FTC Staff Statement Before the Vermont Legislature Concerning Proposed Antitrust Immunity for Cooperative Agreements to Provide Health Care Services

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
PREPARED STATEMENT(1)
OF
MICHAEL WISE
ASSOCIATE DIRECTOR FOR
ADVOCACY AND LEGAL COUNSEL,
BUREAU OF ECONOMICS
FEDERAL TRADE COMMISSION
BEFORE THE
JOINT COMMITTEE ON THE PUBLIC INTEREST
IN COMPETITIVE PRACTICES IN HEALTHCARE
OF THE VERMONT LEGISLATURE
OCTOBER 20, 1994
Madam Chairman and Members of the Committee: I am pleased to appear before you today to discuss competition
and antitrust enforcement in health care markets. This testimony and my responses to your questions represent the
views of the staff of the Federal Trade Commission. They are not necessarily the views of the Commission or any
individual Commissioner.
Competition in health care markets has benefited consumers. Antitrust enforcement has been a significant factor in
the emergence of potentially procompetitive methods of delivering health care services, such as managed care.
Statutory antitrust exemptions could permit behavior that injures consumers and the economy. We know of no
antitrust orders prohibiting cooperative agreements to improve efficiency or enhance the quality of care. Thus, we
question whether granting antitrust immunity is necessary to achieve the goals sought. Because it may be difficult to
ensure that, once agreements are authorized under programs such as the proposal under consideration here, the
agreements continue to operate as intended, we recommend that, if such programs are nonetheless adopted,
measures be taken to make it easier to terminate agreements that fail to achieve those goals.
I. Interest and Experience of the Federal Trade Commission.
The Federal Trade Commission is empowered to prevent unfair methods of competition and unfair or deceptive acts
or practices in or affecting commerce.(2) Pursuant to this statutory mandate, the Commission encourages
competition in the licensed professions, including the health care professions, and in the delivery of health care
services to the maximum extent compatible with other state and federal goals. For several years, the Commission
and its staff have investigated the competitive effects of business practices of hospitals and health care
professionals.(3) The Commission has investigated and taken action concerning the competitive effects of mergers
between hospitals.(4) The staff of the Commission has also commented, in response to requests, on legislative and
regulatory proposals concerning the health care industries that may affect competition and consumer interests.(5)
II. Proposed Antitrust Exemption For Cooperative Agreements in Health Care
Industries.

One of the subjects of this hearing, and the one on which I will focus, is a proposal to grant immunity from antitrust
oversight to certain kinds of cooperative agreements among hospitals or other health care providers.(6) The proposal
would have the legislature find that, to implement strategies to reduce costs, improve access to services, and
enhance prospects for further improvement in quality of care, cooperation among health care facilities and providers
must be encouraged by state legislation.(7) The Secretary of the Agency of Human Services would be authorized to
issue a “certificate of public advantage” covering such a proposed agreement if the applicants demonstrate, by clear
and convincing evidence, that the likely benefits of the agreement outweigh disadvantages attributable to reduction in
competition.(8)
The “cooperative agreements” subject to the proposal could deal with sharing, integration, allocation, or referral of
patients, personnel, instructional programs, equipment, laboratory facilities or procedures or other services.(9) The
possible benefits to be considered include enhancement of quality of health care, preservation of facilities near
communities they have traditionally served, improvements in cost efficiency, improvements in resource utilization,
avoidance of duplication of resources, and improved access to providers and services.(10) The possible
disadvantages from reduction in competition to be considered include impairing the ability of HMO’s, PPO’s,
managed care firms or other payors to negotiate payment and service arrangements, reduction in competition among
providers or facilities (including providers or facilities that compete with, or supply goods or services to, those involved
in the agreement itself), adverse impact on quality, availability, or price of health care services, and the availability of
less restrictive arrangements.(11)
The intention is that a certificate would confer “state action” immunity from antitrust oversight.(12) The certificate
would be subject to review every three years, and could be revoked, after notice and hearing, if the Secretary found
that the benefits no longer outweigh the disadvantages.(13)
