Medicare Compliance & Reimbursement

ENFORCEMENT WATCH:

DOJ Says WV Hospitals Too Close For Comfort

Why being bosom buddies with another facility is unlikely to result in good times.

Hospitals should tread carefully when making agreements with other facilities, or they might land on the Department of Justice's (DOJ) choppiing block.

Here's why:  The DOJ  recently ended an "illegal" patient-swapping agreement between two West Virginia hospitals, Bluefield Regional Medical Center, Inc. (BRMC) and Princeton Community Hospital Association, Inc. (PCH), according to a department press release.

Struck on Jan. 30, 2003, the agreement called for BRMC to offer its cancer treatment services to PCH, and in return, PCH would offer its cardiac surgery services to BRMC.

Though BRMC and PCH were once competitors, the two hospitals closed the market to other area hospitals on cancer and cardiac care services by contracting with each other exclusively.  BRMC and PCH requested a joint certificate of need (CON), a permit that expresses the necessity of the agreements between the hospitals by reporting an unmet need for the facilities' services in a given region. The DOJ's Antitrust Division filed a lawsuit March 21, charging the hospitals' agreements as violating Section 1 of the Sherman Act.

"The Sherman Act clearly prohibits hospitals and other competitors from engaging in this type of market allocation schemes," says J. Bruce McDonald, the DOJ's Antitrust Division's Deputy assistant attorney general.

Despite the CON, the DOJ found the pact nixed fair competition and was a detriment to consumers.

Furthermore, the justice department prohibited BRMC and PCH from entering into and cancer- or cardiac surgery-related agreements without first gaining federal approval.

Lesson Learned:  A CON won't always protect a hospital from federal antitrust reviews.

To read the DOJ's press release, go to www.usdoj.gov/opa/pr/2005/March/05_at_135.htm.
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