Partial integration raises antitrust concerns.

Recently, providers have begun to explore a new model of integrated delivery system, the partially integrated IDS. Typically, a partially integrated IDS is a joint venture, owned by a core group of providers that maintains complete financial and operational independence outside the joint venture. The IDS contracts with other providers to furnish services that the part-owners do not furnish. A partially integrated IDS raises antitrust concerns because the participating providers may be seen as competitors banding together to set prices jointly for healthcare services. Therefore, to minimize their antitrust exposure, providers that are considering this model should be careful to structure the IDS in accordance with the relevant Federal antitrust laws (i.e., Section 1 of the Sherman Act), taking into account the Federal antitrust agencies' various guidelines and enforcement policies.

How intermediate tax sanctions may be applied to IDSs.

Recently issued proposed regulations describing how the IRS intends to enforce the intermediate tax sanctions statute of the Internal Revenue Code have important ramifications for integrated delivery systems (IDSs). The regulations' interpretation of who within an IDS may be subject to excise taxes under the statute is broad, basing an individual's risk of being taxed on his or her degree of influence over a given entity within the organization, rather than over the organization as a whole. To protect individuals within an IDS from exposure to intermediate tax sanctions, the organization should understand who is likely to be at risk and take steps to ensure that all transactions with such persons are in compliance with the conditions set forth in the proposed regulations.

Federal tax developments affecting health care organizations--Part II: New rulings and court decisions.

Health care providers face numerous federal tax law changes in 1997 legislation, agency rulings, and court decisions. In the conclusion of this article, the author covers agency rulings and court decisions, with particular focus on tax-exempt hospitals forming delivery systems with for-profit entities.

Antitrust and affiliations among healthcare providers: the need for a level playing field.

Under pressure to remain competitive in the rapidly changing healthcare industry, policy leaders and healthcare administrators face the challenge of resolving antitrust matters arising from the creation of innovative healthcare provider affiliations. Although guidance from the Federal Trade Commission (FTC) is available, development of new affiliations is hindered due to contradictory rulings and ambiguous guidelines. Provider associations are further disadvantaged by a federal act granting insurance companies antitrust exemption, which enables insurance companies to affiliate more easily. Current antitrust regulations create unequal market powers, resulting in the development of inefficient systems. Softening antitrust laws in favor of provider-sponsored healthcare affiliations will provide for the flexibility necessary for effective healthcare reform.