Keystone Orthopaedic Specialists, LLC and Orthopaedic Associates of Reading, Ltd.; Analysis To Aid Public Comment, 63787-63790 [2015-26690]

Download as PDF Federal Register / Vol. 80, No. 203 / Wednesday, October 21, 2015 / Notices Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company tkelley on DSK3SPTVN1PROD with NOTICES FEDERAL RESERVE SYSTEM FEDERAL RETIREMENT THRIFT INVESTMENT BOARD Sunshine Act; Notice of Meeting Agenda The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)). The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than November 3, 2015. A. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690–1414: 1. The Donald Davis Living Trust, West Bloomfield Township, Michigan, and Kenneth Kelly as trustee, McDonough, Georgia; to acquire control of 25 percent or more of the voting shares of First Independence Corporation, and thereby indirectly acquire control of First Independence Bank, both of Detroit, Michigan. B. Federal Reserve Bank of Minneapolis (Jacquelyn K. Brunmeier, Assistant Vice President) 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291: 1. HCR Trust U/A dated August 14, 1986, as amended, Excelsior, Minnesota, Beth Ann Brackett, Excelsior, Minnesota, Trustee, Michael M. Reget, Plymouth, Minnesota, Trustee, and Thomas Kaliher, Waconia, Minnesota, Trustee; to retain 25 percent or more of the shares of Hamburg Financial, Inc., Excelsior, Minnesota, and thereby indirectly retain control of State Bank of Hamburg, Hamburg, Minnesota and Poe Investment Company, Excelsior, Minnesota, and thereby indirectly retain control of Farmers and Merchants State Bank of Sacred Heart, Sacred Heart, Minnesota. Board of Governors of the Federal Reserve System, October 15, 2015. Michael J. Lewandowski, Associate Secretary of the Board. [FR Doc. 2015–26628 Filed 10–20–15; 8:45 am] BILLING CODE 6210–01–P VerDate Sep<11>2014 22:39 Oct 20, 2015 Jkt 238001 FEDERAL RETIREMENT THRIFT INVESTMENT BOARD MEMBER MEETING October 27, 2015 8:30 a.m. In-Person Meeting Open Session 1. Approval of the Minutes for the September 10, 2015 Board Member Meeting 2. Monthly Reports (a) Monthly Participant Activity Report (b) Legislative Report 3. Quarterly Reports (a) Investment Policy Report (b) Vendor Financials (c) Audit Status (d) Budget Review (e) Project Activity Report 4. Capital Market and L Fund 5. Investment Policy 6. Mid-Year Financial Review 7. ORM Report 8. Calendar Closed Session 9. Security Adjourn CONTACT PERSON FOR MORE INFORMATION: Kimberly Weaver, Director, Office of External Affairs, (202) 942–1640. Dated: October 19, 2015. Megan Grumbine, Deputy General Counsel, Federal Retirement Thrift Investment Board. [FR Doc. 2015–26857 Filed 10–19–15; 4:15 pm] BILLING CODE 6760–01–P FEDERAL TRADE COMMISSION [File No. 141 0025] Keystone Orthopaedic Specialists, LLC and Orthopaedic Associates of Reading, Ltd.; Analysis To Aid Public Comment Federal Trade Commission. Proposed Consent Agreement. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order— embodied in the consent agreement— that would settle these allegations. SUMMARY: PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 63787 Comments must be received on or before November 16, 2015. ADDRESSES: Interested parties may file a comment at https:// ftcpublic.commentworks.com/ftc/ keyorthoconsentconsent online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write ‘‘Keystone Orthopaedic Specialists, LLC.,—Consent Agreement; File No.141–0025’’ on your comment and file your comment online at https://ftcpublic.commentworks.com/ ftc/keyorthoconsentconsent by following the instructions on the webbased form. If you prefer to file your comment on paper, write ‘‘Keystone Orthopaedic Specialists, LLC.,—Consent Agreement; File No.141–0025’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Robert Canterman (202–326–2701), Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for October 15, 2015), on the World Wide Web, at http:// www.ftc.gov/os/actions.shtm. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before November 16, 2015. Write ‘‘Keystone Orthopaedic Specialists, LLC.,—Consent Agreement; File No.141–0025’’ on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http:// DATES: E:\FR\FM\21OCN1.SGM 21OCN1 tkelley on DSK3SPTVN1PROD with NOTICES 63788 Federal Register / Vol. 80, No. 203 / Wednesday, October 21, 2015 / Notices www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals’ home contact information from comments before placing them on the Commission Web site. