U.S. Objects to Plan for Medical Group Contracts

The U.S. Justice Department has warned five groups of Orange County anesthesiologists that they would stifle competition by forming an organization to negotiate contracts with managed-care outfits.

The proposed organization, which would represent about a third of the anesthesiologists in the county, also could bring needlessly high health-care costs, according to a letter by Assistant Atty. Gen. Anne K. Bingaman.

The federal agency’s antitrust division launched an investigation of the groups after receiving a complaint from a managed health-care plan, Bingaman said in a letter to an attorney representing the specialists. She didn’t identify the health-care plan.

During the investigation, the five groups asked the agency for an opinion on their proposed organization, according to the letter.

The groups, which have a total of about 100 anesthesiologists, had planned to form a joint venture called Orange Los Angeles Medical Group, the letter said. If the anesthesiologists proceed with their plans, the Justice Department said it would then consider challenging them legally.

The doctors’ lawyer, Tad R. Callister of Glendale, said the groups are reviewing whether to form the organization anyway. “We want to do whatever . . . we can do to promote our business opportunity and still be legal,” he said.

Callister said his clients disagree with a number of issues raised by the Justice Department. One issue, for instance, focuses on the number of doctors in a geographic area who can serve a particular hospital.

The agency said the number is generally limited to those within a 30-minute commute, but Callister believes the limitation is too stringent. “We are seeing that anesthesiologists can compete from more than 30 minutes away,” Callister argues.

The five groups are Allied Anesthesia Medical Group, Newport Harbor Anesthesia Consultants, Mission Anesthesia Medical Assn., Fullerton Anesthesia Medical Group Inc. and Independent Anesthesiology Medical Assn.

The Justice Department said the county has only one other group of substantial size--South Coast Anesthesia Consultants.

The five groups serve Hoag Memorial Hospital Presbyterian, Children’s Hospital of Orange County, Mission Community, St. Joseph, St. Jude and Western Medical Center, according to the letter.

These hospitals have heavy caseloads and provide a wide range of acute-care services, such as open-heart surgery or high-level trauma care. They also account for a large portion of the budgets of managed-care plans.

Since September 1993, the Justice Department has received 33 letters from health-care organizations across the country, including 13 physician networks, that want to make sure their business plans comply with antitrust laws.

The agency has issued only one other negative letter to a physician group--pediatricians in southern New Jersey who wanted to form a network.

Like specialists in many fields of medicine, anesthesiologists in Orange County have seen their incomes cut as managed-care companies negotiate lower rates for their services.

Dr. Richard Fields, a member of Allied Anesthesia Medical who works at St. Joseph’s and Children’s hospitals, said his revenue dropped about 40% in the last three years.

Fields hasn’t been part of the planning for the new Orange County group of anesthesiologists, but he said that he believes the five groups will drop their plans in light of the Justice Department’s negative letter.