The Justice Department refused yesterday to tell hospitals and doctors whether their joint voluntary cost-cutting drive violates antitrust laws.
The lack of a green light may impede congressional and administration efforts to legislate mandatory controls on hospital revenues if the two-year voluntary program falls. It also could impede hospital attempts to gain control of their own costs in the absence of government intervention, most observers said yesterday.
Rep. Paul Rogers (D-Fla.), who is leading the fight in the House Commerce Committee to pass legislation calling for federal controls if voluntary efforts fail, said he was "surprised" and disappointed by the Justice Department decision.
Yesterday's action does not rule out the possibility that the Justice Department will decide in favor of the hospitals later.
But Rogers called the announcement a strange interpretation of the intent of the antitrust laws. "Any time a significant industry of this nature enters into any program to reduce costs to the public, it should not be bound by any antitrust laws," he said. "If costs are going up, it's a different matter."
The Justice Department announcement came in a letter from Hugh P. Morrison Jr., acting assistant attorney general for the antitrust division, to Richard Wertheimer, a lawyer with Arnold & Porter, which is representing the American Hospital Association, the Federation of American Hospitals and the American Medical Association. These groups have coordinated the voluntary cost-control effort, which they say has been successful in recent months.
Their cost-control conduct "would almost certainly be considered an antitrust violation in many other industry contexts," Morrison said. He conceded that "there may well be significant differences" between hospitals and other industries "that affect the competitive potential of particular conduct." But he said, "Our present understanding of this complex industry precludes a definitive analysis," and "accordingly, we must decline your request for a statement of our enforcement intentions."
Michael Bromberg, executive director of the investor-owned hospital federation, a prime mover in the joint effort, was nonetheless optimistic.
"I don't think the Justice letter means very much," he said. "We're not discouraged because there's nothing negative in the letter at all. Our lawyers tell us that if states go in one at a time" - that is, seek Justice Department approval of state voluntary efforts, one at a time - "there should be fairly fast action."
"We've all talked" already and "none of us are discouraged," he added, referring to his AMA and AHA counterparts.
But Alex McMahon, AHA president, when asked whether he was disappointed, said, "Yes, I think it would have been easier if we had gotten a clear go-ahead."
Still, he said, "we have made remarkable progress in cost control in the last six months without any formal approval, and we're sure that momentum will continue."
A Department of Health, Education and Welfare official who declined to be named attributed the refusal of a "clear go-ahead" not to any Justice Department legal interpretations but to "plain politics."
"Everything is political," he said, explaining that, ever since the Carter administration proposed 14 months ago that Congress set a 9 percent a year limit on hospital cost boosts. HEW has viewed any alternative effort by hospitals as a mere backfire, intended to kill the administration proposal.
HEW General Counsel F. Peter Libassi recently asked the Justice Department to defer giving the hospitals an antitrust exemption, saying there "may be a serious lack of public accountability and public participation" in what the hospitals are doing.
The House Commerce Committee yesterday defeated, 22 to 20, a motion by Rep. James D. Santini (D-Nev.) to kill a bill to impose mandatory federal cost controls if the voluntary effort by hospitals fails to cut their inflation rate by 2 percent in each of the next two years. The defeat was considered a good sign by the legislation's supporters, but the plan still faces hurdles in both houses of Congress.