Potential Monopsony Lawsuit

By Ivan Miller, Ph.D.

Former Executive Director

National Coalition of Mental Health Professionals and Consumers, Inc.
Tel. 303-499-3888

Recent fee reductions have alerted many professionals to the power that the managed care industry has to control the marketplace. This power comes from creating a monopsony - the flip side of monopoly. In a monopoly, one entity can controls all service providers such as all mental health professionals. However, in a monopsony one entity controls all of the consumers. Magellan is on the way to developing monopsonistic power by controlling the behavior of 40% of the managed mental health consumers. This control gives Magellan the power to dictate market terms and fees. Monopsonies as well as monopolies are a clear violation of the Sherman Anti-Trust Act.

A year ago, the National Coalition protested to the Department of Justice that the managed care industry has so much monopsony power that it is in violation of the Sherman Anti-Trust Act. In a White Paper developed in conjunction with the Alliance for Universal Access to Psychotherapy, we presented to the Department of Justice evidence that documented major anti-trust problems in the managed behavioral health care industry.

The Department of Justice has been slow to respond to managed care monopsonies because monopsonies lower prices which is one of the health care goals of the government. However, monopsonies are not in the public interest because they cause a dysfunction in the free market. In a free market, costs go down at the same time as free market forces result in the supply or availability of services rising and quality improving. In a monopsony, the cost may go down, but, as professionals have witnessed, the availability and quality of services fall drastically and far more than would ever occur in a free market. In the monopsony controlled market of managed care, quality mental health services become unavailable. Therefore, high-quality, free trade is inhibited and the Sherman Anti-Trust Act is violated. The National Coalition has negotiated with two prestigious New York law firms to join forces and work together to file a monopsony lawsuit against the managed care industry as well as a series of other lawsuits. These firms believe a monopsony lawsuit is very worthwhile and are willing to invest many of their own resources in its own success. We have been discussing a cost of $150,000 and have been looking for fund raising opportunities. For those who don't know the cost of a lawsuit in Federal Courts, $150,000 is really a bargain.

The strength of a monopsony lawsuit is that it is both based on good legal theory and that there are substantial facts to prove the case. The law firms are among the finest. The attorneys believe that mental health is the area in which the monopsony can most easily be proven. The risky part of the lawsuit is that because it is based on cutting edge legal theory, and because it would undermine the foundation of managed care, it will require a judge who is intelligent, independent and conscientious enough to make a bold decision. Therefore, winning the lawsuit depends to a great extent on which judge is assigned.

We are eager to move forward on the monopsony lawsuit. We believe that we have a reasonable chance of success in the courts. More importantly, we will be able to use a monopsony lawsuit to achieve a great publicity victory. The lawsuit gives us the opportunity to educate the public that the managed care monopsony is not only destroying the income earning capacity of mental health professionals, but it is also harming the public by destroying quality and availability of services. Without the lawsuit, the trend is clear - the fees, quality, accessibility, and integrity of mental health services will continue to deteriorate as managed care consolidates its power. It is possible that the rate of fee reductions can be slowed, but fees will continue to decline until managed care monopsonies are busted.

For submissions, for volunteering to report and work with the newsletter editors, and for letters to the editor, please contact:

Editor, The Coalition Report
William A. MacGillivray, Ph.D.
newsletter@TheNationalCoalition.org

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