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Antitrust Market Analysis In Provider Integration

 Initial Antitrust Market Analysis In Provider Affiliations

antitrust integrated networksAntitrust analysis of potential integrated provider groups necessarily requires identification of the applicable market.  Market share issues cannot be addressed without first knowing the market parameters.  Market analysis has both a geographic and a product component.  In the health care area, the product component involves the specialty area of the physician or other provider involved.  The market may include a specific specialty or may be subject to expansion when there is a degree of functional overlap between specialties.

The geographic nature of the market can involve an extremely complex analysis.  From a planning perspective, it is generally most prudent to begin with the most restrictive definition of the geographic model.  If the network meets market standards based on a conservative market definition, further analysis is not required.  Geographic market definition can be expanded from the most conservative parameters as an exercise in risk assessment.  Based on the degree of market expansion, determinations can be made regarding elements of risk which will in turn help assess whether more complete market definition and analysis is required as a risk assessment tool.  The more conservative market definition is generally where regulators will begin their analysis and is a useful starting point for initial antitrust risk assessment.

Once the market is defined, there needs to be some analysis of the market share that will be represented by the combined group.  The number of physicians in the applicable market can be examined but does not necessarily lead to an accurate indication of market share in any given specialty.  The reality is that not all providers in a given specialty market are “equal” from an antitrust market share perspective.  The degree of market share between similarly qualified providers can be extensive.

Parties who are in the planning stages need to gather enough information to get some feel for market share without spending the money to engage an economist to do a full analysis.  Some cases will be clear on one side or the other.  If the initial conservative analysis does not indicate significant market share problems, the planning can move forward knowing that antitrust exposure is extremely low.  If the conservative market analysis indicates that the merger would result in significant market share, further analysis is required in order to identify and mitigate antitrust risk.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
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