The Department of Justice (“DOJ”) withdrew three longstanding healthcare antitrust enforcement policy statements on the afternoon of Friday, February 3, 2023. The move follows a series of White House antitrust initiatives. These include the repeal of other established antitrust policies and practices, statements on collaborative antitrust enforcement between the DOJ and the Federal Trade Commission (“FTC”), and the exercise of statutory authority to conduct studies by issuing subpoenas to parties who are not part of an investigation to obtain data supporting policy changes in antitrust enforcement.  The Biden administration’s stated purpose for these initiatives is to promote competition and transparency in the healthcare industry.

Friday’s DOJ action included the withdrawal of Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (Sept. 15, 1993); Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996); and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011). The DOJ stated that the policies were “outdated,” “overly permissive on certain subjects,” and that “the healthcare landscape has changed significantly” in the time since these guidance documents were released in the Department of Justice, Press Release 23-137 (February 3, 2023).  The guidelines were jointly developed with the FTC, which is also expected to formally withdraw them in the near future.

The withdrawn DOJ antitrust enforcement guidance covered arrangements such as hospital mergers, joint ventures, participation in group purchasing organizations, physician participation in network joint ventures, and multi-provider networks. The guidance also established an “antitrust safety zone” for accountable care organizations that met the Centers for Medicare and Medicaid Services’ eligibility criteria for the Medicare Shared Savings Program. The antitrust safety zone was designed to allow providers who would ordinarily be market competitors to act collaboratively for the purpose of reducing the cost and improving the quality of care provided to Medicare beneficiaries. Of particular note is the DOJ’s statement that the withdrawn guidance was overly permissive with regard to information sharing. This could foreshadow future enforcement actions and is an area to which providers should pay particular attention in future arrangements.

While the DOJ believes that the withdrawal of these policy statements will best serve the interests of competition and transparency, healthcare providers of all types have relied on this guidance for nearly thirty years. They have used it to guide their strategic operations, structure their relationships with others in the industry, and to improve coordination of patient care. The abrupt withdrawal of this guidance, and the DOJ’s announced preference to engage in a “case-by-case enforcement approach,” leaves the healthcare industry in a state of uncertainty and will likely chill future collaboration efforts. These include the use or expansion of group purchasing organizations, accountable care organizations, clinically integrated networks, and technology sharing arrangements. The withdrawal comes at a time when most healthcare providers are struggling to get back into the black after the COVID pandemic, which resulted in the rising costs of labor, a shaky supply chain, and general inflation.

We anticipate that collaboration among providers and the healthcare M&A market may cool over the remainder of 2023. Further, existing arrangements that previously relied on the DOJ and FTC’s guidance should be reviewed to assess their risk under this new paradigm. With this new level of uncertainty, providers should be cautious and avoid running afoul of the DOJ’s “case-by-case enforcement approach” and should consider vetting existing arrangement and new proposals with their counsel. If you have concerns about existing arrangements or proposed opportunities, please contact Dinsmore attorneys Kelly Leahy or Joe Wheeler, who can provide assistance in navigating these issues.