A New York ambulatory surgery center that earlier this month filed a federal antitrust lawsuit against a local hospital closed its doors Jan. 19. It blames its competitor, alleging "predatory, exclusionary and anticompetitive practices," according to the suit.
Rome (N.Y.) Ambulatory Surgery Center said in a written statement: "Unfortunately, because of actions by Rome Memorial Hospital which are the subject of a pending antitrust lawsuit, RASC is being forced to close its doors, depriving the community of competition and choice."
The surgery center filed its antitrust suit Jan. 3 in U.S. District Court in Syracuse, N.Y., against 211-bed Rome Memorial Hospital, charging the hospital entered into illegal contracts with two New York health plans, Blue Cross and Blue Shield of Utica-Watertown and Schenectady-based Mohawk Valley Physicians Health Plan, which excluded the surgery center. The suit alleges that the hospital intimidated physicians to discourage them from using the facility, which opened in June 1999 in the former home of Griffiss Air Force Base Hospital. The hospital's goal, according to the 34-page lawsuit, was to prevent the surgery center from opening or to drive it out of business. The center's contracts with Blue Cross ended Jan. 1, effectively giving the hospital a monopoly over outpatient surgery in the greater Rome area, the suit contends.
Rome Memorial is the only acute-care hospital in Rome, a city of 41,000 residents in northeastern New York, about 35 miles east of Syracuse. The suit alleges it violated Sections 1 and 2 of the Sherman Antitrust Act, which prohibits contracts that unfairly restrain trade and forbids monopolies or attempted monopolies.
Rome Memorial denies its practices contributed to the surgery center's closure and instead blames the center's overly optimistic financial forecasts.
"In announcing its closure, Rome Ambulatory Surgery Center is apparently attempting to blame Rome Memorial Hospital instead of accepting responsibility for its own poor business decisions," said hospital attorney Raymond D'Agostino of the Syracuse firm Hancock & Estabrook.
D'Agostino said the antitrust suit allegations are "totally without merit and factually inaccurate."
Twenty-three physicians own the surgery center. Center officials said the hospital worked against the facility from the beginning, challenging its certificate-of-need application and refusing to sign transfer agreements for emergency patients. The hospital allegedly changed its bylaws to permit the termination of hospital privileges for physicians owning or investing in facilities competing with the hospital. In addition, Rome Memorial allegedly coerced physicians to sign agreements not to refer patients to the center in exchange for an agreement by the hospital not to recruit new physicians who would compete with them, the suit said.
The Blues plan is the largest commercial insurer in Oneida County, covering 40% to 45% of residents with private insurance. Mohawk Valley Physicians is the second-largest insurer in the county, covering nearly 20% of the region's insured. Both health plans supported the center's CON application. The Blues contracted with the surgery center from its inception until Jan. 1 this year. Before the center opened, Mohawk Valley Physicians had already committed to a contract with the hospital that excluded the center.
The surgery center's lawyer, William Kopit, a healthcare antitrust specialist with the Washington firm Epstein, Becker & Green, said the Jan. 19 closure is directly attributable to Rome Memorial's actions.
"Jan. 1 they lost the Blue Cross (and) Blue Shield contract, which was their biggest source of business," he said. The hospital didn't offer discounts to local health plans until the surgery center opened in 1999, Kopit said.