A Utica, N.Y., federal judge is scheduled to hear oral arguments this week in an unusual civil antitrust lawsuit pitting 23 physicians and other investors in a shuttered ambulatory surgery center against the only acute-care hospital in the same town.
Meanwhile, in Lafayette, Ind., the bruising battle between the owner of two hospitals there and a 150-physician group that planned to build a competing hospital of its own caused the physicians' group to table their project and their leaders to resign.
In January 2001, the 18-month-old Rome (N.Y.) Ambulatory Surgery Center filed a lawsuit in U.S. District Court in Syracuse, N.Y., against not-for-profit Rome Memorial Hospital, alleging it tried to freeze the surgery center out of exclusive contracts with the area's largest health plans.
The 195-bed acute-care hospital conspired with Blue Cross and Blue Shield of Utica-Watertown and the Schenectady-based Mohawk Valley Physicians Health Plan to drive the surgery center out of business, the 34-page lawsuit alleged.
In its complaint, the surgery center also accused the hospital of intimidating physicians to discourage them from using or referring patients to the center. For example, the hospital passed a bylaw that allowed it to revoke the staff privileges of any physician who invested in competing facilities. The surgery center contends the hospital violated sections of the federal Sherman Antitrust Act that prohibit monopolies or contracts that unfairly restrain trade. The managed-care plans were not named as defendants.
In Indiana, one week after breaking ground on a 140-bed, $150 million acute-care hospital in Lafayette, the 82-year-old Arnett Clinic, which does business as Arnett HealthSystem, halted the project. On the same day, the president and chairman of the 156-physician practice, Jeffrey Brown, M.D., and its chief executive officer, Fred Titze, who is not a physician, announced their resignations, effective Oct. 31 and Aug. 31, respectively. Last week the system, which is composed of a multispecialty physician group and its 62,000-member Arnett Health Plans, named Michael Skehan, M.D., president and chairman to replace Brown, effective Aug. 9.
Arnett's decision to halt the project came after a dispute with some of its own physicians and opposition from Greater Lafayette Health Services, or GLHS, owner of the only two acute-care hospitals in Lafayette.
"While the vision of an Arnett Hospital is correct for our patients and our community, the roadblocks orchestrated in recent weeks by Greater Lafayette Health Services make it impractical to proceed with the project at this time," Brown said in a news release. "GLHS has been better at destroying than Arnett has been at creating this vision of fully integrated, patient-centered, physician-directed healthcare in our community."
Chicago healthcare lawyer Scott Becker of the firm McGuireWoods said this type of hospital-physician competition battle usually occurs in small or midsize markets.
"We're seeing these all over the country, particularly in smaller communities where one hospital or system has a monopoly and perceives it would be hurt by a competitor," Becker said. "In big cities, no one facility would be too impacted by a project like this."
Not-for-profit GLHS, which is part of Mishawaka, Ind.-based Sisters of St. Francis Health Services, has conducted a "very effective public relations campaign based on falsehoods that have wrongfully discredited the leadership of Arnett at a particularly critical time in financing the hospital project," Brown said in the news release.
GLHS President and CEO Terry Wilson did not deny the system's opposition.
"We have been pretty open and honest that we thought it was a bad idea," Wilson said. "We think another hospital would spread thin precious human resources, add huge amounts of capital costs and debt to both systems, and that both GLHS, Arnett and the community would pay for it all."
GLHS was formed by the 1998 merger of 280-bed Lafayette Home Hospital and 205-bed St. Elizabeth Medical Center. The Arnett Clinic dates back to 1922 and has enjoyed a long relationship with both GLHS hospitals.
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