When Does Collaboration Tip Over into Antitrust Activity? Suit Filed against 2 Nonprofit Hospitals

Print Share on LinkedIn More
Frozen-traffic-light

Snow accumulation in street lights / Anthony Quintano

April 15, 2016; Becker’s Hospital Review

The U.S. Justice Department announced last week that it has sued Charleston Area Medical Center (“CAMC”) and St. Mary’s Medical Center, both nonprofit hospitals operating in West Virginia, for violating federal antitrust laws by negotiating and agreeing to limit the placement of billboard and other advertising that might cause patients to change providers. The Justice Department has also submitted a proposed settlement order to the court that would halt the territorial allocation strategy and compel each hospital to design its marketing and advertising efforts independently.

NPQ has reported about the tensions between the large-scale population health management goals of the still-new Affordable Care Act on the one hand and antitrust laws (generally favoring smaller businesses against larger ones to preserve choice and competitiveness for consumers) enacted more than a century ago on the other. Typically, the disputes have centered on hospital mergers and whether the Health and Human Services (HHS)-stated goals of the ACA run afoul of antitrust law as interpreted by the Federal Trade Commission (FTC).

This federal lawsuit is different because it targets nonprofit hospital collaborations rather than mergers, and because it resembles the classic (and illegal) business tactic of competitors allocating market share based on geography. However, the suit is still worth watching because nonprofit hospitals are seeking many ways short of outright mergers to collaborate and cooperate in a healthcare marketplace that rewards large health systems. It’s important to know how hospitals and health systems can do so legally.—Michael Wyland