In order to develop and enforce value-based care initiatives and achieve desired outcomes, greater scale in terms of number of physicians or number of covered lives often is required.  Providers must be a sufficient size in order to implement and support comprehensive performance metrics and to manage the continuum of care for each individual patient across a robust healthcare delivery system.

Greater scale, however, often involves provider consolidation, either through a true merger or acquisition, or through certain non-sale transactions such as joint ventures, clinically integrated networks, or certain collaborative purchasing agreements.  Both antitrust regulatory authorities, the Federal Trade Commission and the U.S. Department of Justice, as well as state attorneys general across the country, have issued statements expressing concern that such consolidation could reduce competition and harm consumers through higher prices or lower quality care.  The agencies evaluate the competitive concerns of provider consolidation and have and will take enforcement action as necessary to resolve those concerns.

Full mergers often provide the greatest financial stability, economies of scale, and ability to facilitate healthcare initiatives across an entire health system.  On the other hand, they also often require a notification to the antitrust agencies, which may trigger a protracted review of the proposed transaction without guaranteed success.

Pursuing a transaction short of a true merger or acquisition (e.g., joint venture, minority investment, management agreement, etc.) provides a pathway to achieving the same scale and gaining the same resources without relinquishing full autonomy.  However, there are restrictions on whether the venture is permitted to engage in joint contracting or contract on behalf of one another under the antitrust laws.  Joint contracting between competitors may be considered price fixing, and therefore per se illegal, unless, among other things, providers are under common governance or there is substantial financial and clinical integration.  This determination is highly fact-specific and nuanced.

Strategic collaborations can create opportunities for value-based health initiatives, but they can also invite antitrust scrutiny and potential enforcement.  Parties should be mindful of the variety of potential risks as they consider certain collaborative structures and payment initiatives.

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