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    Legal Aspects Healthcare

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    A physician-hospital organization (PHO) consists of 15 hospitals - with 2,247 staffed beds - and approximately 500 physicians. The PHO operates in a very large section of South Georgia, including the cities of Valdosta, Tifton, Thomasville, Moultrie, and Waycross. The PHOs' physician members represent approximately 90 percent of all physicians practicing in the region.

    The PHO served as a vehicle through which competing hospitals and physicians could bargain collectively with health plans to obtain higher fees for themselves. The owner PHOs, member hospitals, and member physicians cancelled contracts with payers and informed them that the PHO would be the sole entity through which they would enter into payer contracts. To contract with the PHO, payers allegedly have had to accept the fixed physician fee schedule and fixed discount of no more than 10 percent off hospital list prices.

    I need help to
    1. Explain why this arrangement would be found "per se" illegal under the FTCs' analysis.
    2. What kind of actions could be taken to restructure this arrangement to avoid a determination that it is per se illegal?
    3. Discuss the alternate FTC analysis that is applied to such cases if they are suspect but not found to be per se illegal.
    4. Scholarly references

    Thank you

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    Solution Preview

    The attached document is not intended as an assignment completion.

    Managed Care
    A physician-hospital organization (PHO) consists of 15 hospitals - with 2,247 staffed beds - and approximately 500 physicians. The PHO operates in a very large section of South Georgia, including the cities of Valdosta, Tifton, Thomasville, Moultrie, and Waycross. The PHOs' physician members represent approximately 90 percent of all physicians practicing in the region.
    The PHO served as a vehicle through which competing hospitals and physicians could bargain collectively with health plans to obtain higher fees for themselves. The owner PHOs, member hospitals, and member physicians canceled contracts with payors and informed them that the PHO would be the sole entity through which they would enter into payor contracts. To contract with the PHO, payors allegedly have had to accept the fixed physician fee schedule and fixed discount of no more than 10 percent off hospital list prices.
    I need help to
    1. Explain why this arrangement would be found "per se" illegal under the FTCs' analysis.
    An act that is considered per se illegal is one that is not illegal in itself, but has the effect of
    an illegal act. It is characterized as per se because it has a high probability of an anticompetitive
    effect (FTC, 2007). In the case of the Southern Georgia PHO, the effect of the action of
    physicians and hospitals to demand payers negotiate through the PHO is an anticompetitive
    act because it gives the PHO sole power within the regional industry and take initiative away
    from competing hospitals and physicians (Cornell University Law School, nd). Though 90%
    of ...

    Solution Summary

    The legal aspects in healthcare are discussed. The arrangements found in "per se" illegal under the FTC's analysis is provided.

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