III. Competition and Antitrust Enforcement in Health Care.
Before examining this proposal more closely, let me set out the perspective we bring to the issues. The FTC enforces
the antitrust laws to ensure that competitive forces will allow the development of health care delivery desired by
consumers. The Commission does not favor one type of health care delivery system over another. The Commission
does not advocate that consumers choose a managed care plan over a fee-for-service health care plan. Nor does the
Commission take a position on which kind of health care plan provides better quality health care at lower prices.
Instead, the Commission tries to ensure that each plan may develop and grow as it meets the wants and needs of
consumers. The Commission seeks to ensure that anticompetitive behavior does not impede the development of
health care alternatives that consumers might elect to use.
Many of the various health care reform proposals have envisioned some exemption from antitrust review for the
health care industry. The Federal Trade Commission has taken the position that such exemptions are unwarranted
and unwise.(14) The Commission believes that antitrust law enforcement has played a key role in opening up the
industry for competition, and will be important to the success of any competition-based model for the future health
care market.
The antitrust laws have been described by the United States Supreme Court as the “Magna Carta of our free
enterprise system.(15) These laws reflect a judgment that competition generally promotes consumer welfare and
produces the best mix of quality goods and services at the lowest prices. The antitrust laws also assure business
people an opportunity to offer their goods and services in the marketplace, and to have their success or failure
determined by consumers’ preferences, not by the abuse of other competitors’ market power. Indeed, experience
from the Commission’s health care enforcement program suggests that antitrust law enforcement plays an important
role in preventing organized efforts to reduce price competition and to thwart cost containment efforts. For example,
antitrust law enforcement by the Commission has been instrumental in enabling alternatives to traditional fee-for-
service health care arrangements to enter health care markets in the face of opposition by some health care
providers.(16) Other examples include Commission enforcement actions that have challenged anticompetitive rules

that prohibited physicians from affiliating with health care plans, and enforcement actions that have halted organized
boycotts by some health care providers against newly developing health care arrangements.(17)
The Commission’s experience in health care markets has shown that, without the protection that antitrust law
provides, efforts to contain health care costs, and to create innovative delivery systems to better serve consumers,
sometimes can be frustrated by provider opposition. More broadly, to the extent that health care reform depends on
market mechanisms to improve the price and quality of the health care Americans receive, antitrust enforcement will
help make reform work by promoting and maintaining competitive health care markets.
IV. Consideration of Benefits and Costs in Health Care Antitrust Law Enforcement.
The premise of this proposal, and others similar to it, appears to be that antitrust litigation or prosecution, or the fear
of antitrust liability, prevents or inhibits beneficial agreements among hospitals or other providers of health care
services. It would be useful to review the record of antitrust law enforcement involving hospital mergers and
cooperative agreements, to show how the kinds of benefits described in the proposal have been considered in that
process.
The Commission’s antitrust enforcement activities concerning hospital mergers and joint ventures attempt to maintain
the competitive market forces needed to make the current health care system work, and provide opportunities for
improvements in the system to make it work better.(18) The Commission believes that competition significantly
improves the performance of hospitals within the existing health care system. Competition will continue to play such a
role in foreseeable circumstances.
The Commission and the Justice Department have jointly issued merger guidelines which set forth the analytical
framework the agencies use in determining whether a merger is likely to lessen competition.(19) Those Guidelines
emphasize the need to look beyond market concentration to determine whether a particular merger is inconsistent
with the federal antitrust laws’ objective of preserving competition and thereby promoting competitively-priced, high-
quality goods and services for the consumer. In any industry, it is necessary to look at a broad range of market
characteristics to determine whether the increase in concentration and the elimination of a competitor through a
merger would likely threaten consumer interests.(20) These other factors include efficiencies and other consumer
benefits that the merger might make possible.(21) The Commission accordingly is careful to make sure that its
enforcement actions in hospital markets in fact serve consumer interests.
