A public hospital has joined a number of Florida providers alleging integrated system Health First is engaging in unfair business practices.
The lawsuits come amid increasing numbers of health systems moving toward integration across the country, and some say what's happening in Florida is an example of what can occur when integrated systems grab too much market power. Others, though, say the facts of the Health First lawsuits are unique to that market.
Parrish Medical Center, a 210-bed hospital in Titusville, Fla., operated by the North Brevard County Hospital District, filed its complaint against Health First in state court Aug. 27.
In Brevard County, Health First owns and operates health plans, hospitals, physician groups, urgent-care centers, outpatient centers, rehabilitation facilities, diagnostic and treatment centers and a network of fitness and wellness services. Rockledge-based Health First posted $1.14 billion in operating revenue in 2014, according to the Modern Healthcare financial database.
North Brevard County Hospital District had $148.9 million in operating revenue in 2014, according to a financial disclosure (PDF).
Among other things, Parrish alleges that Health First requires its doctors to admit and refer almost exclusively to its facilities; refuses to contract with providers unless they agree to refer almost exclusively to Health First; and won't allow its doctors to refer to physicians who don't refer all or nearly all their patients to Health First. The lawsuit also alleges Health First is attempting to monopolize markets for medical and radiation oncology services.
Health First Vice President of Marketing and Communications Matthew Gerrell called the lawsuit "a distraction to our dedicated and caring associates who are focused on the health and well-being of Brevard County."
"It is Health First's desire to resolve any differences with Parrish Medical Center CEO George Mikitarian and work together for the betterment of our community," Gerrell said in statement. Mikitarian, Gerrell said, "has ignored our request to meet and continues to provide partial information in this lawsuit."
According to Parrish, Health First also coerces competing health insurers to contract with all of Health First's hospitals at high prices by threatening to otherwise not allow them to include Holmes Regional Medical Center—which is the only facility in south Brevard County with Level II trauma care, neonatal-intensive care and air ambulance capabilities—in its network.
Parrish argues that the alleged practices will cause prices to rise and undermine incentives to improve the quality of care.
Health First faces at least two other ongoing lawsuits targeting its business practices. In one, mulitispecialty physician group Omni Healthcare and several other physicians and provider groups allege Health First maintains a monopoly by "intimidating physicians or otherwise obstructing their ability to practice medicine in southern Brevard County if they do not 'play ball' with Health First and refer their patients exclusively to Health First's hospitals and physician specialists."
Health First has denied the allegations in court documents.
In another ongoing lawsuit, an unnamed whistle-blower alleges Health First violated the False Claims Act, the anti-kickback statute and Stark law governing physician financial relationships by paying illegal incentives to physicians for referrals. The physicians belonged to a group acquired by Health First in 2013.
In response to that lawsuit, Health First has argued in court documents that the allegations are barred by the False Claims Act's statute of limitations and that the claims in the lawsuit are based on information that has already been publicly disclosed.
Joe Whatley, an attorney for the plaintiffs in the Omni case, said the concerns surrounding Health First are similar to other monopoly worries elsewhere.
“I think there are problems all over the country with health insurers being monopolies and having market power,” Whatley said.
Whatley said integration doesn't necessarily have to damage competition, but as more healthcare insurers merge, he'd like to see federal antitrust enforcers more aggressively examine such situations.
But Jeff Miles, an antitrust attorney with Ober Kaler, said the situation with Health First in Florida is unusual because it involves so many different types of markets. Miles said integration, on its own, is not a problem, but what integrated systems do with their market power can be.
“Typically, there are a lot of efficiencies that can result from that type of integrated system, but to the extent the hospital system has a substantial degree of market power in any of the markets in which it operates, it has to be at least somewhat careful about its conduct,” Miles said.
He said it's unlikely the government would get involved in a situation like the one in Florida, especially when private cases have already been filed.
