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FTC Withdrawal of Antitrust Safety Zone May Impact Healthcare Valuation
In July 2023, the Federal Trade Commission (“FTC”) withdrew a 1996 policy statement: Statements of Antitrust Enforcement Policy in Healthcare.[1][2] For almost 27 years, this statement provided an Antitrust Safety Zone for healthcare providers participating in compensation surveys and other price and cost information exchanges. The now-withdrawn policy statement stated that absent extraordinary circumstances, the FTC would not challenge provider participation in written compensation surveys if the following conditions were met:
The survey was managed by a third party (e.g., a purchaser, government agency, health care consultant, academic institution, or trade association);
The information provided by survey participants was based on data more than 3 months old; and
There were at least five providers reporting data upon which each disseminated statistic was based, no individual provider’s data represented more than 25 percent on a weighted basis of that statistic, and any information disseminated was sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.
The FTC’s withdrawal of the policy statement, including the Antitrust Safety Zone, was based on its finding that it was outdated, no longer reflected market realities, and no longer served the intended purpose. The FTC has said that its extensive record of enforcement actions, policy statements, and competition advocacy in healthcare provides more up-to-date guidance. In the future, enforcement will be on a case-by-case basis.
Comments [3] made by FTC leadership before the policy withdrawal indicated that the agency had concerns that the policy statement allowed third-party intermediaries to be used as mechanisms to circumvent antitrust laws. The agency also had concerns that having 3-month-old data and a minimum of five participants cannot overcome the ability of data aggregation, machine learning, and artificial intelligence (AI) to help those who want to misuse competitively sensitive data.
How Does This Impact the Healthcare Valuation Industry?
The healthcare valuation industry heavily depends on physician compensation surveys and other exchanges of healthcare pricing data. The consulting firms and trade associations that publish the widely used surveys have strictly adhered to the conditions outlined in the now-withdrawn FTC policy statements. Now that the Antitrust Safety Zone is no longer available, we may see changes to what physician compensation survey data are reported and when they are reported, making the data less useful for those trying to determine the fair market value of physician services in a dynamic, high-demand market. It may also mean less access to some of the niche specialties represented in small numbers in these surveys. If the result of the FTC’s action is older and more general physician compensation and production data, we may see healthcare valuators shift to other data sources, like publicly available compensation data, and use different approaches to determining compensation other than a direct market approach.
