The Federal Trade Commission prohibited a South Carolina physician-hospital organization from collectively negotiating with payers on behalf of its 225 physician members, settling an antitrust complaint it filed and resolved last week with Easley, S.C.-based Partners Health Network.

In an 11-page complaint filed Aug. 5, the FTC alleged that Partners and its members, 79-bed Palmetto Health Baptist Easley (S.C.) and 42-bed Cannon Memorial Hospital in Pickens, S.C. -- the only two acute-care hospitals in Pickens County -- illegally conspired to fix prices for physician fees, thereby reducing competition for physician services and raising the cost of healthcare there. In addition, the complaint alleged that the PHO refused to deal with health plans that wouldn't accept collectively agreed upon fee schedules in violation of Section 5 of the FTC Act, which prohibits unfair methods of competition in commerce.

Partners settled the allegations without admitting guilt. The consent decree does allow Partners to enter into "qualified risk-sharing joint arrangements or clinically integrated joint arrangements," but ordered the group to notify the FTC three years before entering into those arrangements with health plans and ordered the PHO to terminate contracts with physicians within one year.

The order, which includes compliance and reporting requirements, expires in 20 years. Partners' attorney Martin Dajani of the Washington office of DLA Piper Rudnick Gray Cary said the PHO settled to "avoid the very expensive cost of litigation." Dajani said the settlement will not affect Partners' service to its membership and vowed that the PHO will remain in business.