Sound antitrust enforcement does not hinder efficient, procompetitive collaborations. This issue needs consideration
in perspective. In a typical year, there are about 50 to 100 hospital mergers or other arrangements consolidating
previously independent hospitals. Review of these transactions by Commission staff normally entails minimal or no
direct contact with the parties and no delay in the transaction beyond statutory Hart-Scott-Rodino requirements. In the
past decade, the Commission has conducted only about thirty formal investigations, mostly involving larger
metropolitan hospitals, and, even after the recent flurry of merger activity, has challenged only about a dozen hospital
mergers.(22)
The Commission’s assessment of the impact of antitrust enforcement on hospital collaborations has been confirmed
both by a substantial increase in such activity recently — which suggests that fear of antitrust enforcement has not
dampened hospital mergers generally — and by other observers. A Health Care Task Force of the American Bar
Association concluded that, “Overall antitrust enforcement has not deterred hospital mergers and in fact, the hospital
industry has seen a recent wave of mergers.(23) Similarly, a Department of Health and Human Services task force
examined the claim that enforcement agencies have become too adversarial in challenging hospital mergers,
concluding that the assertion was not supported by the evidence.(24)
The enforcement record on hospital joint ventures similarly should not evoke concern. To date, the Commission has
not challenged a single joint venture among hospitals. Indeed, in the context of merger enforcement, the Commission
has taken particular care not to restrict types of hospital joint ventures that are unlikely to raise serious antitrust

concerns. In a recent order blocking a hospital merger in a highly concentrated market, the Commission exempted
from the order’s reporting requirements any prospective joint ventures the hospitals might decide to undertake to
provide data processing, laboratory testing, and health care financing.(25) These joint ventures appeared likely to
achieve efficiencies and improve specific services, without endangering price and quality competition for other
services, as a complete merger could.
The Commission not only has limited its enforcement actions to hospital mergers that could have been genuinely
harmful, but also has made considerable efforts to publicize and clarify its enforcement policies in that area so as not
to discourage legal, beneficial transactions. The Federal Trade Commission and the Department of Justice have
issued Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust specifically
addressing areas of concern to members of the health care industry. A set of six statements was issued a year ago;
last month, those statements were updated and expanded.
The “antitrust safety zones” that are included in most of the policy statements describe the circumstances under
which the federal antitrust law enforcement agencies will not challenge certain collaborative activities by hospitals,
doctors, and other health care providers. The policy statements go on to explain in detail, using illustrative examples,
how the agencies analyze conduct that falls outside a safety zone. They emphasize that many activities falling
outside a safety zone nevertheless are lawful and permissible.
Under the safety zone for mergers, the agencies will not challenge, except in extraordinary circumstances, hospital
mergers where one hospital has fewer than 100 beds and fewer than 40 patients a day, and is more than five years
old. They will not challenge joint ventures among hospitals to purchase or support high-technology or other expensive
health care equipment, that involve only the number of hospitals necessary to support the equipment. If more
hospitals are included, but the additional hospitals could not support the equipment on their own or through a
competing joint venture, the agencies will not challenge the venture. One of two new examples with this statement
explains how the agencies analyze joint ventures involving existing equipment in rural areas.
The statements make clear that the agencies will not challenge joint purchasing arrangements among health care
providers, as long as they meet conditions designed to ensure they do not become vehicles for collusive purchasing
or for price fixing. The purchases must account for less than 35 percent of the total market for the purchased items
and, for arrangements among direct competitors, the cost of the jointly-purchased items must account for less than
20 percent of the total revenues of each purchaser. An example focusing on analysis of rural joint purchasing
arrangements is now included.
