LAW
Monopoly buster DOJ probes Wichita Falls hospital BY CRYSTAL CONDE Anticompetitive conduct by a hospital
system can harm a community by limiting patient choice in health care and driving up costs. That’s exactly what the fed- eral government alleges took place in Wichita Falls. For 18 months, Wichita Falls’ largest hospital system’s busi- ness practices were the target of a U.S. Department of Justice (DOJ) investigation. In February, the department reached a settlement with United Regional Health Care System that pro- hibits it from entering into contracts that improperly inhibit commercial health insurers from contracting with United Re- gional’s competitors. The department said United Regional unlawfully used the contracts to maintain a monopo- ly for hospital services, resulting in consumers paying higher prices for health care services. The DOJ’s Antitrust Division and the Office of the Texas Attorney Gen- eral filed a civil antitrust lawsuit in federal court, along with a proposed settlement that, if approved by the court, would resolve the lawsuit. At press time, the DOJ’s proposed set- tlement was awaiting court approval. Jerry Myers, MD, a Wichita Falls general surgeon and chief executive officer of physician-owned Kell West Regional Hospital, LLC, says the fa- cility’s physician investors became aware of United Regional’s restrictive contracting practices with insurers when Kell West opened in 1999. Within three months of the opening, Dr. Myers says United Regional initiated exclusionary contracts with major commercial health insurers that prevent- ed the hospital system’s area competitors from participating in the insurers’ provider networks. Kell West is a 41-bed acute care hospital that provides in- patient and outpatient surgical, medical, radiology, pathology, laboratory, pharmacy, and rehabilitative services. As a result of United Regional’s contracting practices, Dr. Myers says, Kell West could not participate in the Unicare,
Aetna, HealthSmart, Cigna, and UnitedHealthcare networks, and all insurance companies affiliated with these plans. He says the facility survived for the past 12 years on payments from Medicare, Medicaid, TRICARE, and Blue Cross and Blue Shield of Texas (BCBSTX). The DOJ complaint in United States and State of Texas v.
“United Regional’s actions affected not just Kell West but the people of Wichita Falls and Wichita County.”
United Regional Health Care System says BCBSTX is the only major insurer without an exclusionary contract with United Regional. Eight commercial health insurers had signed exclu- sionary contracts with United Regional as of 2010, according to the complaint. “United Regional’s actions affected not just Kell West but the people of Wichita Falls and Wichita County. Wichita Falls isn’t that affluent, so having a county hospital that was more expensive than many of the hospitals in Dal- las and Fort Worth created a real problem for area patients,” Dr. Myers said.
Allegations of anticompeti-
tive actions by a hospital are nothing new in Texas. In 2009, Texas Attorney General Greg Abbott sent a clear message to Texas hospital systems that attempt to drive physician- owned facilities out of busi- ness when he filed an agreed
five-year injunction against Houston’s Memorial Hermann Healthcare System. (See “Antitrust in Texas,” page 47.) While the claims made in the United Regional case in Wich-
ita Falls differ from those in the Memorial Hermann case in Houston, Dallas attorney L. James Berglund, JD, one of the attorneys who represented the physicians in their civil suit against Memorial Hermann, says they both have a common denominator. “The Texas Attorney General’s Office has indicated twice now that it’s looking into the commercial insurance contract-
November 2011 TEXAS MEDICINE 45
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