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone’s Social Security number, date of birth, driver’s license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any ‘‘[t]rade secret or any commercial or financial information which . . . is privileged or confidential,’’ as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).1 Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https:// ftcpublic.commentworks.com/ftc/ keyorthoconsentconsent by following the instructions on the web-based form. If this Notice appears at http:// www.regulations.gov/#!home, you also may file a comment through that Web site. If you file your comment on paper, write ‘‘Keystone Orthopaedic Specialists, LLC.,—Consent Agreement; File No.141–0025’’ on your comment and on the envelope, and mail your 1 In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c). VerDate Sep<11>2014 22:39 Oct 20, 2015 Jkt 238001 comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service. Visit the Commission Web site at http://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 16, 2015. You can find more information, including routine uses permitted by the Privacy Act, in the Commission’s privacy policy, at http://www.ftc.gov/ftc/privacy.htm. Analysis of Agreement Containing Consent Order To Aid Public Comment I. Overview The Federal Trade Commission has accepted, subject to final approval, an Agreement Containing a Consent Order (‘‘Consent Agreement’’) with Keystone Orthopaedic Specialists, LLC (‘‘Keystone’’), and Orthopaedic Associates of Reading, Ltd. (‘‘Orthopaedic Associates’’) (together ‘‘Respondents’’). The Consent Agreement settles charges that Respondents violated Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45. The Consent Agreement has been placed on the public record for 30 days to receive comments from interested persons. Comments received during this period will become part of the public record. After 30 days, the Commission will review the Consent Agreement and the comments received, and will decide whether it should withdraw from the Consent Agreement, modify it, or make it final. The purpose of this analysis is to facilitate public comment on the Consent Agreement. The analysis is not intended to constitute an official interpretation of the Consent Agreement or to modify its terms in any way. Further, the Consent Agreement has been entered into for settlement purposes only and does not constitute an admission by Respondents that they violated the law or that the facts alleged PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 in the Complaint (other than jurisdictional facts) are true. II. Background and Market Structure Nineteen orthopedists affiliated with six independent orthopedic practices in Berks County, Pennsylvania, merged to form Keystone in January 2011 (the ‘‘Merger’’). One of those practices is Respondent Orthopaedic Associates, and the other five practices are Advanced Orthopaedics of Reading, Arthritis & Joint Replacement Center of Reading, P.C., Berkshire Orthopedic Associates, Inc., Commonwealth Orthopaedic Associates, Inc., and Reading Neck and Spine Center, P.C. (‘‘Keystone Component Practices’’). The Keystone Component Practices became divisions of Keystone after the Merger. Before the Merger, competition among orthopedists in Berks County was robust. At that time, 25 orthopedists in 11 independent practices competed to provide orthopedic physician services. The Merger substantially eliminated this competition by combining 19 out of 25, or 76 percent, of the orthopedists practicing in Berks County into one practice. Only six other orthopedists remained as competitors. After the Merger, the Keystone orthopedists ceased to do business through their respective independent practices and began doing business exclusively through Keystone. Three years after the Merger, in 2014, six orthopedists left Keystone and resumed doing business as Orthopaedic Associates for business reasons independent of the Commission’s investigation. III. The Relevant Markets The relevant line of commerce in which to analyze the Merger’s effects is the provision of orthopedic physician services. Orthopedic physician services include surgery and other services provided by physicians who specialize as orthopedists to treat injuries and diseases of the musculoskeletal system. The relevant geographic market in which to assess the competitive effects of the Merger is Berks County, Pennsylvania. Patients in Berks County generally do not leave the county to obtain orthopedic physician services, and health plans are unable to serve their members in Berks County without including Berks County orthopedists in their provider networks. IV. Effects of the Merger Before the Merger, the Keystone Component Practices competed with each other, and health plans could form a network with some of the Keystone Component Practices. The Merger eliminated this competition and created