The agencies will not challenge an exclusive physician network joint venture (that is, a venture that restricts the ability
of physicians to affiliate with other such ventures or to contract individually with health insurance plans), as long as
the physicians share substantial financial risk and the venture comprises 20 percent or fewer of the physicians in
each specialty with active hospital privileges in the geographic market.(26) The agencies will not challenge a non-
exclusive physician network joint venture (that is, a venture that does not involve limitations on the ability of
participating physicians to affiliate with other ventures or to contract individually with health plans), as long as the
physicians share substantial financial risk, and the venture comprises no more than 30 percent of the physicians in
each specialty with active hospital privileges in the geographic market.(27) This safety zone has been expanded to
reflect the agencies’ experience that truly non-exclusive joint ventures generally raise less risk of foreclosure of
competing plans than do exclusive joint ventures.
The agencies also have added a new statement that explains how they will analyze hospital joint ventures to provide
specialized clinical or other expensive health care services. Under a “rule-of-reason” analysis, the agencies define the
relevant market, determine how the venture would affect competition in that market, weigh any anticompetitive effects
against any procompetitive efficiencies generated by the venture, and examine whether collateral restraints, if any,
are in fact necessary to achieve the efficiencies sought by the venture. To date, neither agency has challenged an
integrated joint venture to provide such services.

A statement has been added explaining how the agencies analyze multiprovider networks, which are ventures among
providers to jointly market their services to health benefits plans and others. If such networks involve agreements that
allocate markets, fix prices or similarly restrict competition, the agencies will examine whether the members are
sufficiently integrated to allow the agencies to weigh the anticompetitive effects and competitive benefits of the
agreements. (Otherwise, such agreements would be illegal on their face.) If the networks are integrated, the agencies
then will define the markets where the networks operate and have substantial impact, and examine the competitive
effects of the networks in each of these markets. That examination will take into account any cost savings or other
efficiencies that will be attributable to such networks.
The safety zones make explicit what our law enforcement activities have demonstrated: that we do not challenge
activities unless they threaten competition or consumers, and that health care providers seeking to improve
efficiency, reduce costs, or otherwise benefit consumers and competition through joint activities, need not be
concerned about antitrust enforcement. Moreover, the policy statements commit the federal antitrust enforcement
agencies to responding quickly to requests to review the legality of proposed activity through the FTC’s advisory
opinion and the Department of Justice’s business review letter processes.
V. Effects of Proposed Antitrust Exemption.
We believe that antitrust enforcement action has not prevented cooperative agreements among hospitals or other
health care institutions that would have been beneficial to consumers.(28) To the extent that the proposal would
merely authorize the kinds of agreements that would not have been subject to antitrust challenge anyway, it would
have no adverse effect on competition. However, the proposal could be interpreted to encourage or permit
agreements that are more explicitly anticompetitive in intention and effect than those contemplated before. The chief
source of concern would be agreements to allocate responsibilities that did not reflect efficiency-enhancing
integration, but instead amounted to agreements to divide markets and refrain from competition. Such division and
allocation of markets can be just as harmful to consumers as explicit price-fixing.
We recognize that policy concerns other than those considered in competition law enforcement may be important
here. Some of the considerations listed as possible benefits to be weighed against the disadvantages of reducing
competition may indeed be such different and independent considerations. Many of them, though, describe the kinds
of issues that the Commission considers in its competition enforcement decisions. For example, two factors,
increased cost efficiency and improved use of resources, could include the kinds of considerations of true efficiencies
that the Commission usually considers in antitrust analysis.(29) Others may be ambiguous. “Preservation of facilities”
and “avoidance of duplication”, although perhaps intended to include similar issues of efficiency, might include less
clearly desirable results as well. The goal of avoiding duplication, to improve efficiency, may contradict the goal of
preserving facilities. Moreover, care may be needed to ensure that “avoiding duplication” does not become simply
“avoiding competition” — that is, the “avoiding duplication” goal might be interpreted, paradoxically, to suggest that a
reduction in competition should be counted as a benefit, to be weighed against itself as a cost.
