In appraising the potential for ex- pansion by competitors, the DOJ found Kell West could more than double the number of patients it serves without any physical expansion, and Maplewood Am- bulatory Surgery Center, which operates only three days per week, could easily add at least one more day per week to its schedule to serve more patients. Ma- plewood focuses on providing outpatient surgical procedures for pain remediation in Wichita Falls.
The complaint says Kell West was
likely unable to expand into obstetrics, pediatrics, oncology, industrial medicine, and neurology due to United Regional’s exclusionary contracts. “Doctors in the Wichita Falls com- munity have expressed interest in treat- ing additional patients at Kell West if it could expand into new services,” the complaint reads.
In examining United Regional’s mo- nopoly power, the DOJ estimates that allowing Kell West and other health care facilities to participate in commercial health insurers’ networks that have ex- clusionary contracts with United Region- al would result in substantially higher profits for the facilities. “For example, if only 10 percent of these insurers’ patients switched from United Regional to Kell West, and these insurers paid Kell West 30 percent less than they currently pay United Regional, Kell West’s profits would still likely in- crease by more than 40 percent,” accord- ing to the complaint. While Dr. Myers welcomes the pros- pect of improving Kell West’s financial health through new contracts with insur- ers, he’s most grateful patient choice will be restored in Wichita Falls. “You have to understand; we started this hospital [Kell West] to try to pre- vent United Regional’s monopoly and to give patients another choice. Because of the exclusionary contracts, Wichita Falls’ public school teachers couldn’t come to Kell West because they’re insured by Aet- na. People don’t like not having a choice, and now, thanks to the DOJ settlement, they’ll have more options for care,” he said. Dr. Myers says that at this point he and the 73 other physician-owners of
Antitrust in Texas
Texas Attorney General Greg Abbott filed an agreed five-year in- junction against Houston’s Memorial Hermann Healthcare System in 2009. The order bars Memorial Hermann from certain contracting practices and orders it to pay $700,000 in partial reimbursement to the attorney general’s office for its two-year investigation. Among its lengthy terms, the injunction bans Memorial Hermann
from signing any agreement with a health care payment plan that results in a boycott of competing hospitals. The hospital system also can’t require or request that health plans supply information on the rates they pay competing hospitals. Additionally, last year Memorial Hermann settled a lawsuit for an undisclosed amount with Stealth, a group of physicians in a limited partnership that owned and operated Houston Town & Country Hospital. In the case, the physician partners alleged Memorial Her- mann violated antitrust laws and employed certain business prac- tices to dissuade insurance companies from doing business with the physician-owned hospital. Following the attorney general’s injunction, the operator of a
competing hospital and a group of physician investors sued Memo- rial Hermann, alleging the hospital system’s anticompetitive behav- ior pressured insurance companies to avoid contracting with Hous- ton Town & Country, a 99-bed physician-owned hospital that closed in 2007 after failing to secure contracts with more than one major health care payment plan. Memorial Hermann settled the lawsuit with the operator of Hous-
ton Town & Country before the trial. Last year, a Harris County jury rejected physicians’ allegations that Memorial Hermann violated antitrust laws, causing the physician-owned competing hospital to fail. At the conclusion of the eight-week trial, the jury found the evi- dence was insufficient to determine whether insurance companies engaged in a conspiracy to discourage insurers from contracting with Town & Country. L. James Berglund, JD, one of the attorneys who represented the
physicians in their civil suit against Memorial Hermann, says to win the case, the plaintiffs had to prove Memorial Hermann facilitated a conspiracy between at least two insurance companies to deny contracts to Houston Town & Country. Mr. Berglund says his clients decided not to appeal the jury’s decision. A second lawsuit, how- ever, brought by the operator of the hospital against the insurance companies, is ongoing.
November 2011 TEXAS MEDICINE 47
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