E:\FR\FM\21OCN1.SGM 21OCN1 Federal Register / Vol. 80, No. 203 / Wednesday, October 21, 2015 / Notices a dominant orthopedic practice in Berks County. After the Merger, Keystone negotiated prices with health plans on behalf of all the previously competing Keystone Component Practices, and health plans could not offer a commercially marketable network that would appeal to Berks County residents without Keystone. Thus, Keystone gained substantial market power through the Merger, which it used to raise prices with most health plans with coverage in Berks County. V. Entry Recruiting new orthopedists to Berks County is difficult, expensive, and time intensive. Neither entry by new practices nor expansion by the remaining practices following the Merger has been timely or sufficient to offset the actual anticompetitive harm from the Merger. Nor is future entry to be timely, likely, or sufficient to do so. tkelley on DSK3SPTVN1PROD with NOTICES VI. Efficiencies The Merger has not produced mergerspecific efficiencies sufficient to offset the actual anticompetitive harm from the Merger. VII. The Decision and Order The proposed Decision and Order (‘‘Order’’) is designed to maintain competition in the relevant market, including by prohibiting future anticompetitive consolidation, and by allowing health plans to cancel and renegotiate the contracts they entered with Keystone after the Merger was consummated. In evaluating the remedies in the proposed Order, it is important to note that market conditions have changed since the 2011 Merger. Market concentration levels are lower now than after the Merger was consummated in 2011 due to orthopedists leaving Keystone. Most significantly, for reasons independent of and pre-dating the Commission’s investigation, six orthopedists separated from Keystone in 2014 and resumed doing business separately and independently as Orthopaedic Associates. Following the separation, Orthopaedic Associates has become a major player in the market with eight orthopedists. Keystone, in contrast, currently has 11 orthopedists, down from 19 when the Merger was consummated. Had Orthopaedic Associates remained a part of Keystone, the Commission likely would have sought divestiture. As it is, the unique circumstance of Orthopaedic Associates’ separation from Keystone for business reasons predating the Commission’s investigation resulted in structural changes that VerDate Sep<11>2014 22:39 Oct 20, 2015 Jkt 238001 factored into the Commission’s decision not to pursue further structural relief. But a recombination of the two groups could raise serious antitrust concern. Therefore, the proposed Order is designed to maintain competition in the relevant market by, among other things, preserving the Orthopaedic Associates’ separation, and by allowing health plans to avail themselves of current market conditions by renegotiating existing Keystone contracts. Orthopaedic Associates is a named Respondent because its orthopedists helped form Keystone and benefitted from Keystone’s post-merger price increases. Moreover, putting Orthopaedic Associates under Order is necessary to obtain appropriate relief, as discussed below. Paragraph II of the proposed Order preserves Orthopaedic Associates’ separation by requiring Keystone and Orthopaedic Associates to obtain prior approval from the Commission before acquiring any interest in each other. Paragraph III requires Keystone and Orthopaedic Associates to obtain prior approval from the Commission before either practice may acquire another orthopedic practice located in Berks County. Keystone and Orthopaedic Associates also must obtain prior approval before entering into any employment, membership, or other agreement of affiliation with an orthopedist who during the prior year provided services in Berks County. The proposed Order also prohibits Keystone and Orthopaedic Associates from engaging in illegal concerted activity apart from merging or acquiring other practices in Berks County. Under the Horizontal Merger Guidelines, mergers may harm competition where a ‘‘market shows signs of vulnerability to coordinated conduct.’’ In this case, the Commission is concerned that the effects of this consummated merger could linger because of the close ties developed between Keystone and Orthopaedic Associates. Keystone and the orthopedists affiliated with Orthopaedic Associates jointly negotiated with payors and shared price information for over three years before the Orthopaedic Associates orthopedists left Keystone. Therefore, Paragraph IV includes provisions prohibiting certain joint activity among competing orthopedists who are members of or employed by Keystone or Orthopaedic Associates in order to limit the risk of coordination. Paragraph IV.A prohibits Keystone and Orthopaedic Associates from jointly negotiating or refusing to deal with payors, and from engaging in this conduct with other orthopedists in PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 63789 Berks County. Paragraph IV.B prohibits Keystone and Orthopaedic Associates from facilitating exchanges of information among orthopedists concerning whether, and on what terms, to contract with a payor. Paragraph IV.C bars attempts to engage in any action prohibited by Paragraphs IV.A or IV.B. Paragraph IV.D proscribes inducing anyone to engage in any action prohibited by Paragraphs IV.A through IV.C. Certain kinds of agreements that do not raise antitrust concerns are excluded from the general bar on joint negotiations. Paragraph IV does not preclude Keystone or Orthopaedic Associates from engaging in conduct that is reasonably necessary to form or participate in ‘‘qualified risk-sharing’’ or ‘‘qualified clinically-integrated’’ joint arrangements, as defined in the Order. Paragraph V requires Keystone and Orthopaedic Associates to notify the Commission before initiating certain contacts regarding contracts with payors pursuant to these joint arrangements. Paragraph V also sets out the information necessary to satisfy the notification requirement. Paragraph VI imposes other notification obligations on Keystone and Orthopaedic Associates and requires the termination of certain contracts that were entered into after the Merger. Paragraphs VI.A and VI.B require Keystone and Orthopaedic Associates to distribute the Complaint and Order to their respective orthopedist members and personnel identified in the Order, and to each payor that they have a record of having been in contact with since January 1, 2010. Paragraph VI.C requires Keystone and Orthopaedic Associates to terminate, without penalty, any existing contracts with payors for the provision of orthopedic physician services at the earlier of a written request from a payor to terminate or the earliest termination or renewal date under the contract. Paragraph VI.C also allows a payor to extend a contract beyond the termination or renewal date for a period of no longer than one year from the date the order becomes final to allow payors sufficient time to renegotiate contracts with Keystone and Orthopaedic Associates. The contract termination requirement allows payors to avail themselves of current conditions in renegotiating contracts, where Keystone is no longer the dominant provider. Paragraph VI.D requires Keystone and Orthopaedic Associates to distribute payor requests for contract termination to their respective orthopedist members. Paragraph VI.E requires Keystone and Orthopaedic Associates to provide new E:\FR\FM\21OCN1.SGM 21OCN1 63790 Federal Register / Vol. 80, No. 203 / Wednesday, October 21, 2015 / Notices orthopedists, payors, and various personnel not previously receiving a copy, a copy of the Order and the Complaint. Paragraphs VII, VIII, and IX impose various obligations on Keystone and Orthopaedic Associates to report or provide access to information to the Commission to facilitate the monitoring of compliance with the Order. Finally, Paragraph X provides that the Order will expire in 10 years from the date it is issued. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2015–26690 Filed 10–20–15; 8:45 am] Christine Harada, Associate Administrator for Governmentwide Policy. Thomas Sharpe, Jr., Commissioner, Federal Acquisition Service. Kevin Youel Page, Deputy Commissioner, Federal Acquisition Service. Norman Dong, Commissioner, Public Buildings Service. Michael Gelber, Deputy Commissioner, Public Buildings Service. Giancarlo Brizzi, Principal Deputy Associate Administrator for Governmentwide Policy. Joanna Rosato, Regional Commissioner, Public Buildings Service, Mid-Atlantic Region. Kim Brown, Regional Commissioner, Federal Acquisition Service, Great Lakes Region. Dated: October 15, 2015. Denise T. Roth, Administrator, General Services Administration. BILLING CODE 6750–01–P GENERAL SERVICES ADMINISTRATION [FR Doc. 2015–26661 Filed 10–20–15; 8:45 am] [Notice-CX–2015–01; Docket No. 2015–0002; Sequence 21] BILLING CODE 6820–34–P SES Performance Review Board DEPARTMENT OF HEALTH AND HUMAN SERVICES General Services Administration. ACTION: Notice. AGENCY: Centers for Disease Control and Prevention Notice is hereby given of the appointment of new members to the General Services Administration Senior Executive Service Performance Review Board. The Performance Review Board assures consistency, stability, and objectivity in the performance appraisal process. DATES: Effective: October 21, 2015. FOR FURTHER INFORMATION CONTACT: Antonia