Because an informed assessment would conclude that antitrust risks are not inhibiting desirable cooperative
agreements, and because permitting the health care industry to become accustomed to agreements to eliminate
competition could harm consumers’ interests without producing clear countervailing benefits, we recommend caution
in proceeding with programs such as this proposal. The very process of negotiation among competitors could lead to
anticompetitive understandings and market behavior even where no agreement is ever requested and no certificate is
granted. And once certificates are granted, it will be difficult to ensure that the agreements are implemented in ways
that maintain the balance that justified their issuance.
The law sets two requirements for state action to remove the risk of federal antitrust liability for private actions such
as these cooperative agreements among health care providers. First, the actions must be taken pursuant to a clearly
articulated state policy to displace competition; and second, the state must actively supervise the policy.(30) The
“active supervision” requirement means that supervision must extend to specifics of implementation.(31) The
Supreme Court has said that the purpose of the requirement is to ensure that the state has determined the specific

details of a scheme that supplants competition; the mere potential for a state supervisory action is not enough.(32)
Applying this requirement to health care, it has been held that an authorizing certificate would not confer antitrust
immunity, in the absence of post- certificate regulation of the parties’ conduct to ensure that it was consistent with the
state’s policies.(33)
This proposal would require that applications for certificates be reviewed and specifically approved before the
certificates would be issued, but does not call for subsequent scrutiny or regulation of the parties’ actual operation,
except by providing generally for “review” and the possibility of reexamination and revocation. More particularized
scrutiny or regulation of actual conduct under these agreements may not only be desirable to ensure that they
continue to serve their intended purposes, but might also be necessary to accomplish the apparent goal of conferring
antitrust immunity.
One additional way to reduce the risk that anticompetitive agreements would become institutionalized would be to
issue certificates only for defined, limited terms. The burden would then clearly be on the parties to demonstrate that
the benefits continue to outweigh the disadvantages.
VI. Conclusion.
In summary, we believe that competition has been an important factor in bringing about beneficial changes in how
health care services are delivered to consumers. Experience does not demonstrate that immunity from antitrust
liability is necessary to permit hospitals or other institutional providers to undertake cooperative arrangements to
improve the quality of care they provide and make their operations more efficient. Thus, we recommend that, if
antitrust immunity is nonetheless considered desirable for other policy reasons, effective measures be included to
ensure scrutiny of “agreements” and to terminate “agreements” whose net effect is detrimental to consumers’
interests. We hope these comments are of assistance.
(1) This testimony represents the views of the staff of the Federal Trade Commission.
(2) 15 U.S.C. §§ 41 et. seq.
(3) See, e.g., American Medical Ass’n, 94. F.T.C. 701 (1979); Iowa Chapter of American Physical Therapy Ass’n, 111
F.T.C. 199 (1988) (consent agreement); Wyoming State Bd. of Chiropractic Examiners, 110 F.T.C. 145 (1988)
(consent order); Connecticut Chiropractic Ass’n, 114 F.T.C. 708 (1991); American Psychological Ass’n, C-3406
(consent order issued December 16, 1992), 58 Fed. Reg. 557 (January 6, 1993)); Texas Bd. of Chiropractic
Examiners, C-3379 (consent order issued, April 21, 1992, 57 Fed. Reg. 20279 (May 12, 1992)); National Ass’n of
Social Workers, C-3416 (consent order issued March 3, 1992, 58 Fed. Reg. 17411 (April 2, 1993)); California Dental
Ass’n, D-9259 (administrative complaint issued July 9, 1993); and McLean County Chiropractic Ass’n, C-3491, 59
Fed. Reg. 22163 (April 29, 1994) (consent order).
(4) See, e.g., Columbia Hospital Corporation, D. 9256 (complaint issued February 18, 1993; consent order, 59 Fed.
Reg. 33296 (June 28, 1994)); FTC v. Columbia Hospital Corp., No 93- 30-CIV-FTM-23D (M.D. Fla., preliminary
injunction issued May 21, 1993); University Health, Inc., D. 9246 (consent order issued September 9, 1992, 57 Fed.
