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CHAPTER I
ANTITRUST OVERVIEW
A. Application of the Antitrust Laws to Health Care
The health care sector comprises numerous industries providing a
broad array of products and services. These include medical care by
licensed physicians and other health care professionals, inpatient and
outpatient services of hospitals and other facilities, prescription drugs,
durable medical equipment, and home health services. There are also a
variety of arrangements for delivering and paying for health care services,
ranging from traditional commercial fee-for-service insurance plans and
government plans such as Medicare and Medicaid to more complex
arrangements like narrow networks and accountable care organizations
(ACOs). These varied products and services are delivered to consumers
by health care providers and commercial or government payors through a
complex web of contractual and regulatory relationships.
Until the late 1970s, antitrust cases in the health care sector were rare.
For many years after passage of the Sherman Act, the practice of medicine
was considered a “learned profession,” rather than “trade or commerce,”
and thus it was debatable whether the antitrust laws applied to it.1 In
addition, health care is often provided locally, and thus it was questionable
whether rendering health care services affected interstate commerce
sufficiently for courts to have subject matter jurisdiction over cases
brought under the federal antitrust laws.
that “until the present case it is clear that we have not attempted to decide
whether the practice of a learned profession falls within § 1 of the Sherman
Act”); FTC v. Raladam Co., 283 U.S. 643, 653 (1931) (noting that medical
practitioners “follow a profession and not a trade”). But see Am. Med.
Ass’n v. United States, 317 U.S. 519, 528-29 (1943) (suggesting that
antitrust laws apply to activities of physicians).
Antitrust Health Care Handbook
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The U.S. Supreme Court issued important decisions in 1975 and 1976
settling these issues. In its 1975 decision in Goldfarb v. Virginia State
Bar,2 the Court held that there is no “learned professions” exemption from
antitrust coverage, although it also noted that there may be differences in
antitrust treatment between the activities of professions and other
occupations.3 The next year, the Court decided Hospital Building Co. v.
Trustees of Rex Hospital,4 in which it explained that the activities of a local
hospital might affect interstate commerce sufficiently to fall within the
purview of federal antitrust law.5 In succeeding years, the Supreme Court
issued other important decisions establishing the federal antitrust laws’
broad application to health care.6 Now, federal antitrust claims are
2. 421 U.S. 773 (1975).
3. Id. at 788 n.17 (“It would be unrealistic to view the practice of professions
as interchangeable with other business activities, and automatically to
apply to the professions antitrust concepts which originated in other areas.
The public service aspect, and other features of the professions, may
require that a particular practice, which could properly be viewed as a
violation of the Sherman Act in another context, be treated differently.”).
4. 425 U.S. 738 (1976).
5. Id. at 744.
6. See Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999) (discussing application
of the “quick look” rule of reason in the context of a professional
association’s restraints on advertising); Summit Health v. Pinhas, 500 U.S.
322 (1991) (discussing the interstate commerce requirement in the context
of a hospital staff-privilege exclusion decision); Patrick v. Burget, 486 U.S.
94 (1988) (discussing the state action exemption in the context of a hospital
staff privilege peer review proceeding); FTC v. Ind. Fed’n of Dentists, 476
U.S. 447 (1986) (discussing application of the rule of reason in the context
of a concerted provider effort to thwart cost containment by payors);
Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984) (discussing
tying arrangements in the context of an exclusive hospital physician
contract); Arizona v. Maricopa Cty. Med. Soc’y, 457 U.S. 332 (1982)
(discussing horizontal price fixing in the context of a physician contracting
network); Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982)
(discussing the McCarran-Ferguson Act exemption fo r the business of
insurance in the context of a fee peer-review program); Nat’l Gerimedical
Hosp. & Gerontology Ctr. v. Blue Cross of Kansas City, 452 U.S. 378
(1981) (discussing the implied repeal doctrine in the context of health
planning); Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205
(1979) (discussing the McCarran-Ferguson Act exemption for the business