T. Harris, Chief Human Capital Officer, Office of Human Resources Management, General Services Administration, 1800 F Street NW., Washington, DC 20405, 202–501–0398. SUPPLEMENTARY INFORMATION: Section 4314(c)(1), through (5) of title 5 U.S.C., requires each agency to establish, in accordance with regulations prescribed by the Office of Personnel Management, one or more SES performance review board(s). The board is responsible for making recommendations to the appointing and awarding authority on the performance appraisal ratings and performance awards for the Senior Executive Service employees. The following have been designated as members of the Performance Review Board of the General Services Administration: tkelley on DSK3SPTVN1PROD with NOTICES SUMMARY: Adam Neufeld, Deputy Administrator— Chair. Antonia Harris, Chief Human Capital Officer. Jerome Fletcher, Associate Administrator for Small Business Utilization. VerDate Sep<11>2014 22:39 Oct 20, 2015 Jkt 238001 [Docket Number CDC–2015–0090; NIOSH 248–C] Meeting: World Trade Center Health Program Scientific/Technical Advisory Committee (WTCHP STAC or Advisory Committee), National Institute for Occupational Safety and Health (NIOSH) In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463), the Centers for Disease Control and Prevention (CDC), announces the following meeting of the aforementioned committee: Time and Date: 9 a.m.–5 p.m., Eastern Standard Time, December 1, 2015 Place: Jacob J. Javits Federal Building, 26 Federal Plaza, New York, New York 10278. This meeting is also available by teleconference. The USA toll-free, dialin number is 1–888–455–9749, and when prompted enter passcode— 6542002. To view the web conference, enter the following web address in your web browser: https:// odniosh.adobeconnect.com/wtchpstac/. Public Comment Time and Date: 11:20 a.m.–12 p.m., Eastern Standard Time, December 1, 2015 Please note that the public comment period ends at the time indicated above or following the last call for comments, whichever is earlier. Members of the public who want to comment must sign up by providing their name by mail, email, or telephone, at the addresses PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 provided below by November 27, 2015. Each commenter will be provided up to five minutes for comment. A limited number of time slots are available and will be assigned on a first come-first served basis. Written comments will also be accepted from those unable to attend the public session. Status: Open to the public, limited only by the number of telephone lines. The conference line will accommodate up to 50 callers; therefore it is suggested that those interested in calling in to listen to the committee meeting share a line when possible. Background: The Advisory Committee was established by Public Law 111–347 (The James Zadroga 9/11 Health and Compensation Act of 2010, Title XXXIII of the Public Health Service Act), enacted on January 2, 2011 and codified at 42 U.S.C. 300mm–300mm-61. Purpose: The purpose of the Advisory Committee is to review scientific and medical evidence and to make recommendations to the Administrator of the World Trade Center (WTC) Health Program regarding additional WTC Health Program eligibility criteria and potential additions to the list of covered WTC-related health conditions, as well as providing consultation on research to the Administrator of the World Trade Center Health Program. Title XXXIII of the Public Health Service Act established within the Department of Health and Human Services (HHS), the World Trade Center (WTC) Health Program, to be administered by the Administrator of the World Trade Center Health Program. The WTC Health Program provides: (1) Medical monitoring and treatment benefits to eligible emergency responders and recovery and cleanup workers (including those who are Federal employees) who responded to the September 11, 2001, terrorist attacks, and (2) initial health evaluation, monitoring, and treatment benefits to residents and other building occupants and area workers in New York City, who were directly impacted and adversely affected by such attacks (‘‘survivors’’). Certain specific activities of the Administrator of the World Trade Center Health Program are reserved to the Secretary, HHS, to delegate at her discretion; other duties of the Administrator of the World Trade Center Health Program not explicitly reserved to the Secretary, HHS, are assigned to the Director, NIOSH. The administration of the Advisory Committee established under Section 300mm–1(a) is left to the Director of NIOSH in his role as Administrator of the World Trade Center Health Program. CDC and NIOSH provide funding, E:\FR\FM\21OCN1.SGM 21OCN1

