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Client Alert

Risks of Sharing Wage Information with Competitors

Summer 2007 | Volume 2, Issue 2

Recent cases underscore the risk related to the exchange of wage and price information by competing health care providers. On March 28, 2007, the court in one such case, Reed v. Advocate Health Care, ruled that a hospital employer is not immune from antitrust liability when it shares nurse wage information with other hospital employers outside the context of a collective bargaining agreement. In Reed, the plaintiffs alleged that several Chicago-area hospitals conspired to depress nurses’ wages in violation of the Sherman Antitrust Act. One of the hospitals, the University of Chicago Hospitals, argued that it was immune from such suit because nurse wage rates, along with other terms, are determined by collective bargaining agreements between particular hospitals like the University of Chicago Hospitals and the Illinois Nurses Association. The court disagreed with that argument, stating that wage fixing among competitors outside the collective bargaining process is not in furtherance of the goals that are protected by the national labor laws.

In general, federal antitrust laws prohibit agreements that restrain competition. Agreements among competing businesses, including health care providers, that limit price competition or allocate markets are particularly suspect under the antitrust laws and can create substantial risk to the individuals and organizations engaged in such activities. Sharing current or prospective employee wage and salary information with competing employers, at a minimum, raises a possible inference that the employers intend to coordinate the amounts they will offer employees for these services.

With that cautionary note in mind, it should be noted that there are ways in which competing employers may share wage and price information with each other with far less antitrust risk. As noted in Reed, groups of employers who negotiate jointly in a collective bargaining context with a union representing all of the group’s employees may share wage information because of a non-statutory exemption from the antitrust laws when union activity is involved. The Reed court concluded that the University of Chicago Hospitals were sharing wage information with hospitals that were not parties to the collective bargaining agreement with the nurses’ union. Consequently, the hospital’s activity was subject to antitrust exposure.

Even where the labor exemption does not apply, competing health care providers may be able to exchange price and wage information with minimal risk of antitrust exposure if it is done in a way which does not raise the inference that the purpose of the exchange is to coordinate actual prices. For example, the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) will not challenge, absent extraordinary circumstances, provider participation in written surveys of the prices for health care services or wages, salaries or benefits of health care personnel where certain conditions are satisfied. These conditions include:

  • The survey is managed by a third party, such as a consultant;
  • The information provided by survey participants is based on data more than three months old; and
  • There are at least five providers reporting data upon which each disseminated statistic is based, no individual provider’s data represents more than 25% on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.

According to the FTC and DOJ, exchanges of price and cost information that fall outside this safety zone will not necessarily be labeled “anticompetitive” or illegal. Rather, the government will weigh the anti-competitive effect with any pro-competitive justification for the information exchange. “Depending on the circumstances, public, non-provider initiated surveys may not raise competitive concerns. Such surveys could allow purchasers to have useful information that they can use for procompetitive purposes.” However, the FTC and DOJ are very likely to view the sharing of current or future price or wage information as anticompetitive, especially if the exchange results or even appears to result in an agreement among competitors as to the prices for health care services or wages to be paid to health care employees.

Sharing wage and price information can be interpreted as anti-competitive conduct under the antitrust laws, which can expose the organization to significant criminal and civil penalties. Health care organizations that want to share wage or price information with other organizations for purposes of a survey or otherwise should carefully consider the adverse inferences that can be drawn from such sharing. If it appears that such sharing would make sense from a business perspective, competent antitrust counsel should be sought so as to minimize antitrust risk.

If you would like additional information relating to collective bargaining and/or the sharing of wage and other employee information with other providers, contact a member of the Godfrey & Kahn Health Care Team. 

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