Smell that? Thats the smell of competition coming back to the Kansas City, Mo., healthcare market after the settlement of an antitrust lawsuit filed by a physician-owned specialty hospital against competing hospitals that allegedly conspired with local health insurers to put it out of business.
In a series of confidential out-of-court settlements, the six insurer defendants and the five hospital system defendants presumably agreed to stop doing what they allegedly were doing. And that allegedly was the hospital systems pressuring the insurers not to enter into managed-care contracts with the Heartland Spine & Specialty Hospital.
As Andis Robeznieks reported in last weeks cover story (March 24, p. 6), the last of the settlements came just two weeks before the trial in the case that was scheduled to begin on April 1. Now, Heartland is free to pursue managed-care contracts on a level playing field with the likes of HCA Midwest and the St. Lukes Health System, which Heartlands attorney portrayed as the ringleaders of the conspiracy.
HCA by any other name, chief executive officer or ownership status is still HCA, and HCA will attempt to eliminate any impediment to the Nashville-based hospital chains desire to make money. Those impediments can range from costly medical errors to not-for-profit competitors to state hospital association presidents. HCA usually is successful. In the Heartland case, the hospital giant was stared down by a small group of physicians.
But the real winners in this case arent Heartlands physician owners. The winners are patients and employers. Patients will have another choice of hospitals from which they can receive orthopedic care. And employers who ultimately pay patients bills will enjoy more competitive prices for that care. If HCA and others dont want to lose patients to Heartland, theyll have to offer the same or better care at the same or lower prices.
Such is the nature of competition in healthcare. In fact, if the other hospitals want to put Heartland out of business, the way to do so is through competition, not through allegedly trying to gerrymander the market by twisting the arms of health insurers.
Time and money also are on the side of Heartlands competitors. Instead of aggressively trying to put it out of business through better care at more competitive prices, they can just sit back and wait. Experience tells us that physicians hate to spend their own money. Operating an inpatient specialty hospital is a very capital-intensive business proposition. There are the bricks and mortar, the medical technology and information technology that perpetually need to be updated and not to mention the labor costs.
Doctors like cashing checks, not cutting them. At some point in the not too distant future, Heartlands doctors will want out, and the likely buyer will be one of its hospital competitors. Last week, for example, Good Samaritan Hospital in Dayton, Ohio, agreed to buy out the Dayton Heart Hospital for $55 million. The heart hospital is a joint venture between MedCath Corp. and a group of physicians. That follows a trend started in late 2006 when two physician-owned specialty hospitalsone a heart hospital, the other an orthopedic facilitywere bought out by local not-for-profit hospital system competitors (Jan. 1, 2007, p. 32).
To learn about yet another strategy for dealing with physician-owned specialty hospitals, turn to page 20. There youll find a guest commentary from a hospital system executive and an orthopedic surgeon on how both sides can become partners in such ventures rather than both having to sleep with one eye open.
Competition in healthcare can be messy, uncomfortable, time-consuming and expensive. But its the fuel that drives the healthcare industry forward to the benefit of the most important stakeholder in the delivery system: the patient.