Reg. 44748 (Sept. 29, 1992)); FTC v. University Health, Inc., 1991-1 Trade Cas. (CCH) ¶¶ 69,400, 69,444 (S.D. Ga.),
rev’d, 938 F.2d 1206 (11th Cir. 1991); Hospital Corporation of America, 106 F.T.C. 361 (1985), aff’d, 807 F.2d 1381
(7th Cir. 1986), cert. denied, 481 U.S. 1038 (1987); American Medical Int’l, 104 F.T.C. 1 (1984).
(5) See, e.g., letter to North Dakota Assistant Attorney General David Huey (March 8, 1993) (concerning bills, similar
to the proposal being considered here, to grant antitrust exemptions to certain cooperative agreements among
hospitals or other providers); letter to Illinois State Senator Judy Baar Topinka (March 12, 1993) (concerning bill to
establish demonstration program to test feasibility of alternative health care delivery system).

(6) Another subject of this hearing is a bill about pharmacies and prescription drugs that was considered in the last
legislative session and is expected to be introduced again in the next one. The staff of the Commission has
commented several times, in other jurisdictions, about “any willing provider” features comparable to those in this bill.
Copies of those recent comments are attached to this statement for your information.
(7) Proposed Section 9460.
(8) Proposed Section 9462(d).
(9) Proposed Section 9461(a).
(10) Proposed Section 9462(d)(1).
(11) Proposed Section 9462(d)(2).
(12) Proposed Sections 9460, 9465(a).
(13) Proposed Section 9462(e). Certificates would be granted only if “clear and convincing” evidence showed that
benefits outweighed disadvantages, but they could be revoked if only a preponderance of the evidence showed that
the balance had shifted the other way. Proposed Section 9465(b).
(14) See letters from Federal Trade Commission concerning H.R. 3486 and S. 1658 to The Honorable Jack Brooks,
Chairman, Committee on the Judiciary, United States House of Representatives, and The Honorable Howard M.
Metzenbaum, Chairman, Subcommittee on Antitrust, Monopolies, and Business Rights, Committee on the Judiciary,
United States Senate (June 10, 1994). The Department of Justice has also taken a similar position. See letter from
Anne K. Bingaman, Assistant Attorney General, U.S. Department of Justice, Antitrust Division, to The Honorable
Howard M. Metzenbaum, (April 14, 1994).
(15)” U.S. v. Topco Associates, Inc., 405 U.S. 596, 610 (1972).
(16) See e.g., the “Cleveland Clinic” cases: Medical Staff of Holy Cross Hospital, FTC Docket No. C-3345, 56 Fed.
Reg. 49184 (1991) (consent order); Medical Staff of Broward General Medical Center, FTC Docket No. C-3344, 56
Fed. Reg. 49184 (1991) (consent order); Diran Seropian, M.D., FTC Docket No. 9248, 57 Fed. Reg. 44748 (1992)
(consent order).
(17) See e.g., Baltimore Metropolitan Pharmaceutical Association, Inc., FTC Docket No. D- 9262, 59 Fed. Reg.
15733 (1994).
(18) The Commission is not in a position to make broad predictions or recommendations about what the hospital
industry will or should look like in the next century. The Commission’s involvement in the health care field is limited to
the enforcement of certain antitrust and consumer protection statutes. While that role is important, the Commission’s
experience with, and expertise in, health care is limited and specialized, as compared to agencies such as the
Department of Health and Human Services.
(19) Department of Justice and Federal Trade Commission, Horizontal Merger Guidelines (April 2, 1992).
(20) Id.
(21) Claims of efficiencies will only be considered if they are realistic and supported by the evidence. Notably, in three
of the four hospital merger cases decided after litigation in which potential efficiencies were a significant issue, the
hospitals’ arguments on that issue were rejected as factually unpersuasive. See FTC v. University Health, Inc., 938
F.2d 1206, 1223-24 (11th Cir. 1991); United States v. Rockford Memorial Corp., 717 F. Supp. 1251, 1287-91 (N.D. Ill.

