Another physician-hospital organization has come under federal antitrust scrutiny-this time, it is one linked to Columbia/HCA Healthcare Corp., the nation's largest hospital chain.
MODERN HEALTHCARE has learned that the U.S. Justice Department is conducting an antitrust investigation of Apex Health Care of Hampton, N.H. The PHO is affiliated with 215-bed Exeter (N.H.) Hospital and 181-bed Portsmouth (N.H.) Regional Hospital.
Exeter is a private not-for-profit hospital. Portsmouth, located 12 miles northeast of Exeter on the Atlantic coast, is a for-profit hospital owned by Columbia.
Wendy Frosh, executive director of Apex, confirmed last week that the PHO is under investigation.
"The investigation is ongoing," she said. "It's in the information-gathering stage right now."
Frosh referred all further questions to the PHO's attorney, David Marx of McDermott, Will & Emery in Chicago.
William Schuler, chief executive officer of Portsmouth, insisted on calling the investigation an "inquiry."
"I don't know many of the details, but I'm not worried about it," Schuler said. "Only in America can the Justice Department come knocking on your door without telling you why they were there or who sent them."
He also referred questions to Marx.
At deadline, Kevin Callahan, Exeter's president and CEO, hadn't responded to an interview request.
"Many government antitrust investigations result in no enforcement action," Marx said. "We have no basis to believe that any enforcement action will result from this investigation."
Marx said the probe began last September and is ongoing. He said the Justice Department hasn't revealed the focus of the investigation except to indicate that it is looking at the "formation and operation" of the PHO.
Other federal antitrust investigations of PHOs have focused on market share and how the providers set prices charged to payers.
Competing hospitals and physicians can't collectively set prices unless they financially integrate their operations and become a single economic unit. Under federal and state antitrust laws, a single economic unit is incapable of conspiring with itself to fix prices.
Marx said Apex is a joint venture co-owned by the two hospitals and the PHO's 190 participating physicians. About half of each hospital's medical staff belong to the PHO, which was created in 1992.
The New Hampshire investigation represents at least the fifth federal antitrust investigation of a PHO that's become public. The other cases involve PHOs operating in St. Joseph, Mo.; Danbury, Conn.; Billings, Mont.; and Baton Rouge, La. Proposed settlements are pending in the St. Joseph and Danbury cases. The investigations in Billings and Baton Rouge, according to sources, are close to being settled.
A source familiar with the situation said the New Hampshire antitrust investigation may have been prompted by a complaint from one of the players in the state's highly competitive managed-care industry. Those players include Matthew Thornton Health Plan, Tufts Associated Health Plans and Healthsource.
A spokesman for Healthsource said the plan "has heard rumors" about the federal investigation, but he declined to comment on whether the plan had been contracted by the Justice Department. He said Healthsource has contracts with both Exeter and Portsmouth hospitals and many of the physicians in the PHO but has no direct contract with Apex itself.
A spokeswoman for Matthew Thornton said the plan has heard about the investigation but is unaware of the details and hasn't been contacted by the Justice Department.
Executives at Tufts did not respond to an interview request.
Healthcare antitrust observers may find the PHO investigation somewhat ironic given the Justice Department's 1994 antitrust clearance of the proposed merger of the only two hospitals in Manchester, N.H.
In that case, the hospitals successfully argued that they competed in a much wider geographic market-one that extended all the way to Exeter, some 35 miles east.