In January 2011, 19 orthopedists affiliated with six independent orthopaedic practices in Berks County merged to form Keystone. Orthopaedic Associates was one of those practices. There were five others as well. In the Federal Register, the FTC calls each of those five practices "Keystone component practices." Each of them became divisions of Keystone after the merger. Prior to the merger, orthopaedic competition in Berks County was robust. Prior to the merger, there were 25 orthopods in 11 independent practices competing to provide orthopaedic physician services in Berks County. With the merger, this competition was substantially eliminated since 19 out of 25 (76 percent) of the orthopods practicing in Berks County were practicing in one entity.
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It determined that patients in Berks County generally did not leave the county to obtain orthopedic services. Health plans were unable to serve their Berks County members without including Berks County orthopedists in their provider networks.
Effects of the Merger
The merger eliminated the competition and created a dominant orthopaedic practice in Berks County. Keystone was able to negotiate prices with health plans on behalf of all of the previously competing Keystone component practices. The FTC determined that the health plans could not offer a commercially marketable network for the provision of services to treat injuries and diseases of the musculoskeletal system for the benefit of Berks County residents without Keystone. Keystone, therefore, was able to gain substantial market power through the merger. It used it to raise prices with health plans.
The FTC determined that recruiting new orthopods to Berks County was difficult, expensive and time-intensive. It was not sufficient to offset the actual anti-competitive harm from the …show more content…
Keystone and Orthopaedic Associates would also be required to obtain prior approval before entering into any employment, membership or other agreement of affiliation with an orthopod who, during the prior year, provided services in Berks County.
Keystone and Orthopaedic Associates were also prohibited from engaging in illegal concerted activity apart from merging or acquiring other practices in Berks County. This is because the FTC had concerns about the close ties developed between Keystone and Orthopaedic Associates during the initial, consummated merger. They had jointly negotiated with payors and shared price information for over three years before Orthopaedic Associates split from Keystone.
Paragraph IV of the order includes provisions prohibiting certain joint activities in order to limit the risk of coordination, since the FTC was concerned that this market was vulnerable to coordinated conduct. This includes prohibiting Keystone and Orthopaedic Associates from jointly negotiating or refusing to deal with payors and from engaging in this conduct with other orthopods in Berks
It determined that patients in Berks County generally did not leave the county to obtain orthopedic services. Health plans were unable to serve their Berks County members without including Berks County orthopedists in their provider networks.
Effects of the Merger
The merger eliminated the competition and created a dominant orthopaedic practice in Berks County. Keystone was able to negotiate prices with health plans on behalf of all of the previously competing Keystone component practices. The FTC determined that the health plans could not offer a commercially marketable network for the provision of services to treat injuries and diseases of the musculoskeletal system for the benefit of Berks County residents without Keystone. Keystone, therefore, was able to gain substantial market power through the merger. It used it to raise prices with health plans.
The FTC determined that recruiting new orthopods to Berks County was difficult, expensive and time-intensive. It was not sufficient to offset the actual anti-competitive harm from the …show more content…
Keystone and Orthopaedic Associates would also be required to obtain prior approval before entering into any employment, membership or other agreement of affiliation with an orthopod who, during the prior year, provided services in Berks County.
Keystone and Orthopaedic Associates were also prohibited from engaging in illegal concerted activity apart from merging or acquiring other practices in Berks County. This is because the FTC had concerns about the close ties developed between Keystone and Orthopaedic Associates during the initial, consummated merger. They had jointly negotiated with payors and shared price information for over three years before Orthopaedic Associates split from Keystone.
Paragraph IV of the order includes provisions prohibiting certain joint activities in order to limit the risk of coordination, since the FTC was concerned that this market was vulnerable to coordinated conduct. This includes prohibiting Keystone and Orthopaedic Associates from jointly negotiating or refusing to deal with payors and from engaging in this conduct with other orthopods in Berks