ABSTRACT Although the health care industry has experienced tremendous consolidation during the past two decades, many hospitals have been excluded because of religious, financial or legal restrictions that have prevented their merger. More recently, however, health care organizations have employed a variety of innovative structures to permit participating entities to coordinate certain operational functions while maintaining varying degrees of independence. Because these collaborations achieve many of the benefits of a true merger, they are often referred to as "virtual mergers." Though virtual in name, these collaborations face real antitrust scrutiny. In the first virtual merger case to reach the courts, an examination of price fixing and market allocation activities of the new entity did not survive antitrust analysis. The results of this case in conjunction with increased activism among health insurers and state attorneys general may portend a new round of antitrust enforcement with significant implications for healthcare organizations.
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