The effect of the market share requirement is that unless the hospital is the
major provider in a small community or is possessed of a unique community
resource (say, the only federally funded level 3 nursery in the community),
then the court will reject antitrust claims against it if these claims depend on
monopoly power. Even if a hospital has sufficient market share, the court is
concerned with the impact of the practices on the consumer, not on the
competitors. The court will not be concerned if the hospital uses its market
power in a way that injures an individual physician, as long as it does not
injure consumers. This was the heart of the
Jefferson Parish Hospital District
No. 2 v. Hyde
Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2
(1984)] which is taken as sanctioning exclusive contracts with medical staff
In this case the plaintiff was an anesthesiologist. He applied for medical staff
privileges at Jefferson Parish Hospital and was rejected because the hospital
had an exclusive contract with a group of anesthesiologists. Hyde sued,
alleging that this exclusive contract was a violation of the antitrust laws in that
it interfered with his right to practice in the hospital.
Although there were several other issues in the case, the heart of the U.S.
Supreme Court’s ruling was that Hyde only wanted to join the conspiracy. He
did not claim that he would compete with the existing group and thus benefit
the public through lower prices or better service. He just complained that he
was denied the opportunity to profit from the price fixing and work allocation
aspects of the exclusive contract granted to the existing anesthesia group.
Finding that this would be of no benefit to the community, the Court rejected
Hyde’s claim. Rather than an endorsement of exclusive contracts as a way to
allocate medical staff privileges, this case should be seen as the Court’s lack of
sympathy for would-be conspirators who are left out. The Court did not rule on
the fate of exclusive contracts in the face of an attack by a physician who
offered a competitive alternative in the delivery of services.