The U.S. Justice Department is conducting an antitrust investigation of another physician-hospital organization, this one providing obstetric services in the Baton Rouge, La., area.
It's at least the fourth ongoing federal antitrust probe of a PHO or PHO-like group disclosed in recent months, suggesting that PHOs have become the preferred target of federal healthcare antitrust enforcement officials.
The Justice Department is conducting three of the investigations. The Federal Trade Commission is conducting the other.
The latest target is the Woman's Physician Health Organization, which received a civil investigative demand from the Justice Department late last month. A CID is like a subpoena, but it's used in civil investigations.
In general, the Justice Department is seeking information about the provision of obstetric and gynecological services in the Baton Rouge market and, specifically, about the operations of the Woman's Physician Health Organization.
The organization is a PHO formed in February 1994 by Woman's Hospital in Baton Rouge and 144 physicians on staff at the hospital. The physicians specialize in obstetrics and gynecology.
Like other PHOs, the Woman's Hospital PHO is a vehicle for the hospital and its physicians to jointly pursue service contracts with insurers and employers. To date, the PHO has entered into four such contracts.
Attorney Jeff Miles, the PHO's outside antitrust counsel, said he believes that the Justice Department is looking into four distinct issues:
Whether the hospital somehow hindered other hospitals in the market from offering OB/GYN services.
Whether the hospital used the PHO as a vehicle to discourage OB/GYNs from practicing at other hospitals.
Whether the fee-setting mechanisms used by the PHO represent an illegal price-fixing conspiracy.
And whether the PHO controls too many of the OB/GYNs in the market.
At deadline, no information about the total number of OB/GYNs in the Baton Rouge market was available.
Miles said he and representatives of the PHO met with Justice Department investigators last week and negotiated a decrease in the number of documents that must be turned over to the department and an extension for filing the requested papers. The deadline was extended to Sept. 25 from July 25.
In a statement, Vicki Romero, president and chief executive officer of the Woman's Hospital Foundation, which operates the hospital, said: "We believe the investigation is a result of our success in offering unusually high-quality, competitively priced OB/GYN services. Success in the marketplace, unfortunately, sometimes results in antitrust examination."
Romero said the hospital, physicians and PHO will comply fully with the investigation, and she expressed confidence that the providers will be cleared of any wrongdoing once "they (the Justice Department) learn the facts."
Meanwhile, sources said settlements are close to being completed in the government's three other pending PHO probes. Many healthcare antitrust observers believe the details of the settlements will provide important legal guidance on the formation and operation of PHOs.
The other cases are in St. Joseph, Mo. (Feb. 13, p. 21); Billings, Mont. (May 15, p. 8); and Danbury, Conn. (June 12, p. 3). The allegations being investigated by the agencies include price fixing, attempted monopolization and group boycotts.