FTC investigations into M&As prompt early disclosure of consolidation

Clear communication, legal assessment key to smooth practice mergers
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Mergers and acquisitions among medical practices are continuing to proliferate, and along with them, a host of concerns about potential antitrust violations and other legal disputes. A recent article from American Medical News provides several examples of recent mergers that have ended up in court, many of them dealing with anticompetitive behavior and what happens when a physician does not want to be part of a newly merged organization.

"Changes in ownership and composition of professional businesses can end up being very contentious if partners don't agree," Mark A. Hall, a law and public health professor at Wake Forest University School of Law in Winston-Salem, N.C., told amednews. "These disputes can end up being very expensive because of the value that is built into professional businesses."

Critical to preventing such fallouts is promoting transparent communication upfront, the article noted.

"Physicians should be as open as possible about the details of a merger so employees feel comfortable. Incorrect assumptions can lead to distrust and inaccurate information."

It's also important to remember that the Federal Trade Commission (FTC) has the authority to evaluate all mergers, whether they fall under the $60 million valuation threshold to be reported or not.

"It's often helpful for [health professionals] to think about the likelihood it's going to be challenged and do a good job articulating why consumers are going to be better off because you're merging," Monica Noether, executive vice president and chief operating officer at Charles River Associates in Boston and former vice chair of the American Health Lawyers Association's Antitrust Practice Group, told amednews.

Indeed, as a recent New York Times article described, the FTC is increasingly becoming involved in cases, questioning whether some organizations are becoming too powerful and stifling competition in the wake of rapid consolidation.

Physicians can reduce the risk of an FTC investigation by sharing their consolidation plans upfront and asking for a nonbinding advisory opinion, amednews noted.

The discussion surrounding the move toward fast, widespread healthcare consolidation is a lively one. The NYT article elicited a series of letters to the editor from the likes of the American Hospital Association, the American Medical Association and several practicing physicians published Dec. 9.

To learn more:
- read the article from American Medical News
- see the story from The New York Times
- check out the NYT's letters to the editor

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