced costs, but it has been occurring for a long time. What the new market forces are provoking is a different set of competitive goals for hospitals: efficiency, appropriate utilization, cost effectiveness, and innovative patterns of care.

Friedman, Does Market Competition Belong in Health Care?, 54 Hospitals, July 1, 1980Google ScholarPubMed at 47, 49. See also Williams, How to Meet the New Demands in Ambulatory Care, Trustee, Dec, 1980Google Scholar at 47.

10 United States v. Socony Vacuum Oil Co., 310 U.S. 150, 224 n.59 (1940).

11 For example, proposals for catastrophic health insurance have advocated the use of coinsurance and deductibles to increase consumer price sensitivity. See, e.g., Feldstein, A New Approach to National Health Insurance, 23 Pub. Interest 93 (1971)Google Scholar; McClure, supra note 1, at 44-47.

12 Ellwood & McCLURE, Health Delivery Reform 2 (Nov. 17, 1976) (unpublished InterStudy paper) (emphasis added).

13 See supra note 7.

14 See generally Note, Health Maintenance Organizations and the McCarran-Ferguson Act, 7 Am:J. L. & Med. 437, 437-40 (1982).

15 Id.

16 Id.

17 See infra notes 96-99 and accompanying text.

18 See supra note 7.

19 Bureau of Medical Economics, American Medical Association, Economics and The Ethics of Medicine 8 (1936):

While the relations of employer and employee, of landlord, merchant and capitalist were completely transformed by the coming of the machine and the factory, the relations of patient and physician remained almost unaltered from the dawn of history, through all the changes from domestic to household and factory industry.…

[I]t is a rule with few exceptions that whenever an attempt has been made to transplant the ethics, theories or forms of organization of business into the fields of art, science, law, education or medicine the result has been harmful to professional standards and progress.

Bureau of Medical Economics, American Medical Association, an Introduction to Medical Economics 18-19 (1933)

On the aggressive actions taken by medical societies to preserve the guild model, including boycotts, see In re AMA, infra not e 20 ; Havighurst, Antitrust Enforcement in the Medical Services Industry: What Does It All Mean?, 58 Milbank Memorial Fund Q. 89 (1980)CrossRefGoogle ScholarPubMed.

20 In re AMA, 94 F.T.C. 701, 1012 (1979), aff’d, 638 F.2d 443 (2d Cir. 1980), aff’d, 102 S. Ct. 1744 (1982). The administrative law judge’s Nov. 13, 1978 opinion is reported at 94 F.T.C. 705 (1978). The Commission’s Oct. 12, 1980 affirming opinion is reported at 94 F.T.C. 980 and 3 Trade Reg. Rep. (CCH), 21, 920 (Oct. 12, 1980).

21 See, e.g., Note, American Medical Association: Power, Purpose & Politics, 63 Yale L.J. 937, 976-96 (1954); A. Somers & H. Somers, Doctors, Patients, & Health Insurance, 261-340 (1960); In re AMA, 94 F.T.C. at 1013. Cf. AMA v. United States, 317 U.S. 519 (1943).

22 7n re AMA, 94 F.T.C. 701 (1979), aff’d, 638 F.2d 443 (2d Cir. 1980), aff’d, 102S.Ct.744 (1982). This fundamental misunderstanding of private market economics is reflected in a string of cases brought by doctors and other health professionals against participating contracts used by health plans and insurance companies. E.g., Anderson v. Medical Serv. of D.C., 551 F.2d 304 (4th Cir. 1977); Kartell v. Blue Shield of Mass., Inc., 592 F.2d 1191 (1st Cir. 1979); Grigg v. Blue Cross & Blue Shield of Mich., Inc., No. 77-2990 (E.D. Mich, filed Dec. 22, 1977) (physicians); Enright, Doctors v. Blue Shield: The First Bigg Battle, Med. Econ. 23 (Nov. 27, 1978). See also Group life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979); Doctors, Inc. v. Blue Cross of Greater Philadelphia, 557 F.2d 1001 (3rd Cir. 1976) (hospitals); Sausalito Pharmacy, Inc. v. Blue Shield of Cal., 1981-1 Trade Cas. (CCH) 63,885 (N.D. Cal. 1981) (pharmacists); Manasen v. Cal. Dental Serv., 1981-1 Trade Cas. (CCH) 63,959 (N.D. Cal. 1980) (dentists).

The provider plaintiffs in these cases were alleging, in essence, that it is “anticompetitive” for an insurance company-buyer to make provider-sellers compete over price for the insurer’s business and to refuse to deal with providers whose fees are too high.

