exemptions to providers entering cooperative agreements, including partnerships to share or allocate services. Providers that can prove the benefits of their ventures outweigh any anti-competitive risks can obtain a "certificate of public advantage" from the state health department, which will monitor the ventures' progress.
The South Carolina law also would, in theory, exempt providers from federal antitrust laws under the "state action immunity" doctrine. Under the doctrine, activities permitted or encouraged by states and actively supervised by states are exempt from federal antitrust scrutiny.
The Charleston hospitals intend to apply for a state exemption once the health department promulgates regulations implementing the law, said Likes of Bon Secours-St. Francis.
The same goes for the Spartanburg hospitals, said Spartanburg Regional's Oddis.
As the town's only two, and formerly competing, hospitals, a partnership opens them up to conspiracy charges, and a merger gives them a monopoly.
The Spartanburg hospitals also may play two other cards. Spartanburg Regional is a public hospital that may enjoy special antitrust protection not available to privately operated hospitals, Oddis said. The hospitals also are prepared to argue that they compete in a broad geographic market, he said.
The market extends to Greenville, S.C., 30 miles southwest, and to Charlotte, N.C., 60 miles northeast, he said.
Kentucky stakes.No such law exists in
Kentucky, where hospitals in a Louisville partnership are conducting informal talks with federal antitrust officials.
The participating hospital systems are Baptist Healthcare System and Alliant Health System, both in Louisville; the Sisters of Charity of Nazareth (Ky.) Health System; and St. Elizabeth Medical Center in Covington, Ky.
The four systems combined own 18 hospitals in Kentucky. Six of them are in Louisville, including the Sisters of Charity's flagship facility, Saints Mary and Elizabeth Hospital. The systems would control half Louisville's hospitals and 43% of its staffed beds.
What the four systems want to do is create two separate partnerships: one to oversee an integrated provider network in Louisville and the other to oversee an integrated network serving the entire state. Physician groups also would participate and have equal representation on the boards of the two not-for-profit partnerships.
The partnerships are joint venture arrangements for the purpose of collectively pursuing managed-care contracts, said Stephen Williams, Alliant's president and CEO.
The hospital systems will maintain separate ownership status and assets, although they may consider consolidating or coordinating some services in the future.
Until then all the participants would remain competitors outside the network contracting arrangements, said Mark Dundon, president and CEO of the Sisters of Charity.
"There will be no sharing of price information," Dundon said.
According to Williams, Dundon and Tommy Smith, Baptist's newly named president and CEO, network bids for managed-care contracts will be determined independently and won't be based on price lists from each hospital.
Still, the executives confirmed that the systems' partnership arrangement has piqued the interest of the FTC.
"We're in discussions with them," Williams said.
Dundon actually expressed sympathy for the FTC, which is being bombarded with new partnership mutations from creative attorneys.
"The FTC doesn't know what to do with us. They're struggling with the whole issue," he said. "Regionally, we may be too big. Statewide, we're not."