Methodist Health sues St. Fran­cis, claims an­titrust vi­o­la­tions

Suit claims St. Fran­cis is vi­o­lat­ing an­titrust laws

Modern Healthcare - - NEWS - Joe Carl­son

Methodist Health Ser­vices Corp. in Peo­ria, Ill., is su­ing its larger lo­cal com­peti­tor for more than $300 mil­lion, say­ing the big­ger hospi­tal is break­ing state and fed­eral an­titrust laws in con­tracts with in­surance com­pa­nies.

The com­plaint filed in U.S. District Court in Peo­ria is a vari­a­tion on a type of dis­pute at is­sue in sev­eral an­titrust cases in re­cent years in­volv­ing ex­clu­sion­ary terms in con­tracts be­tween hos­pi­tals and in­sur­ers.

Methodist Med­i­cal Cen­ter, a 282-bed hospi­tal, says the par­ent com­pany of 574bed OSF St. Fran­cis Med­i­cal Cen­ter has con­tracts with four in­surance com­pa­nies that com­pel the pay­ers not to sign con­tracts with St. Fran­cis’ com­peti­tors. St. Fran­cis has threat­ened to pull out of in­sur­ers’ net­works or im­pose fi­nan­cial penal­ties if the compa- nies do busi­ness with its com­peti­tors, the law­suit al­leges.

“St. Fran­cis has lever­aged its size and sta­tus as a ‘must-have’ hospi­tal to en­ter, main­tain and en­force th­ese ex­clu­sion­ary con­tracts,” the law­suit says. “Be­cause St. Fran­cis is the most ex­pen­sive hospi­tal in the area, this drives up health­care costs and harms con­sumers.”

Jim Far­rell, se­nior vice pres­i­dent and spokesman for St. Fran­cis’ par­ent, nine-hospi­tal OSF Health­care Sys­tem in Peo­ria, de­clined to com­ment on the law­suit at dead­line. “It will take some time for our le­gal coun­sel to re­view the 39-page com­plaint,” Far­rell said in an e-mail the day the law­suit was filed.

Methodist al­leges that St. Fran­cis’ con­duct is vi­o­lat­ing the fed­eral Sherman Act, the Illi­nois An­titrust Act and the Illi­nois Con­sumer Fraud Act, and has in­ter­fered with its abil­ity to do busi­ness with four in­sur­ers: Aetna, Blue Cross and Blue Shield of Illi­nois, Health Al­liance and Hu­mana.

In 2011, the Jus­tice De­part­ment set­tled sim­i­lar al­le­ga­tions of anti-com­pet­i­tive con­duct be­tween a hospi­tal and in­sur­ers in Wi­chita Falls, Texas.

In that case, United Re­gional Health Care Sys­tem set­tled the case with­out ad­mit­ting to the al­le­ga­tions that its con­tracts with pay­ers il­le­gally ex­cluded com­peti­tors and ul­ti­mately drove up con­sumer costs. Hospi­tal of­fi­cials dis­puted the government’s as­ser­tions, but agreed to a seven-year mora­to­rium on ex­clu­sion­ary pric­ing con­tracts.

In Michi­gan, the Jus­tice De­part­ment is headed for trial later this year in a civil case in which Blue Cross and Blue Shield of Michi­gan is ac­cused of us­ing ex­clu­sion­ary terms in its con­tracts with hos­pi­tals that force the health­care providers to give Blue Cross the low­est prices in the mar­ket—terms that com­peti­tors say drive up their costs.

Methodist Med­i­cal Cen­ter, above, says St. Fran­cis is in­ter­fer­ing with its abil­ity to do busi­ness with four in­sur­ers.

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