The doctors' trust: self-regulation and the law.
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Biomedical subjects
Publications and source records attributed to C C Havighurst.
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This Article explores the antitrust and other implications of private credentialing and accrediting programs in the health care industry. Although such programs are usually sponsored by powerful competitor groups, they serve the procompetitive purpose of providing useful information and authoritative advice to independent decision makers. Part One examines the risk that credentialing will sometimes be unfair to competitors and deceive consumers. Its survey of common-law, antitrust, and regulatory interventions to correct such unfairness and deception seeks to determine the degree of oversight to which credentialing and similar activities have been and should be subjected. In recommending that judicial or regulatory scrutiny should be limited to discovering whether standards and practices have a rational relation to a procompetitive purpose, the Article argues that greater intrusion into credentialing schemes would be inconsistent with market theory and first amendment values and would discourage line-drawing efforts that stimulate competition and facilitate consumer choice. By emphasizing throughout that personnel certification and institutional accreditation embody ideology and opinion as well as factual information, Part One sets the stage for the argument in Part Two that antitrust law can and should be used to contest the dominance of a single ideology of health care and to facilitate the development of alternative sources of consumer information. The Article's overall thesis is that, whereas the quality of advice given to the public about health care personnel and similar matters should not be closely regulated, neither should the supply of competing information and opinion be artificially curtailed.
Having argued in Part One against extensive judicial or regulatory interference with private personnel credentialing in the health care field, this Article now shifts its focus to emphasize the anticompetitive hazards inherent in credentialing as practiced by professional interests. Competitor-sponsored credentialing is shown to be a vital part of a larger cartel strategy to curb competition by standardizing personnel and services and controlling the flow of information to health care consumers. Instead of altering the conclusions reached in Part One, however, Part Two sets forth a new and hitherto unexplored agenda for antitrust enforcement, one that the authors believe will increase the quantity and quality of information available to consumers and offer a fairer competitive environment to individuals and groups disadvantaged by the denial of desirable credentials. The specific targets singled out for antitrust scrutiny are (1) the practice of "grandfathering," by which new candidates for credentials are required to meet tougher requirements than were met by existing credential holders; (2) agreements to standardize educational programs if they go beyond setting and applying accrediting standards and impair the freedom of institutions to decide independently whether to offer unaccredited training; (3) agreements by which independent certifying or accrediting bodies limit the nature or scope of competition among themselves; and (4) mergers and joint ventures in credentialing and accrediting. The legal theory supporting antitrust attacks in the latter two categories is strengthened by the apparently original insight that commercial information and opinion are themselves articles of commerce such that agreements and combinations restricting their nature and output can be characterized as restraints of trade. Among the many self-regulatory institutions in the health care field whose operation or sponsorship is called into question by the analysis herein are the leading medical specialty boards, the Liaison Committee on Medical Education, various accrediting and certifying bodies in the allied health occupations, and the Joint Commission on Accreditation of Hospitals.
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Before 1975, federal antitrust authorities neglected the health care sector, thereby allowing the entrenchment of many anticompetitive practices and institutions that seemed not only "natural," but also beneficial to the quality and professionalism of doctor-patient relations. While antitrust enforcement shares the usual physician preference for free enterprise, prosecutorial discretion is often feared as eroding professional discretion and even well-intentioned reform. However, strengthened competition in the health services industry offers a way to bring some stability to health policy, and to resolve some of the conflicts between advocates of institutional status quo and enthusiasts for increased government regulatory power.
Physicians should recognize that a more competitive health-care market would provide the best defense against government regulation. Aside from group-practice health-maintenance organizations, the cost-containment steps that might be taken in such a market are not well understood. In particular, little attention has been paid to how private health insurers might redefine their coverage to limit the cost-increasing effects of third-party payment. Insurer-provider agreements negotiated in a competitive environment would seem to be especially promising. Competing insurance plans would be variously organized and operated according to provider and consumer preferences. Traditional doctor-patient relations as well as fee-for-service payment could be preserved. The antitrust laws, while curbing concerted effort to prevent change, should assure that physicians are not exploited by dominant buyers. Lucrative opportunities already exist for enterprising and efficient providers.
