Public policy surrounding the government’s role in the provision of health care services has been solidifying for more than one hundred years now. The federal government, having been actively involved through the Medicare and Medicaid statutory regimes for years, took an even greater step forward with the Affordable Care Act signed into law in 2010. In addition, numerous state-run programs, including more than 1,000 state and local government-owned community hospitals, work to provide health care to as many as possible.
On February 19, 2013, the Supreme Court released its decision in Federal Trade Commission v. Phoebe Putney Health System, which involved Georgia’s Hospital Authorities Law. The law gave these state-owned entities (the authorities) ordinary corporate powers, such as those necessary to purchase, lease and operate non-profit hospital projects, but it also granted some unique powers, such as that of eminent domain.
The conflict emerged when the Hospital Authority of Albany-Dougherty County, which already owned one of the two hospitals in the county, sought to acquire the other private, for-profit hospital. The Federal Trade Commission became concerned about the acquisition because it would create a virtual monopoly in the county. The hospital authority and its associated entities claimed the state-action immunity to antitrust law applied and litigation ensued.
In a unanimous decision, the Supreme Court concluded that immunity from federal antitrust law exists when a local government or its political subdivision acts pursuant to a state policy to displace competition, but that policy must "clear[ly] articulate" that intention, or provide evidence of an "affirmative contemplation," of such displacement. Here, no such convincing evidence existed, and the Court held that the merger is not exempt. Indeed, the parties may be forced to unwind the completed deal.
Outside of its relevance for the mechanics of antitrust immunity, both in general and in the health care area, the Supreme Court’s decision has a principled value in the field of health law and regulation. It forces us to think about whether health care should be considered a business or a public service for purposes of regulation. The answer is, perhaps, that health care is neither and both. For that reason, it must be regulated as a hybrid of the two spheres, and policymakers must carefully calibrate the rules to ensure that any state’s health care institutions are well-funded and providing the right services to those in need. The Phoebe Putney decision is just one piece of that puzzle. The court has not prohibited the states from exempting their community hospitals from antitrust law, but it has required an affirmative indication before recognizing that immunity. As states review their relevant laws for such an affirmative indication, we hope that the court’s requirement will force them to consider seriously the ramifications of immunity and the benefits of market competition for health care.•