Clinton Plan Would Facilitate Joint Ventures by Hospitals

The Clinton Adminstration’s unusual move to clarify antitrust guidelines for hospitals and other health care providers will make it easier for some Southern California hospitals to form joint ventures and help to curb the medical technology arms race, industry experts said Thursday.

While the industry welcomed the Justice Department announcement of six “safety zones” that would not be challenged under antitrust law, some hospital executives said the guidelines provide no significant relief for large hospitals in urban areas.

“What we would like the most is to be able to explore relationships with a number of hospitals despite their size,” said Dr. Allen Mathias, president of the 600-bed Huntington Memorial Hospital in Pasadena.

The guidelines would permit mergers in which one hospital has fewer than 100 beds and an average of fewer than 40 patients a day. Many hospitals in small towns and specialty hospitals in larger cities have 100 beds or less. However, Southern California’s 219 general hospitals have an average of about 300 beds each.

The guidelines, announced Wednesday by the Justice Department and Federal Trade Commission, are a prelude to the formal unveiling of President Clinton’s health care reform package next week. Hillary Rodham Clinton, who promised the hospital industry antitrust relief earlier this year, said at a news conference that the guidelines would help “turn this system right side up.”

The First Lady and other federal officials said the guidelines would save consumers and hospitals money. One guideline would allow joint ventures among hospitals to buy and operate expensive medical equipment so long as it would be too costly for each to do alone. Two hospitals, for example, could build a medical imaging clinic together and be permitted to discuss setting prices for patients from both hospitals.

Matthew Gerlach, chief operating officer of Queen of the Valley Hospital in West Covina, said he welcomes the changes as a way to reduce costs. “With the traditional health care system, we’ve been so very competitive by nature. If someone else had a CAT scanner, we almost got into a technology war where each hospital wanted the best and brightest.

“Most hospitals are already exploring alternative ways to integrate and collaborate,” Gerlach said. “But we’ve all been dancing around how to do that due to the antitrust regulations.”

The attempt to clarify by guidelines drew praise from two congressional antitrust hawks, Sen. Howard Metzenbaum (D-Ohio), chairman of the Senate Judiciary subcommittee on antitrust, and Rep.Jack Brooks (D-Tex.), House Judiciary Committee chairman.

David Langness, a spokesman for the Hospital Council of Southern California, said some hospitals have formed “loose affiliations” rather than formal mergers out of concern that their activities could run afoul of antitrust rules.

“We understand that there is more to come and that the rules will be further relaxed,” Langness said. “When that happens, we will see a lot of formal mergers.” The federal antitrust agencies have said they will consider further policy statements as warranted.

Kirk B. Johnson, general counsel for the American Medical Assn., criticized the guidelines as not very significant. He said the antitrust provisions cover areas that most health care providers already consider safe.

Johnson said he is concerned that Clinton’s proposed “managed competition” plan gives more marketplace clout to insurance companies and hospitals and less to physicians.

The other permissible activities stated by the Justice Department are:

* Physicians providing information about the quality and efficiency of medical treatments--but not their fees--to purchasers.

* Hospitals exchanging price and cost information, as long as the data is not used to coordinate prices or costs.

* Joint purchasing arrangements among health care providers.

* Joint ventures among doctors involving no more than 20% of the physicians in any specialty in a geographic market. Ventures that exceeded the 20% threshold might be approved under some circumstances.

Times staff writer Ronald J. Ostrow contributed to this report.

MAIN STORY: A1