The Interplay Between Competition and Clinical Integration: Why the Antitrust Agencies Care About Medical Care Delivery Styles

The Affordable Care Act provides for the formation of Accountable Care Organizations (“ACOs”). These ACOs will be composed of health care providers (hospitals and physicians) that will work together to manage and coordinate care for Medicare beneficiaries. Through this coordination of care-sometimes referred to as clinical integration-Medicare hopes that ACOs will lead to lower costs and increased quality of care for Medicare beneficiaries.

Medicare, however, is not the only government agency interested in ACOs and the clinical integration that will likely characterize those entities. In particular, state and federal antitrust agencies (“the Agencies”) are also quite interested in ACOs. The Agencies’ interest in ACOs, however, differs somewhat from Medicare’s, and stems from the concern that, under some circumstances, ACOs may not benefit consumers, but instead lead to higher healthcare costs and lower quality of care.

This paper outlines why the Agencies care about clinical integration, an issue that might seem primarily an issue of concern to the healthcare community and not antitrust enforcers, and how the Agencies typically evaluate the competitive significance of clinical integration. This discussion should help prospective ACOs understand how to pursue the benefits envisioned by the Affordable Care Act while avoiding antitrust concerns.