A new hospital planned by Columbus, Ohio-based Mount Carmel Health System has been stalled by a breach-of-contract lawsuit filed by physicians who are partners in a surgery center.
The suit claims the proposed hospital would violate a development agreement that bars parties in the joint venture from operating competing businesses. Both the proposed 50-bed hospital and the surgery center are located in Lancaster, in Ohio's growing Fairfield County market.
The suit seeks a permanent injunction blocking Mount Carmel from building the hospital, which was announced in July 1999. Mount Carmel, a three-hospital system, bought land and originally intended to open the facility this year, but no work has been done. The lawsuit is scheduled to go to trial Nov. 26 in the Fairfield County Court of Common Pleas in Lancaster.
Michael Cunniff, Mount Carmel's vice president of business development, blamed "fuzzy" contract language for the dispute. He said the 1996 agreement, which bars the hospital from ventures that would compete with "professional business interests" of the physician investors, was meant to apply to the recruitment of new physicians into the market, not hospitals. Mount Carmel owns 30% of the surgery center, which has 16 physician investors, he said. Six physicians are parties in the lawsuit.
Cunniff said it was physicians at the surgery center who proposed building a hospital to meet growing demand. Fairfield County has one hospital, 196-bed Fairfield Medical Center in Lancaster. In fact, he said some of the physicians who are partners in the surgery center, including some of those suing Mount Carmel, also have agreed to be partners in the new hospital.
But despite their support of the new hospital, the physicians "have been advised that the noncompete agreements are worth money . . . and they want to get paid for it," Cunniff said. He said Mount Carmel rejected a settlement offer by the physicians.
Jim Savage, the physicians' lawyer, said Mount Carmel could build its hospital elsewhere in the county or divest its stake in the surgery center. "All the doctors want is for Mount Carmel to live by its word," he said.