Eleven hospitals in northern and eastern Maine and about 325 physicians may have to renegotiate their payment contracts with insurance companies and other health care payers as a result of recent antitrust settlements between the Bangor-based Maine Health Alliance, the Maine Attorney General’s Office and the Federal Trade Commission.

In separate announcements earlier this month, the FTC and attorney general announced consent agreements reached with the alliance and its director William Diggins in response to price-fixing allegations raised by health insurance companies. The terms of the agreements are similar, effectively barring the Maine Health Alliance, which represents most of the hospitals and physicians in the area, from negotiating payments on behalf of its collective membership unless it meets specific guidelines.

The analysis of the FTC agreement finds that the alliance’s bargaining practices have stifled healthy competition between doctors and hospitals and “kept the price of health care in northeastern Maine above the level that would have prevailed absent the illegal conduct.”

FTC attorney Jeff Brennan said it is a common, allowable practice for health care provider groups to negotiate collectively with payers. Under the rapidly disappearing HMO insurance model, for example, providers share the financial risk of managing patient health, Brennan said. In that instance collective negotiating is allowable.

Providers also may be able to demonstrate to regulators that only through a noncompetitive agreement can they efficiently provide a specific service or make a procedure affordable to their patients.

Absent these provisions, Brennan said, “this is the type of conduct the FTC is charged with eradicating.”

Maine Assistant Attorney General Christine Moylan said several other physician-hospital organizations – or PHOs – like the Maine Health Alliance operate in Maine and are common in other states as well. Moylan said she was not at liberty to reveal whether antitrust complaints against other Maine PHOs have been raised recently. Nor would she reveal where the complaint against Maine Health Alliance originated, although it is widely thought to have been generated by an insurance company doing business in Maine.

The Maine Health Alliance was established in 1995, a subsidiary of Quorum Health Resources. MHA split from Quorum about two years ago and is now a freestanding organization with a mission of sustaining access to high-quality health care by supporting hospitals and doctors, Diggins said. Membership consists of regional providers not affiliated with Bangor-based Eastern Maine Healthcare.

Contract negotiation is a much-needed service, Diggins said Monday, especially in rural areas where hospitals and physicians may have neither the staff nor the time to negotiate complicated payment contracts.

While he does not agree with the price-fixing allegations, the terms of the consent agreements allow the alliance to get on with its work, Diggins said. The settlements permit current contracts to remain in place until their expiration. Diggins and his staff will revise bargaining practices to satisfy the FTC and the attorney general, he said.

Physician response to the agreements has been muted, according to Gordon Smith of the Maine Medical Association. “I have had a few calls from some people who are very distressed about the whole affair,” he said. But for the most part, “it’s been quiet.”

Smith said doctors value the bargaining service of the physician-hospital organizations or PHOs.

“It’s been a very desirable way for a physician in private practice to get administrative help. Imagine going to the table to negotiate a contract with a company like Aetna,” he said.

Despite concerns antitrust charges may spread to other PHOs, Smith said those organizations and their members are “cautiously optimistic that they’re operating within FTC parameters.”

St. Joseph Hospital, the largest of the 11 hospitals represented by the alliance, declined to comment on the agreement.

Mount Desert Island Hospital in Bar Harbor issued a statement from president Arthur Blank: “We are very pleased that the state and the FTC have been willing to resolve this matter and provide clear guidance in the very complex area of contracting practices.”

Bill Cohen, spokesman for Anthem Blue Cross and Blue Shield of Maine, the state’s largest insurer, said the company’s legal experts are exploring how the ruling will affect the cost of doing business in Maine. The consent agreement “will help with future cost increases by fostering direct negotiations between Anthem, doctors and hospitals,” Cohen said.

In Augusta, Gov. John Baldacci’s director of health care policy and finance, Trish Riley, said 31 of Maine’s 39 hospitals are affiliated with a PHO. The effect of collective-provider negotiations and regional competition on hospital prices will be examined in the coming year, Riley said, as part of a statewide study of hospital operations.