Agencies

[Federal Register Volume 80, Number 203 (Wednesday, October 21, 2015)]
[Notices]
[Pages 63787-63790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26690]


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FEDERAL TRADE COMMISSION

[File No. 141 0025]


Keystone Orthopaedic Specialists, LLC and Orthopaedic Associates 
of Reading, Ltd.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before November 16, 2015.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/keyorthoconsentconsent online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``Keystone 
Orthopaedic Specialists, LLC.,--Consent Agreement; File No.141-0025'' 
on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/keyorthoconsentconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``Keystone Orthopaedic Specialists, LLC.,--Consent 
Agreement; File No.141-0025'' on your comment and on the envelope, and 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 
(Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Robert Canterman (202-326-2701), 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for October 15, 2015), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before November 16, 
2015. Write ``Keystone Orthopaedic Specialists, LLC.,--Consent 
Agreement; File No.141-0025'' on your comment. Your comment--including 
your name and your state--will be placed on the public record of this 
proceeding, including, to the extent practicable, on the public 
Commission Web site, at http://

[[Page 63788]]

www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
---------------------------------------------------------------------------

    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/keyorthoconsentconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Keystone Orthopaedic 
Specialists, LLC.,--Consent Agreement; File No.141-0025'' on your 
comment and on the envelope, and mail your comment to the following 
address: Federal Trade Commission, Office of the Secretary, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, 
or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before November 16, 2015. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Overview

    The Federal Trade Commission has accepted, subject to final 
approval, an Agreement Containing a Consent Order (``Consent 
Agreement'') with Keystone Orthopaedic Specialists, LLC (``Keystone''), 
and Orthopaedic Associates of Reading, Ltd. (``Orthopaedic 
Associates'') (together ``Respondents''). The Consent Agreement settles 
charges that Respondents violated Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 
U.S.C. 45.
    The Consent Agreement has been placed on the public record for 30 
days to receive comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will review the Consent Agreement and the comments 
received, and will decide whether it should withdraw from the Consent 
Agreement, modify it, or make it final.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement. The analysis is not intended to constitute an 
official interpretation of the Consent Agreement or to modify its terms 
in any way. Further, the Consent Agreement has been entered into for 
settlement purposes only and does not constitute an admission by 
Respondents that they violated the law or that the facts alleged in the 
Complaint (other than jurisdictional facts) are true.

II. Background and Market Structure

    Nineteen orthopedists affiliated with six independent orthopedic 
practices in Berks County, Pennsylvania, merged to form Keystone in 
January 2011 (the ``Merger''). One of those practices is Respondent 
Orthopaedic Associates, and the other five practices are Advanced 
Orthopaedics of Reading, Arthritis & Joint Replacement Center of 
Reading, P.C., Berkshire Orthopedic Associates, Inc., Commonwealth 
Orthopaedic Associates, Inc., and Reading Neck and Spine Center, P.C. 
(``Keystone Component Practices''). The Keystone Component Practices 
became divisions of Keystone after the Merger.
    Before the Merger, competition among orthopedists in Berks County 
was robust. At that time, 25 orthopedists in 11 independent practices 
competed to provide orthopedic physician services. The Merger 
substantially eliminated this competition by combining 19 out of 25, or 
76 percent, of the orthopedists practicing in Berks County into one 
practice. Only six other orthopedists remained as competitors. After 
the Merger, the Keystone orthopedists ceased to do business through 
their respective independent practices and began doing business 
exclusively through Keystone. Three years after the Merger, in 2014, 
six orthopedists left Keystone and resumed doing business as 
Orthopaedic Associates for business reasons independent of the 
Commission's investigation.

