Federal officials are taking an interest in hospital collaboration in Mercer County, W.Va., for the second time in 11 years. But rather than encouraging hospitals to work together, as Congress did in 1993, prosecutors are investigating whether the collaborative agreement violates antitrust laws.
The U.S. Justice Department has opened an investigation into an agreement to divide cancer and heart services forged in January 2003 by 265-bed Bluefield (W.Va.) Regional Medical Center and 191-bed Princeton (W.Va.) Community Hospital. The hospitals said they were notified of the investigation by the Justice Department on June 16 (June 21, p. 4).
Charleston (W.Va.) Area Medical Center, which participated in the agreement as a consultant, said it also was told of the probe. The Justice Department declined to comment.
Bluefield Regional and Princeton Community previously sparred over who would provide open-heart surgery, but the state Health Care Authority preferred collaboration and denied Bluefield Regional a certificate of need to develop an open-heart program in 2000, said Bluefield Regional President and Chief Executive Officer Eugene Pawlowski said.
Pawlowski said he believes that the authority's actions-which included meetings in both communities with the governing boards to iron out the agreement-will give the hospitals antitrust immunity under the state-action doctrine. "That's why we're surprised" by the federal investigation, Pawlowski said. "To me, the big issue is we followed the state direction in getting approval."
Pawlowski contends that collaboration would bring much-needed open-heart services to an isolated community in the Appalachian Mountains, located 120 miles away from any advanced cardiology program. West Virginia's rate-setting authority should quell concerns that a lack of competition will lead to rising prices, Pawlowski said.
The agreement calls for an open-heart surgery program to be developed as part of a new heart center at Bluefield; the center already has certificate-of-need approval. It also calls for a cancer center to be developed at Princeton; CON approval is pending on the cancer center. The Charleston hospital would consult on the operation of both centers.
One obstacle to collaboration was that Bluefield Regional's crosstown rival, 60-bed St. Luke's Hospital, was owned by investor-owned hospital chain Columbia/HCA Healthcare Corp. until 2001, when the facility was sold to Princeton Community. Pawlowski said another Columbia/HCA opposed having a heart program in Mercer County until a few years ago, when it scrapped a plan to introduce a heart program at one of its other hospitals in the region, 237-bed Raleigh General Hospital in Beckley.
The two hospitals are no strangers to antitrust controversy. In 1993, Pawlowski testified twice before Congress that antitrust concerns squelched cost-saving collaboration among healthcare providers (Jan. 10, 1994).
In separate testimonies before subcommittees of the Senate Finance and House Ways and Means committees, Pawlowski testified that Columbia-owned St. Luke's threatened to bring a private antitrust lawsuit if Bluefield Regional and Princeton Community went ahead with a collaborative agreement that could have led to a merger. Columbia denied making the threat.
Federal legislation was proposed to expand antitrust safe harbors for hospitals, but did not pass.
A consultant's report, co-sponsored by Bluefield Regional and the state, suggested the 1993 collaboration plan, which called for Bluefield Regional and Princeton Community to form a two-hospital network and divide services between them. The report said the network could evolve into a merger.