In the guild model, price competition is a restraint of trade.

23 Supra note 20.

24 94 F.T.C. at 1014.

It would be a serious error to consider the health profession’s resistance to insurance arrangements that promote price competition among providers a thing of the past. The AMA is seeking to have Congress overturn the FTC’s landmark ruling, In re AMA. The AMA’s Executive Vice President recently stated that the AMA would be “violently opposed” to changes in Medicaid contrary to a key ethical provision struck down by the FTC as a restraint of trade. See In re AMA 94 F.T.C. at 1015; Schorr, Reagan’s Medicaid Plan Stirs Fears of Two-Class Health Care System, Wall St. J., Feb. 24, 1981 at 25; Also, an AMA delegate recently described the Enthoven competitive health plan proposals to be “socialized medicine” because, in essence, they were inconsistent with these illegal ethics against physician price competition over premiums. Rogers, Pro-competition Bills and Socialized Medicine, Am. Med. News, May 8, 1981 at 8.

Deep-seated guild policies unfortunately will not be easily eradicated.

25 15 U.S.C. § 1 (1976).

26 See generally L. Sullivan, Handbook of the Law of Antitrust 165-82 (1977).

27 National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679, 688 (1978).

28 Id. at 692.

29 L. Sullivan, supra note 26, at 195-96.

30 Bok, Section 7 of the Clayton Act and the Merging of Law and Economics, 74 Harv. L Rev.. 266, 288 (1960)CrossRefGoogle Scholar.

31 “[O]ur inquiry must focus on … the effect and, here because it tends to show effect,… the purpose of the practice.…” Broadcast Music, Inc. v. CBS, Inc. 441 U.S. 1, 7 (1979). See United States v. United States Gypsum Co., 438 U.S. 422, 436 n.13 (1978).

32 See United States v. Addyston Pipe & Steel Co., 85 F. 271, 282 (6th Cir. 1898), aff’d, 175 U.S. 211 (1899); United States v. Columbia Pictures Corp., 189 F. Supp. 153, 178 (S.D.N.Y. 1960).

33 See, e.g., Catalano, Inc. v. Target Sales, Inc., 466 U.S. 643 (1980) (rejecting the two “procompetitive” justifications given for a price restraint: (1) they removed barriers to entry and (2) increased the visibility of prices).

34 Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 7-8 (1979). In the same opinion the Court stated:

More generally, in characterizing this conduct under the per se rule, our inquiry must focus on whether the effect, and here because it tends to show effect, * * * the purpose of the practice [is] to threaten the proper operation of our predominantly free market economy—that is, whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output, and in what portion of the market, or instead one designed to ‘increase economic efficiency and render markets more, rather than less competitive.’

Id. at 19-20 (footnotes and citations omitted).

35 Brief for the United States as amicus curiae at 21, Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982) (hereinafter cited as U.S. Brief).

36 Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 20 (1979), quoting United States v. United States Gypsum Co., 438 U.S. 422, 441 n.16 (1978); see also National Soc’y of Professional Eng’rs, 435 U.S. 679, 688 (1978).

37 U.S. Brief, supra not e 35, at 20-21 n.25 (citing R. Bork, The Antitrust Paradox 267 (1978)).

38 Id. at 20. The U.S. Brief further provides that “[purported benefits that are not procompetitive would not be relevant even under the rule of reason. National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679, 690 (1978)(‘the inquiry is confined to a consideration of impact on competitive conditions’).” U.S. Brief, supra note 35, at n.25.

39 102 S. Ct. 2466 (1982).

40 Id. at 2469.

41 See id. at 2470 for a description of the Maricopa Foundation for Medical Care. The Court indicates that the functions of the two foundations are “essentially the same.” Id. at 2471.

42 “The Pima foundation is open to any Pima County area physician licensed in Arizona…. The Maricopa foundation admits physicians who are members of their county medical society.” Id. at 2480 n. l (Powell, J., dissenting).

43 Id. at 2470. The percentage of doctors who are members in the Pima foundation was disputed. Id. at 2471 n.8.

44 Id. at 2470-71.

45 Id. at 2480 (Powell, J., dissenting).

46 Id. at 2471.

47 Id. at 2481 (Powell, J., dissenting).

48 Id. at 2471.

49 Id. at 2471 n.l0.

50 Id. at 2471-72.

51 Id. at 2466.

52 Id. at 2475.

53 Id. at 2476.

54 Id.

55 See supra notes 32-35 and accompanying text.

56 Maricopa, 102 S. Ct. at 2477.

57 Id.

58 Id.

59 Id. at 2479-80. See also infra notes 82-99 and accompanying text.

60 Id. See also infra notes 82-99 and accompanying text.

61 441 U.S. 1 (1979).

