Blam­ing the Blues

Stew­ard sues R.I. in­surer for role in Land­mark deal

Modern Healthcare - - REGIONAL NEWS - Jaimy Lee

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.

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