When a hospital's financial fortunes head south, it often pins the blame on Medicare, Medicaid and managed care. But 346-bed Saint Joseph's Hospital of Atlanta is blaming one of its chief competitors, 444-bed Northside Hospital, just across the street.
In a rare case of one hospital taking another to court for intentionally limiting competition, Saint Joseph's last month filed suit Northside in Fulton County Superior Court.
Saint Joseph's says Northside is illegally using its area dominance in obstetrics to cut Saint Joseph's out of some lucrative managed-care contracts.
In a written statement, Northside said Saint Joseph's lawsuit is without merit, and it intends to vigorously defend itself in court.
Not in dispute is the fact that Northside successfully opposed Saint Joseph's certificate-of-need application to open a competing obstetrics business.
In January, the Georgia Department of Community Health's Division of Health Planning rejected Saint Joseph's CON application to open a $30 million obstetrics program and women's center in a separate building. Northside argued and the state agreed that there was not a need for the services and that Saint Joseph's proposal would hurt existing OB/GYN programs in the area.
Saint Joseph's did not appeal, deciding instead to refile an application in July that will address the state's questions and concerns.
With more than 14,800 deliveries, Northside operated the country's busiest obstetrics program for a community hospital in 1999, according to the American Hospital Association. In May of that year, Northside opened its new $42 million women's center. Saint Joseph's did not oppose that project.
And on March 31 of this year, Saint Joseph's posted an undisclosed financial loss in the first quarter, the first time in its 120-year history it has lost money in that quarter, usually its most profitable, Saint Joseph's spokeswoman Diana Lewis confirmed.
Saint Joseph's has not reported its 1999 figures, but in 1998, it made
$5.2 million from operations on net revenue of $270 million. By comparison, in 1999, Northside made almost $11 million on net revenue of $345.6 million.
In response to its quarterly loss, Saint Joseph's laid off 34 people from 17 departments earlier this month, including supervisors and cafeteria workers, but not any hands-on caregivers.
Then the hospital turned litigious.
According to its complaint, Northside negotiates managed-care contracts that make it the sole provider of all "covered services," including obstetrics. Because it can't offer obstetric services, Saint Joseph's argues that it can't compete for those contracts.
In addition to seeking a court order barring Northside from using such language in its contracts, Saint Joseph's wants at least $50 million in damages for revenue it claims to have lost in the past four years because of Northside's contracting practices.
"A health plan must agree to exclude Saint Joseph's Hospital from its plan in order for patients covered by the plan to obtain market rates at Northside Hospital for obstetrical and perinatal services," according to the suit.
Northside, owned by the Hospital Authority of Fulton County, had no other comment except to announce that it has filed a motion for dismissal of the case.