62 Id. at 8-9.

63 Maricopa, 102 S. Ct. at 2479. See also supra note 58 and accompanying text.

64 Id. at 2479-80.

65 Id. at 2466. See also Pitofsky, Joint Ventures Under the Antitrust Laws: Some Reflections on the Significance of Penn-Olin, 82 Harv. L Rev.. 1007, 1016(1969):

Only those joint ventures where there is substantial but not complete integration of production, managerial, distribution, financial, or other operations will be considered. Without such integration the “joint venture” label simply masks a consensual cartel, and there is no reason to displace established antitrust rules governing cartel conduct. And, of course, when there is complete or substantially complete integration between the parent companies, merger rules would apply.

Id.

66 Maricopa, 102 S. Ct. 2475. See also infra notes 100-11 and accompanying text.

67 Maricopa, 102 S. Ct. at 2475.

68 The respondants’ brief argues some of these practices were changed after the complaint was filed and are moot. Joint Brief for Respondents 39-40, Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982).

69 The [Connecticut State-Medical Society] Council has urged the DSMS component medical societies to consider forming foundations for medical care on a county-by-county basis, each foundation to serve as the negotiating agent for contracting physicians in all matters having to do with third-party payments to physicans.…

Foundations “owned, controlled and administered by organized medicine” and incorporating fee-for-service medicine as a basic principle are one means available to medical societies to protect the interests of practicing physicians. They provide physicians with a “common front in meeting the socioeconomic pressures facing the practice of medicine,” such as presented by HMOs, where fees are not necessarily controlled by doctors.

94 F.T.C. at 787-88 (citations omitted). There also is no legal, economic or policy basis for tolerating doctor guilds that act as a “countervailing power” to large insurer-buyers. See infra note 73.

70 Maricopa, 102 S. Ct. at 2477-78.

71 Maricopa, 102 S. Ct. at 2474-75, (quoting Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211, 213 (1951); and Albrecht v. Herald Co., 390 U.S. 145, 152-53 (1968)).

72 Maricopa, 102 S. Ct. at 2475.

73 There is no persuasive legal, economic or sound policy basis for permitting physician guilds to collectively negotiate their fees with large insurer buyers. See generally L. Sullivan, supra note 26, at 285-89. Physicians generally have a far weaker case for countervailing collective negotiations than the ordinary businessman, since it is relatively easy for them in most states to organize their own insurer, such as an Individual Practice Association-type HMO. Thus the traditional antitrust proscription against collective fee bargaining by guilds of independent businessmen is especially salutary in the health field. It is likely to result in increased price competition in both provider and insurance markets.

74 Similar effects were found in the FTC’s opinion concerning the AMA’s ethical restrictions on advertising and solicitation: “These restrictions further evince in certain respects the characteristics of a horizontal allocation of customers,… also considered to be per se illegal under the antitrust laws.” 94 F.T.C. at 1003 n.42 (citations omitted).

Professor Sullivan points out that “[division of markets by customers exemplifies the most extreme case [of market division].… The division is monolithically complete and all competition is ended.” L. Sullivan, supra note 26, at 225. See also United States v. Cadillac Overall Supply Co., 1978-1 Trade Cas. (CCH) 61,892 (5th Cir. 1978).

75 L. Sullivan, supra note 26, at 194-95.

76 Affidavit of Mr. Anthony Mitten, Executive Director, Maricopa County Foundation for Medical Care, submitted in Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982).

77 Joint Brief for Respondents, 29, Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982)(footnote omitted).

78 Id. at 37 (footnotes omitted and emphasis added).

79 Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 214 (1979).

80 Id. at 215. See also P. William, The Purchase of Medical Care Through Fixed Periodic Payment (1932); Bureau of Medical Economics & AMA, New Forms of Medical Practice (1933).

“Paid-in-full” or service benefit plans were the predominant form of what is now called health insurance before Blue Cross-Blue Shield plans existed. The hospital and medical profession’s Blue Cross and Blue Shield plans were first established in the early 1930’s, after these publications on service benefit plans were printed. See Anderson, O. Blue Cross Since 1929Google Scholar, at 31-35 (1975).

