As other hospitals and systems prepared to ask the federal government for permission to merge operations, bruised survivor Evanston (Ill.) Northwestern Healthcare filed a plan with Federal Trade Commission last week explaining how it plans to segregate managed-care negotiations, an unusual prescription the commission ordered to restore competition it says suffered from a merger seven years ago.
According to the systems six-page explanation and attached diagram, ENH would create distinct and separate negotiating teams, one for inpatient services at 380-bed Evanston Hospital and 125-bed Glenbrook Hospital in Glenview, Ill., and another for 172-bed Highland Park (Ill.) Hospital, which was brought into the system by the contested merger.
Its a mess, said lawyer Jeff Miles, a partner in Ober, Kaler, Grimes & Shaw in Washington, who addressed the decision at an American Health Lawyers Association gathering last week. Thats not to say that ENH didnt do pretty much what the FTC asked, Miles said, or that the FTC made the wrong decisionthat divesting Highland Park at this point would lead to more harm than good.
ENH would maintain a sort of clearinghouse of managed-care information at an office geographically separate from all of the hospitals, an arrangement it says would support the segregated contracting scheme but allow ENH to continue to operate as an integrated health system. Payers could choose whether to contract separately or with the entire ENH system.
The arrangement deals only with inpatient services because the FTC lawyers limited their complaint to inpatient services. I have to wonder if there were similar problems in outpatient markets, but the FTC chose not to complicate the case. He also questioned a 10-year sunset (if negotiating together is bad now, why not in 10 years?) and why its necessary for there to be what ENH calls a corporate managed care department that holds and polices the flow of information.
Finally, Miles noted that ENHs plan cites a similar structure used by Morton Plant Mease Health Care in Florida to satisfy the Justice Departments antitrust concerns in 1994. That was a disaster, he said of the arrangement, which six years later led to penalties of $300,000 and an enforcement order.
ENH declined to comment on its plan. A spokeswoman said no decision had been made on whether to appeal the case to the 7th U.S. Circuit Court of Appeals.