1989), aff’d, 898 F.2d 1278 (7th Cir.), cert. denied, 111 S.Ct. 295 (1990); American Medical Int’l, 104 F.T.C. 1, 148-
155, 218-20 (1984). However, the Commission has weighed potential efficiencies in reaching its decision not to
challenge certain hospital transactions.
(22) A recent GAO study compiled the enforcement records of both federal antirust enforcement agencies. It found
that, of the 397 hospital combinations for which pre-merger filings had been made between 1991 and 1993, only 28
resulted in formal “second requests” for additional information, and only 15 of those were challenged. United States
General Accounting Office, Federal and State Antitrust Actions Concerning the Health Care Industry (August 5,
1994). The figures do not include combinations that did not require pre-merger filings.
(23)” American Bar Association Working Group on Health Care Reform, “Antitrust Implications of Health Care
Reform” (May 14, 1993) at 4.
(24) Report of the Secretary’s Task Force on Hospital Mergers, at 11 (Jan. 1993). The HHS task force specifically
addressed the issue of rural hospital mergers. It found that there was no evidence that the possibility of scrutiny by
the antitrust enforcement agencies adversely affected consolidation among hospitals in rural markets. The task force
also found that very few such mergers are investigated, and concluded that there was “no need to exempt and
therefore tacitly encourage mergers among hospitals in rural or ?small’ urban settings.” Id.
(25) University Health, Inc., D. 9246, 57 Fed. Reg. 44748 (1992) (consent order) (exempting a wide range of support
service joint ventures). See also The Reading Hospital, 113 F.T.C. 285 (1990) (consent order) (the Commission
determined that voluntary separation of the merged hospitals was sufficient to restore them as independent
competitors, even though both hospitals continue to participate in hospital-sponsored health plan joint ventures, and
to share laundry, laboratory, and biomedical equipment repair services).
(26) If there are fewer than five of one type of specialist in the market, the venture may include one of them on a non-
exclusive basis.
(27) If there are fewer than four of one type of specialist in the market, the venture may include one of them.
(28) We know of no antitrust actions brought by private parties against cooperative agreements of the kind
contemplated by this proposal. In theory, the risk of facing the costs of antitrust litigation or enforcement could
discourage even some joint arrangements that would not be found illegal. In practice, though, the threat of
government or private antitrust action has not, to our knowledge, discouraged beneficial cooperative arrangements.
Reports in trade journals suggest that the threat of antitrust action has not chilled collaborations. See, e.g., D. Burda,
Mergers thrive despite wailing about adversity, Modern Healthcare (October 12, 1992).
(29) For examples of consideration of such efficiencies in particular hospital mergers, see the cases cited in n. 21,
supra. See generally Massachusetts Bd. of Registration in Optometry, 110 F.T.C. 549 (1988), for a discussion of how
the Commission considers factors such as these in deciding other kinds of antitrust cases. These factors would not
be considered in a case of pure price-fixing among competitors, but would be important in a case involving a joint
venture or other combination.
(30) See California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980).
(31) F.T.C. v. Ticor Title Insurance Co., 112 S.Ct. 2169 (1992).
(32) Ticor, supra n. 31 at 2177 (the state must have exercised independent judgment and control “so that the details
of the rates or prices have been established as a product of deliberate state intervention, not simply by agreement
among private parties”), 2179.

(33) See P.I.A. Asheville, Inc. v. North Carolina, 740 F.2d 274, 278 (4th Cir. 1984), cert. denied, 471 S.Ct. 1003
(1985) (certificate of need approval for hospital acquisition did not immunize from antitrust challenge; there was no
active supervision of post-certificate conduct, and the federal program that the certificate of need process
implemented did not displace the antitrust laws).