According to the Blue Cross Association, Blue Cross traces its beginnings to a single hospital’s insurance plan at Baylor University Hospital in Dallas in 1929. Blue Cross & Blue Shield Associations, Fact Book 2 (1979). However, the Baylor plan was fundamentally different from Blue Cross. As a single hospital plan, it was in today’s parlance a “health plan.” It did trigger a competitive response by other hospitals: “Plans began forming across the country, each associated with a single hospital.” Id. (footnote omitted). The Blue Cross and Blue Shield concept is entirely different, and, consistent with medical and hospital association policy, includes all doctors and hospitals. The Fact Book states that the first “community wide” plans appeared in 1932. Id. By including most or all hospitals or physicians in one plan, provider price competition over premiums was eliminated.

81 F.T.C. Bureau of Competition, Medical Participation in Control of Blue Shield and Certain Other Open Panel Prepayment 280-301 (April, 1979).

82 See Group Life and Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979); Hearings on Third Party Prepaid Prescription Programs before the Subcomm. on Environmental Problems Affecting Small Business of the House Select Comm. on Small Business, 92d Cong., 1st Sess. 227-70 (1971).

83 See G. Lamb & C. Shields, Trade Association Law & Practice 34-53 (1971).

84 In re AMA, 94 F.T.C. at 1012.

85 Id. at 997.

86 Id. at 830-33.

87 See supra notes 19-24 and accompanying text.

88 See generally Havighurst, Professional Restraints on Innovation in Health Care Financing, 1978 Duke L.J. 303.

89 Joint Brief for Respondents, 12, Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982).

90 United States v. Trento n Potteries Co., 273 U.S. 392, 397-98 (1927).

91 Even an AMA attorney, “one of this nation’s foremost experts on health law,” recommended that medical societies stop collective fee negotiations with insurers:

Third-party plans need stabilized physicians’ fees in order to determine premiums for medical and health insurance. Some medical societies have previously assisted in the process, but this is now quicksand. If you are running a committee to help third-party payers determine what is reasonable payment for physician’s services, stop. Third-party payers can themselves hire practicing physicians on a part-time basis, if they wish. But it should not be done by a medical society.

Breo, Antitrust and the Medical Society, 76 Ohio St. Med. J. 136, 140 (March, 1980).

92 Office of Health Maintenance Organizations, Investor’s Guide to Health Maintenance Organizations 15 (March 1982).

93 The terms “ancillary restraint,” “joint venture,” and “partial integration” are used synonymously here. Former FTC Commissioner Robert Pitofsky summarized the law of joint ventures as follows:

The joint venture is in some respects a “quasi-merger,” where cooperation between formerly independent companies often acts to benefit and spur competition. The combined capital, assets, or know-how of two companies may facilitate entry into new markets and thereby enhance competition, or may create efficiencies or new productive capacity unachievable by either alone. As a result, relatively lenient merger standards usually apply to joint ventures, rather than straight per se rules that may apply to cartel behavior.

In re Brunswick Corp., 94 F.T.C. 1174, 1253, 1265 (1979), aff’d. 657 F.2d 971 (8th Cir. 1979), cert.denied, 102 S. Ct. 1768 (1982) (footnote omitted). See generally Brodley, Joint Ventures and Antitrust Policy, 95 Harv. L Rev.. 1521 (1982)CrossRefGoogle Scholar; L. Sullivan, supra note 26 at 206-10.

94 R. Bork, the Antitrust Paradox 279 (1978).

95 Id. at 222.

96 Professor Havighurst reaches similar conclusions in a recent article, wherein he sees the absence of competitive bargaining between insurance plans and professionals as the ultimate market problem in the health care industry:

The absence of competitive bargaining at the crucial interface between plans and professionals is the ultimate problem in this industry, and antitrust enforcement must focus on remedying this problem above all others. Control by the profession of its own financing plan obviously eliminates arm’s-length bargaining between individual physicians and the controlled plan.

Havighurst, Enforcing the Rules of Free Enterprise in An Imperfect Market: The Case of Individual Practice Associations, in A New Approach to the Economics of Health Care 375 (K. Olson ed. 1981).

He sees the market power of the controlling and participating physicians as the determinative factor in the antitrust legality or illegality of an IPA:

Only where collaborating competitors possess market power can their collaboration have anticompetitive effects in the market as a whole. Indeed, power alone can raise a hazard that justifies condemning a practice even where its ostensible purposes are defensible and its effect on competition cannot be proved adverse. It should be clear, therefore, that wherever a questionable purpose and some indication of adverse effects appear (anecdotal evidence may serve), power can be the clincher in establishing an antitrust violation.

