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ANTITRUST EXPERT ASSAILS MONOPOLIES

Antitrust violations are why the once-mighty American auto industry fell and the Soviet Union collapsed, contends University of Utah Professor John Flynn.

"In the '60s and '70s, American carmakers became fat and sassy monopolists who didn't compete," Flynn said. "Essentially, they told customers, either pay the high price or don't buy it. The lower quality and high prices of American-made cars made the market vulnerable to foreign competition."Absence of viable political competition was the downfall of the Soviet Union because entrepreneurs were prevented from entering a free market.

"In America, we have a society of individual enterprise. Antitrust policy is to keep the market open so people can succeed or fail based on the market - not on a dictatorship," said Flynn, a nationally recognized antitrust expert.

Does this relate to health care in Utah?

Flynn hesitated to say because of an ongoing, sensitive federal investigation. But he addressed some of the unique complexities involved in applying antitrust to health care.

"In health care, there may be circumstances where competition may be counterproductive or has to be enforced in a limited way," he said. "We should rely on competition where we can but come up with other ways to regulate economic power where competition can't work."

Businesses such as electric and water companies are monopolies by necessity. "It would be wasteful to build two power systems for the sake of competition.

"The health-care industry is an example of market failure because a third party pays the medical bills - either the government or insurance.

"We either have to come up with a unique response to this situation or continue to watch the inflation of health-care costs soar beyond our ability to withstand."

A motivating factor behind the federal agents' persistence with the Utah investigation, Flynn believes, is "to establish antitrust standards for hospital cooperation and health-care policy in the nation. Whether it results in indictments or not, no one knows yet."

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(Additional information)

Costs favorable

According to Don Poulter, chief executive officer for Primary Children's Medical Center, Primary Children's costs compare favorably with other children's hospitals in the country. Based on 1989 data released by the National Association of Children's Hospitals and Related Institutions, Primary Children's charges were 13.8 percent below average. The comparisons of 46 out of 53 general acute children's hospitals were adjusted by the Health Care Financing Administrations area wage index.

"When we moved to the university campus into a new $75 million facility, we thought we might require major rate increases for a couple of years until we got our operation up to full speed," said Poulter. "That was not necessary. For the past several years, the rate increases at Primary have been less than the state average. This is due to the immediate success of the new hospital in attracting large numbers of patients and also the efficient design. There will be no rate increase at all for the hospital in 1992."