III. The Relevant Markets

    The relevant line of commerce in which to analyze the Merger's 
effects is the provision of orthopedic physician services. Orthopedic 
physician services include surgery and other services provided by 
physicians who specialize as orthopedists to treat injuries and 
diseases of the musculoskeletal system.
    The relevant geographic market in which to assess the competitive 
effects of the Merger is Berks County, Pennsylvania. Patients in Berks 
County generally do not leave the county to obtain orthopedic physician 
services, and health plans are unable to serve their members in Berks 
County without including Berks County orthopedists in their provider 
networks.

IV. Effects of the Merger

    Before the Merger, the Keystone Component Practices competed with 
each other, and health plans could form a network with some of the 
Keystone Component Practices. The Merger eliminated this competition 
and created

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a dominant orthopedic practice in Berks County. After the Merger, 
Keystone negotiated prices with health plans on behalf of all the 
previously competing Keystone Component Practices, and health plans 
could not offer a commercially marketable network that would appeal to 
Berks County residents without Keystone. Thus, Keystone gained 
substantial market power through the Merger, which it used to raise 
prices with most health plans with coverage in Berks County.

V. Entry

    Recruiting new orthopedists to Berks County is difficult, 
expensive, and time intensive. Neither entry by new practices nor 
expansion by the remaining practices following the Merger has been 
timely or sufficient to offset the actual anticompetitive harm from the 
Merger. Nor is future entry to be timely, likely, or sufficient to do 
so.

VI. Efficiencies

    The Merger has not produced merger-specific efficiencies sufficient 
to offset the actual anticompetitive harm from the Merger.

