Blaming the Blues
Steward sues R.I. insurer for role in Landmark deal
Steward Health Care System is blaming Blue Cross and Blue Shield of Rhode Island for tanking its bid to buy Landmark Medical Center in Woonsocket, R.I. The Boston-based system filed a lawsuit alleging the insurer used its dominance in Rhode Island to prevent Steward from entering the state.
After spending years pursuing a deal to acquire the 133-bed community hospital and investing millions of dollars in the financially troubled facility, Steward walked away from the transaction in September.
At that time, Landmark’s court-appointed special master said that Steward declined to close the deal with the hospital until it obtained an acceptable agreement with Blue Cross and Blue Shield of Rhode Island, which covers at least 70% of the state’s commercially insured population.
The lawsuit, which was filed in Superior Court in Providence, R.I., on May 1, alleges that Blue Cross and Blue Shield of Rhode Island’s “unlawful attempted and actual monopolization of the market for the sale of commercial health insurance in Rhode Island” caused Steward’s deal with Landmark to fail.
“BCBSRI purposely thwarted Steward’s acquisition and planned revitalization of Landmark, and thereby excluded from Rhode Island a community-based, integrated healthcare delivery system and accountable care organization, dedicated to delivering more affordable healthcare and more affordable health insurance in the communities it serves,” Steward said in the lawsuit.
The for-profit health system alleged that the insurer never intended to enter into a contract with Steward for “reasonable and competitive reimbursement rates at Landmark.”
In an e-mailed statement, Michele Lederberg, Blue Cross and Blue Shield of Rhode Island’s chief administrative officer and general counsel, said she expects the lawsuit to be resolved in the insurer’s favor. “At a time when Rhode Island is focused on assuring access to quality healthcare for all residents, lowering costs and increasing collaboration in the provider community, Blue Cross and Blue Shield of Rhode Island is disappointed with Steward’s decision to file a lawsuit,” she said.
The deal was, in many ways, indicative of the challenges for-profit health systems face when they attempt to enter traditionally notfor-profit markets. As part of the deal, Stew-
ard required a change to a long-standing state law that limited the number of hospitals a forprofit company could acquire. That law, the Hospital Conversions Act, was amended last summer, months before the deal collapsed.
Landmark, which has been in receivership since 2008, is being acquired by Prime Healthcare Services, a for-profit health system based in Ontario, Calif.