Provider diversification into ancillary services is not unusual. Many health systems have, for example, tapped into additional revenue streams by offering patients durable medical equipment (“DME”) and other ancillary services through affiliated entities. Health systems may view the diversification as an approach for successfully implementing population health management strategies.
However, for a dominant health system that might be in control of the relevant referral sources for these ancillary services, operating in these ancillary markets can present an antitrust concern. Among other things, if these dominant health systems lock up the referral sources and foreclose competing ancillary service providers from operating in the market, the dominant health system could be accused of monopoly leveraging in violation of Section 2 of the Sherman Act.
Monopoly leveraging occurs when a firm with monopoly power in one market uses that power to monopolize or threaten to monopolize a second market. In the example above, if a dominant health system prevented competing DME providers from access to the system’s patients, and if that foreclosure allowed the health system to gain a monopoly or threaten to gain a monopoly in the DME market, the system could be accused of monopoly leveraging.
Understanding the risks associated with provider diversification—and the limitations that might be associated with operating in multiple markets—is important to protecting against associated antitrust liability.