VII. The Decision and Order

    The proposed Decision and Order (``Order'') is designed to maintain 
competition in the relevant market, including by prohibiting future 
anticompetitive consolidation, and by allowing health plans to cancel 
and renegotiate the contracts they entered with Keystone after the 
Merger was consummated.
    In evaluating the remedies in the proposed Order, it is important 
to note that market conditions have changed since the 2011 Merger. 
Market concentration levels are lower now than after the Merger was 
consummated in 2011 due to orthopedists leaving Keystone. Most 
significantly, for reasons independent of and pre-dating the 
Commission's investigation, six orthopedists separated from Keystone in 
2014 and resumed doing business separately and independently as 
Orthopaedic Associates. Following the separation, Orthopaedic 
Associates has become a major player in the market with eight 
orthopedists. Keystone, in contrast, currently has 11 orthopedists, 
down from 19 when the Merger was consummated.
    Had Orthopaedic Associates remained a part of Keystone, the 
Commission likely would have sought divestiture. As it is, the unique 
circumstance of Orthopaedic Associates' separation from Keystone for 
business reasons pre-dating the Commission's investigation resulted in 
structural changes that factored into the Commission's decision not to 
pursue further structural relief. But a recombination of the two groups 
could raise serious antitrust concern. Therefore, the proposed Order is 
designed to maintain competition in the relevant market by, among other 
things, preserving the Orthopaedic Associates' separation, and by 
allowing health plans to avail themselves of current market conditions 
by renegotiating existing Keystone contracts. Orthopaedic Associates is 
a named Respondent because its orthopedists helped form Keystone and 
benefitted from Keystone's post-merger price increases. Moreover, 
putting Orthopaedic Associates under Order is necessary to obtain 
appropriate relief, as discussed below.
    Paragraph II of the proposed Order preserves Orthopaedic 
Associates' separation by requiring Keystone and Orthopaedic Associates 
to obtain prior approval from the Commission before acquiring any 
interest in each other.
    Paragraph III requires Keystone and Orthopaedic Associates to 
obtain prior approval from the Commission before either practice may 
acquire another orthopedic practice located in Berks County. Keystone 
and Orthopaedic Associates also must obtain prior approval before 
entering into any employment, membership, or other agreement of 
affiliation with an orthopedist who during the prior year provided 
services in Berks County.
    The proposed Order also prohibits Keystone and Orthopaedic 
Associates from engaging in illegal concerted activity apart from 
merging or acquiring other practices in Berks County. Under the 
Horizontal Merger Guidelines, mergers may harm competition where a 
``market shows signs of vulnerability to coordinated conduct.'' In this 
case, the Commission is concerned that the effects of this consummated 
merger could linger because of the close ties developed between 
Keystone and Orthopaedic Associates. Keystone and the orthopedists 
affiliated with Orthopaedic Associates jointly negotiated with payors 
and shared price information for over three years before the 
Orthopaedic Associates orthopedists left Keystone. Therefore, Paragraph 
IV includes provisions prohibiting certain joint activity among 
competing orthopedists who are members of or employed by Keystone or 
Orthopaedic Associates in order to limit the risk of coordination.
    Paragraph IV.A prohibits Keystone and Orthopaedic Associates from 
jointly negotiating or refusing to deal with payors, and from engaging 
in this conduct with other orthopedists in Berks County. Paragraph IV.B 
prohibits Keystone and Orthopaedic Associates from facilitating 
exchanges of information among orthopedists concerning whether, and on 
what terms, to contract with a payor. Paragraph IV.C bars attempts to 
engage in any action prohibited by Paragraphs IV.A or IV.B. Paragraph 
IV.D proscribes inducing anyone to engage in any action prohibited by 
Paragraphs IV.A through IV.C.
    Certain kinds of agreements that do not raise antitrust concerns 
are excluded from the general bar on joint negotiations. Paragraph IV 
does not preclude Keystone or Orthopaedic Associates from engaging in 
conduct that is reasonably necessary to form or participate in 
``qualified risk-sharing'' or ``qualified clinically-integrated'' joint 
arrangements, as defined in the Order. Paragraph V requires Keystone 
and Orthopaedic Associates to notify the Commission before initiating 
certain contacts regarding contracts with payors pursuant to these 
joint arrangements. Paragraph V also sets out the information necessary 
to satisfy the notification requirement.
    Paragraph VI imposes other notification obligations on Keystone and 
Orthopaedic Associates and requires the termination of certain 
contracts that were entered into after the Merger. Paragraphs VI.A and 
VI.B require Keystone and Orthopaedic Associates to distribute the 
Complaint and Order to their respective orthopedist members and 
personnel identified in the Order, and to each payor that they have a 
record of having been in contact with since January 1, 2010.
    Paragraph VI.C requires Keystone and Orthopaedic Associates to 
terminate, without penalty, any existing contracts with payors for the 
provision of orthopedic physician services at the earlier of a written 
request from a payor to terminate or the earliest termination or 
renewal date under the contract. Paragraph VI.C also allows a payor to 
extend a contract beyond the termination or renewal date for a period 
of no longer than one year from the date the order becomes final to 
allow payors sufficient time to renegotiate contracts with Keystone and 
Orthopaedic Associates. The contract termination requirement allows 
payors to avail themselves of current conditions in renegotiating 
contracts, where Keystone is no longer the dominant provider. Paragraph 
VI.D requires Keystone and Orthopaedic Associates to distribute payor 
requests for contract termination to their respective orthopedist 
members. Paragraph VI.E requires Keystone and Orthopaedic Associates to 
provide new

[[Page 63790]]

orthopedists, payors, and various personnel not previously receiving a 
copy, a copy of the Order and the Complaint.
    Paragraphs VII, VIII, and IX impose various obligations on Keystone 
and Orthopaedic Associates to report or provide access to information 
to the Commission to facilitate the monitoring of compliance with the 
Order. Finally, Paragraph X provides that the Order will expire in 10 
years from the date it is issued.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-26690 Filed 10-20-15; 8:45 am]
BILLING CODE 6750-01-P