Nov 26, 2020 in Coursework

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Physician-Hospital Organizations and Ensuing Illegality versus Legality Issues

In the healthcare sector, the provision of services is an aspect that stems from time immemorial. The people as the recipients of healthcare deserve proper treatment, quality service, and irrefutable competitive pricing. Hence as an ongoing aspect, the formation of partnership programs among the caregivers is on the rise. Surgeons, physicians, and other caregivers are forming organizations in which they can harness the strength of numbers. Through forming joint ventures, they maintain cutthroat competition in the health sector. However, the joint ventures, in recent times have come under scrutiny. The fact that some of the ventures, as per the various pundits are operating in per se illegal ways. Hence the need to curve out what constitutes illegality and measures to change is a prudent move. Consequently, this paper will look at what constitutes per se illegality in the PHOs in Georgia, and measures to change into legal practices.

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First and foremost, a competitive edge is an important aspect in any market. In the healthcare sector, competition ensures various aspects are nipped and handled effectively (Acton, 2011). Proper healthcare services, better pricing, and flexibility in terms of determining price by the payer. However, the core and most pivotal aspect of any competitive market is the allowance of small businesses to operate in the market without strong obstacles ensuing. However, the PHO in Georgia has created an anti-competitive environment in the market. Apparently, the organizations control 90% of the market. The control of the market is due to the higher percentage of physicians operating within the circles of the organization. As such, the organization has a direction and control mandate concerning competition in the market. The organization can easily and effectively crush the small physician organizations that may arise in the market (Acton, 2011). Through control of the market, the organization is acting in per se illegal under the FTC. Since, a conducive, competitive, and the open market creates the right and proper environment for various payers or customers.

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Additionally, the consumer is the core determinant of price-setting strategies. Various markets, consumer preferences, and tastes play a crucial role in shaping the pricing of various goods and services (Haas-Wilson, 2009). Hence, in a legal market, the role of the consumer should be put into consideration. The price points should be flexible and favorable to ensure that the consumers or payers are not too harassed or affected by the rigid prices. However, in the PHOs of Georgia, unfavorable pricing is an issue that manifests itself profoundly. The pricing of various services is highly rigid. Rigidity is evident from the fact that the physicians state the fixed prices to consumers and various hospitals in which they have an integral relationship. Additionally, the PHOs can still determine the level at which customers can bargain and get a discount in respect to the services rendered (Haas-Wilson, 2009). Consequently, price rigidity creates an unfavorable market in which it is illegal per se concerning the FTC laws. As such, the control of the resources in terms of physicians and the ability to stipulate pricing is an unfavorable practice in the health sector.

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However, from the analysis of what may constitute illegal per se to the scrutiny of FTC, various measures can be taken by the PHO to ensure legality. Firstly, the partnership should not be highly aggressive in terms of market share. Other reasons should play an equally significant role in determining the merging of various physicians. The first and important reason, when FTC is analyzed, is the cost-containment strategy. In the Georgia market, prudent measures through the harnessing of each other's resources would ensure that costs would dwindle rapidly. Hence, through the cost-containment strategy, the PHOs would provide services in a price flexible manner thus refuting the illegality.

Secondly, coordination of health care is another reason for the partnership of various physicians in the market. Evidently, a market whereby various physicians are interconnected through a web of effective service delivery ensures that patients can receive health care in different regions. A patient in Thomasville can receive healthcare services in Waycross in a non-affiliated practice without any astringency. Hence, through the coming together of various physicians to coordinate services, the PHO can restructure itself to constitute legality. Correspondingly, coordination would result in the creation of a favorable market in which various players can enter without extreme barriers.

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Thirdly, the PHO network should maintain a clear analysis of its horizontal competitors. By the antitrust laws, the horizontal market analysis constitutes various competitors such as a sole physician and other healthcare service-oriented businesses (Posner, 2009). They should maintain the right price points that ensure an open and favorable market in which the various competitors can participate. Through collusion or non-price-related competitive strategies, the market becomes open and exclusive of obstacles (Posner, 2009). Nevertheless, without key analysis as in the Georgia PHOs, a clash with the FTC laws is bound to augment. Hence, as an organization, clear policy mandates among its clear competitors would ensure appropriate competition.

All in all, the FTC laws and recommendations are mainly directed at favoring the consumer. In this case, access to quality services from various healthcare givers is essential. Additionally, favorable pricing hastens the goal of FTC in ensuring a conducive and sustainable market to consumers. Thus, as the PHO, through various measures, consumer-related pricing and service delivery among the sector players will negate it from illegality per se.

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