Relative value studies are lists of "relative values" of different professional services. Antitrust enforcement agencies recently have filed several complaints against the promulgation of relative value studies by professional organizations of physicians, alleging that these lists have been used to fix and increase physician fees. This article examines the status of professionally sponsored relative values studies under antitrust law and suggests several reasons why they should be held unlawful. In particular, such relative value studies threaten to eliminate desirable competition among private third-party payers in the development of effective cost-containment strategies as well as among physicians in the setting of fees. Moreover, the alleged benefits of professionally sponsored relative value studies could be achieved by alternative means that do not similarly restrict competition in the provision of medical services.
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In Volume 3, Number 3 of this journal, Professor Havighurst wrote a brief Comment in which he observed that the function of health care cost-containment regulation is the rationing of health care resources, and argued that the fostering of health care consumers' and providers' free choice in the competitive marketplace is preferable to conventional cost-containment regulation as a mechanism for such rationing. He briefly outlined various reforms, including changes in federal tax treatment of health insurance premiums, aimed at implementing his approach. Subsequently, in a Comment in Volume 4, Number 1, Stephen M. Weiner, then Chairman of the Massachusetts Rate Setting Commission, criticized Professor Havighurst's analysis by asserting that it failed to acknowledge the validity of regulation in the health care field; that it overemphasized free market economics; and that it failed to appreciate the essentially political nature of regulatory processes. Mr. Weiner argued that health care regulation is here to stay, and called for renewed efforts to clarify and implement appropriate relationships between health care regulation and (1) health care rationing, (2) health care planning, and (3) health care competition. In the Comment below, Professor Havighurst replies both to specific statements in, and the general direction of, Mr. Weiner's critique, asserting that it inaccurately represented the earlier Havighurst Comment in several important respects. Professor Havighurst states, for example, that, Mr. Weiner's opinion notwithstanding, Havighurst--both in his earlier Comment and in his other writings--has considered extensively the political nature of regulation, and, furthermore, has been constructive in his critiques of regulation. He charges Mr. Weiner with attempting to stifle debate on the question of the volume and direction of health care regulation, and suggests that Weiner's criticisms may reflect a bias against the individual's right to choose for himself and to have his preferences registered in the economic marketplace.
The council on Wage and Price Stability recently has discovered evidence suggesting "an unackonwledged potential of the private sector to exert influence and control in the area of health care cost inflation." This article examines the limitations on private-sector cost-control efforts and suggests actions which would permit and encourage private decision makers to be more effective. In particular, private health insurers' potential role in cost control is explored, and some promising insurer strategies are adumbrated. Carefully designed coverage limitations and plan-initiated reviews to exclude nonessential care from coverage are suggested, together with wider use of fixed indemnity payments or negotiated fees and charges (instead of paying unusual and customary rates or incurred costs). Among the steps needed to permit insurers to provide this added service to cost-conscious customers is enforcement of the antitrust laws to prevent doctors' organized resistance to unwanted measures. In general, it is argued that private-sector efforts are likely to be more effective than government-sponsored controls as well as more appropriate in a pluralistic society.
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Regulation of the health care system to achieve appropriate containment of overall costs is characterized by Professor Havighurst as requiring public officials to engage, directly or indirectly, in the rationing of medical services. This rationing function is seen by the author as peculiarly difficult for political institutions to perform, given the public's expectations and the symbolic importance of health care. An effort on the part of regulators to shift the rationing burden to providers is detected, as is a trend toward increasingly arbitrary regulation, designed to minimize regulators' confrontations with sensitive issues. Irrationality and ignorance are found to plague regulatory decision making on health-related issues, even though it is the consumer who is usually thought to suffer most from these disabilities. The author argues that consumer choice under some cost constraints is a preferable mechanism for allocating resources because it better reflects individuals' subjective preferences, has a greater capacity for facing trade-offs realistically, and can better contend with professional dominance of the resource allocation process. In view of the unlikelihood of regulation that is both sensitive and effective in containing costs, the author proposes that we rely primarily on consumer incentives to reform the system. A simple change in the tax treatment of health insurance or other health plan premiums, to strengthen consumers' interest in cost containment while also subsidizing needy consumers, is advocated. Steps to improve opportunities for innovation in cost containment by health insurers, HMOs, and other actors are outlined briefly.