Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Orthopedic practices settle charges that merger harmed competition, (Oct 15, 2015)

By Jody Coultas, J.D.

An orthopedic practice, created through a combination of six independent orthopedic practices in 2011, settled charges that the merger was anticompetitive and violated U.S. antitrust law.

In its complaint against Keystone Orthopaedic Specialists, LLC, the FTC alleged that the merger substantially reduced competition for orthopedic services in Berks County, Pennsylvania. The merger allegedly eliminated competition and enabled Keystone to negotiate prices with health plans on behalf of all its formerly independent member practices. According to the FTC, Keystone used its market power to raise prices with most health plans operating in Berks County.

Under the terms of the settlement, Keystone and Orthopaedic Associates are required to obtain prior approval from the FTC before acquiring any interests in each other, before acquiring another orthopedic practice in Berks County, and before hiring or offering membership to an orthopedist who has provided services in Berks County in the past year. Keystone and Orthopaedic Associates also are prohibited from coordinating their prices with other orthopedists in the market and jointly negotiating with or refusing to deal with payors. They also must terminate, without penalty, any existing contracts with payors for the provision of orthopedic physician services at the payors’ request.

Orthopaedic Associates was one of the six practices that merged into Keystone in 2011. The practice and six of its associates split off from Keystone in 2014, and has become a major player in the market, with eight orthopedists. Because a recombination of the two groups could raise serious antitrust concerns, the proposed settlement is designed to maintain competition in the relevant market by preserving Orthopaedic Associates’ separation, and allowing health plans to avail themselves of current market conditions by renegotiating existing Keystone contracts.

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