Two giants-West Tennessee Healthcare, Jackson, Tenn., and Blue Cross and Blue Shield of Tennessee-have been pushing around little Regional Hospital of Jackson, the hospital alleged in a recent antitrust lawsuit.
Behind 132-bed Regional Hospital, however, is another big player-Community Health Systems, the 72-hospital investor-owned chain based in Brentwood, Tenn. Community purchased Regional Hospital and six others in western Tennessee from Methodist Healthcare, Memphis, in January for $150 million.
Regional Hospital's lawsuit, filed last month in U.S. District Court in Jackson, Tenn., accuses WTH of conspiring with the Tennessee Blues to lock up the market for commercial patients in Madison County, for the public system's flagship, 626-bed Jackson-Madison County General Hospital. The lawsuit alleges that General Hospital controls 99% of the managed-care market because it insists on exclusive contracts with health plans, both for the hospital and physicians for whom a WTH affiliate handles negotiations.
The Tennessee Blues, the lawsuit contends, agrees to the exclusive contracts for its patients to use General Hospital in return for lower prices than the hospital offers other health plans.
"We think there are two very good hospitals in Jackson, and we're one of them. We just want people to be able to choose," said Tim Puthoff, chief executive officer of Regional Hospital.
Scott Becker, a healthcare lawyer with the Chicago office of the law firm McGuireWoods, said antitrust cases pitting hospitals against each other are rare, but as competition heats up and "hospitals become less chummy with each other, you'll see more of these cases."
Regional Hospital's lawsuit is not the first challenge to six-hospital WTH on antitrust grounds. Tennessee Attorney General Paul Summers began probing possible violations of antitrust and state consumer protection laws last year (March 4, 2002, p. 18), but Summers closed the investigation in June. As part of a settlement, WTH agreed to submit to Summers, for the next three years, an annual report on its restricted fund balances and capital assets and its community benefit report. The system also agreed to use the hospital Consumer Price Index as the upper limit for any price increases at General Hospital over the next three years, according to a news release from the attorney general.
WTH spokeswoman Jan Boud would not answer questions about the lawsuit, but she released a prepared statement in which she said, "We believe the relationship between West Tennessee Healthcare and Blue Cross and Blue Shield of Tennessee has been of tremendous benefit for our patients. ... It is unfortunate that (Community), a national, for-profit hospital chain that has been in our community for only six months, has chosen to file suit. We have every confidence that we will prevail when all is said and done."
Tennessee Blues spokesman Bill Steverson said the insurer signed that contract because it produced the best deal for Blues members. As for the allegation that the Tennessee Blues leveraged its 80% local market share to receive discounts compared with the rates its competitors pay, Steverson said, "We don't make any apologies for negotiating low rates."