A judge's ruling that a Wilmington, N.C., hospital must disclose the discount it gives to a managed-care company could pose a threat to public hospitals, a hospital industry representative said.
Last May, the Morning Star of Wilmington newspaper sought to find out the size of the discount New Hanover Regional Medical Center gives to 16,000 customers of PHP, an HMO company.
The hospital refused to disclose the rate, saying it feared legal action from PHP for disclosing a trade secret.
Judge Ernest Fullwood entered a handwritten notation in New Hanover County Superior Court this month in which he sided with the newspaper. He has yet to sign an official order.
If Fullwood's ruling stands, the effect could be far-reaching, said Ellen MacMillan, vice president of the North Carolina Hospital Association.
"Having to reveal the secrets of these negotiations and contracts is going to be a competitive disadvantage for public hospitals," she said.
PHP argued before Fullwood that trade secrets are protected by law. It also said that releasing the information would give other hospitals, both public and private, and other insurance companies an unfair competitive advantage.
Mark Prak of Raleigh, N.C., the newspaper's attorney, argued that the trade secret defined by law does not apply to a contract negotiated by a public hospital.
MacMillan noted that public hospitals handle most of the indigent care across the state and said they sometimes cannot compete on equal terms with private hospitals, especially those backed by large, wealthy corporations.
"If you have to reveal your bid, it gives someone else the opportunity to barely underbid you," she said.
Prak argued that that is exactly why the rates should be public-so competitors can bid openly against one another and possibly drive down the cost of healthcare.
But MacMillan said public hospitals can last only so long if the discounts increase.
"You can bring healthcare costs down to the point where hospitals cannot survive," she said.
Fullwood's ruling would not necessarily set policy throughout the state because other Superior Court judges would not be bound by his decision, Prak said. But if the state appeals court upholds it, the ruling would become statewide policy, he said.
Fullwood now must decide whether to allow PHP to prevent the rates from being made public while it appeals the case.