Some hospital groups want federal judges to give not-for-profit hospitals special treatment under antitrust law by lending greater legal weight to the economic benefits that a merger of two not-for-profits would create.
Friend-of-the-court briefs to that effect were recently filed in the 6th U.S. Court of Appeals in Cincinnati by the American Hospital Association, the Michigan Health and Hospital Association, known as the MHA, healthcare alliance VHA, and Volunteer Trustees of Not-for-Profit Hospitals.
At issue is a lower court's denial of a preliminary injunction to block the merger of Butterworth Health System and Blodgett Memorial Medical Center in Grand Rapids, Mich. (Sept. 30, 1996, p. 4). The Federal Trade Commission challenged the deal, which would merge the city's two largest hospitals.
In an unusual ruling last year, a federal district court judge concluded the merger would create an illegal monopoly but refused to block it on the grounds that consumers probably wouldn't be hurt. The judge cited cost efficiencies, not-for-profit status, community representation on the board, and the hospitals' promise to limit price increases for seven years.
The FTC has appealed, saying the institutions are "very large, highly profitable and already highly efficient hospitals" whose merger would wipe out consumer choice.
The 6th Circuit has yet to schedule oral arguments in the case.
In their jointly filed brief, the AHA and the MHA argued that given excess capacity, hospital mergers are more likely than mergers in other industries to produce substantial efficiencies.
"All we're doing is trying to assert the belief that it's important to analyze what's happening in the local community," MHA Executive Vice President David Seaman said.
VHA and Volunteer Trustees supported the hospitals' claim of antitrust immunity because of their not-for-profit status-an argument the FTC denounces and several federal appellate courts have rejected.