Two recent district court opinions consider whether affiliations among hospitals, doctors and health insurers — through contract or ownership — violate the antitrust laws. This Article applies a raising rivals’ costs framework to the facts of those cases in order to assess whether the practices at issue were unreasonable.

This Article analyzes the development and complexities of the antitrust state action doctrine and the Local Government Antitrust Act as these doctrines apply to both “municipalities” and private entities. The restructuring of a public hospital is used as a model to facilitate the antitrust analysis. The restructuring model, which typically involves the leasing of a hospital facility by a public entity to a private nonprofit corporation, offers the unique opportunity to compare the different standards employed under the state action doctrine and the Local Government Antitrust Act. As a practical matter, the Article provides a framework for a public hospital to evaluate the impact of corporate restructuring on its antitrust liability exposure and to develop strategies to minimize antitrust risks.

One rapidly evolving area of the law is the application of antitrust law to health care professionals. After the United States Supreme Court decided in 1975 that the “learned professions” were subject to the constraints imposed by the Sherman Antitrust Act, a significant number of antitrust actions have been filed against health care professionals and their professional organizations under Section 1 of the Sherman Act. These suits have found anticompetitive behavior in a variety of forms, ranging from tying arrangements and price-fixing agreements to certain forms of exclusive contracts and group boycotts.

In 1986, the Seventh Circuit Court of Appeals in Ball Memorial Hospital v. Mutual Hospital Insurance denied an injunction sought under the antitrust laws by the plaintiffs, eighty acute care hospitals, which would have precluded Blue Cross and Blue Shield of Indiana from implementing a Preferred Provider Organization. The Ball court used a conservative economic analysis to deny the injunction and failed to consider many industry-specific factors. This Note examines these factors and challenges the Ball court’s position by arguing that antitrust scrutiny of alternative health care delivery markets must go beyond the court’s narrow approach.