A hospital operator will pay $75,000 to settle allegations that it squelched competition in concert with Blue Cross and Blue Shield of Massachusetts, state prosecutors said late last week.
The payment was promised by Berkshire Health Systems of Pittsfield, Mass., in an accord filed in Suffolk Superior Court. The company runs Berkshire Medical Center, a 291-bed hospital in Pittsfield, as well as nursing homes and Fairview Hospital in Great Barrington, Mass.
State prosecutors say Berkshire Medical improperly agreed to boycott Harvard Community Health Plan, a potential Blue Cross competitor. And Blue Cross allegedly agreed in exchange to snub Hillcrest Hospital, which is also in Pittsfield.
Assistant Attorney General Pasqua Scibelli, who worked on the case, said the secret agreement tended to hurt consumers. "You have two parties who both have large amounts of market share," she said. "Therefore, there's competitive harm."
She said her office had heard of similar agreements elsewhere in the industry. But she said they are not necessarily illegal and must be judged individually.
However, David Phelps, president of Berkshire Health Systems, said there was no such exclusivity agreement at Berkshire Medical Center. "We are the largest healthcare provider in Berkshire County. We have higher standards to adhere to," he said.
He said the settlement allows the hospital to avoid more expensive litigation.
In the settlement, Berkshire Health Systems promised to avoid exclusivity arrangements in the future and negotiate in good faith with all health plans that meet its standards.
As a result of a June settlement, Blue Cross and Blue Shield of Massachusetts already has paid $200,000 in the same case. It also began doing business with Hillcrest Hospital and set up an internal antitrust program.
However, it did not admit to any wrongdoing.