In the case of physician control of prepayment plans, power seems the crucial element. The best indicia of power in this context may be the percentage of the market’s physicians involved in the organization participating in control of a plan and the percentage of the market’s physicians being paid through the physician-controlled plan. If a low percentage of the market’s physicians is involved, the anticompetitive threat would probably be small, and the plan would appear to be pro-competitive in its impact. If a high percentage is involved, there would be greater probability that the plan would be used to limit, rather than promote, competition.

Id.

97 L. Sullivan, supra note 26, at 209-10 (1977).

98 Sullivan gave an example where 10% was per se illegal:

Suppose, for example, that the proposal is to form a common buying agency to purchase raw materials for twenty firms of about equal size representing 10% of the capacity for the production of a homogeneous product sold to consumers. If the firms, which presently average.5% of capacity each, are typical in size of other firms in the industry, if entry barriers exist, and if firms in this industry are the sole users of some of the raw materials to be purchased, the case for forbidding the change in structure is overwhelming. The aggregation of buying power is obviously substantial; the agency will represent about one-tenth of the demand from all sources for the products it is buying. Even though real efficiencies are attained by means of this larger buying unit, a reasoned judgment would shrink from seeing them gained at such a cost in concentration.

Id. at 293-94 (footnote omitted).

See also Yamaha Motor Corp, v. FTC, 1981-2 Trade Cas. (CCH) 64,202 (8th Cir. 1981) (38% illegal); United States v. American Smelting & Ref. Co., 182 F. Supp. 834 (S.D.N.Y. 1960) (40-41% illegal); United States v. Minnesota Mining & Mfg., 92 F. Supp. 947 (D. Mass. 1950)(four-fifths illegal); 4 P. AREEDA & D. Turner, Antitrust Law § 915 (1980)(13-14%); Brodley, supra note 94, at 1553 (15%); Appalachian Coals, Inc. v. United States, 288 U.S. 344 (1933) (12% lawful).

99 See supra note 20 and accompanying text.

100 In re AMA, 94 F.T.C. at 1015. See C. Steinwald, Foundations for Medical Care 1 (Blue Cross Reports, Research Series 7, August 1971).

101 L. Sullivan, supra note 26 at 225-26.

102 Telephone conversation with Mr. Jerry Alloway, former Executive Director of United Health Plan of Columbus (August 14, 1982).

103 Egdahl, supra note 3, at 588-89 (“The complexities of managing any HMO are multiplied … by the greater autonomy and diversity of the participating… providers.”)

104 See Weller, Insurance Industry Regulation, in Health Care Regulation and Competition: are They Compatible?, (C. Havighurst ed. forthcoming).

105 Health Maintenance Organization Act of 1973, Pub. L. No. 93-222, 87 Stat. 914 (1973) (codified as amended in scattered sections of 42 U.S.C.).

106 Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, Title IX §§ 40-49, 95 Stat. 357, 572-78 (1981) (codified as amended in scattered sections of 42 U.S.C.).

107 Edgdahl, supra note 3, at 590.

108 Olds, How Our Model IPA Went Bankrupt, Med. Econ. 147, 148 (March 17, 1980)Google Scholar.

109 Office of Health Maintenance Organizations, National Hmo Development Strategy 14 (Sept., 1979).

110 In re AMA, 94 F.T.C. at 1013. That opinion quotes the AMA: “One of the pernicious effects of contract practice schemes is that each of them stimulates the launching of other similar schemes until there are many in the field competing with each other.” Id.

111 Olds, supra note 108, at 158. In a national sample of IPAs, 10 out of 10 involved more than 40% of the provider market (varying from 42-100%). Egdahl, The Potential of Organizations of Fee for Service Physicians for Achieving Significant Decreases in Hospitalization, 186 Annals of Surgery 388, 390 Table 1 (Sept. 1977).

112 Luft, How Do HMOs Achieve Their Savings?, 298 New Eng. J. Med. 1336, 1337 (1978)CrossRefGoogle ScholarPubMed.

113 Office of Health Maintenance Organizations, supra note 109, at 14. For the reactions of a medical society IPA to health plan competition, see Office of Health Maintenance Organizations, the Physicians Health Plan of Minnesota (1980).

114 Peart, & Hassard, The Organization of California Physicians’ Service, 6 Law & Contemp. Probs. 565 (1939)Google Scholar.