Two Chicago-area health systems are at odds over payments, business practices and insurance negotiations.
Downers Grove. Ill.-based Advocate Health Care has filed a complaint against Palos Community Hospital in Palos Heights, Ill., asking a judge to rule to prevent Palos from wrongfully obtaining Advocate's trade secrets, its practices and processes for billing patients.
Exposed trade secrets can foster an increase in competition among healthcare systems that compete for the same patients in a region. If one system knows what another system charges patients for specific procedures and treatments, or what their negotiations are with insurance companies, they can undermine those prices to receive an advantage.
The complaint, filed in Cook County (Ill.) Circuit court on April 11, says that Palos wrongfully obtained Advocate's method for collecting reimbursements from third-party payers for Advocate services, like Humana Insurance, resulting in damages that exceed $50,000. The trade secret information was obtained when Palos wrongfully sued Advocate and Humana in 2013, at which point they received access to Advocate's business methods, the complaint says.
Palos, a 428-bed hospital, filed the original complaint to obtain additional payment for services Palos allegedly gave to thousands of patients between 2005 and 2010. But Palos was contractually barred from suing Advocate for the claims.
“Palos should have never been in a position to request Advocate's rate information in discovery . . . and it is so highly confidential and so valuable as trade secrets that any compelled disclosure would irreparably harm Advocate,” the complaint says.
Advocate, the largest hospital network in the state, is asking for the court to issue a preliminary and permanent injunction prohibiting Palos from continuing to pursue and use the information they found from Advocate and to pay for damages they inflicted on Advocate.
Advocate representatives declined to comment, as well as their attorneys, Mark Furlane and Elizabeth Lopez, partners at Drinker Biddle & Reath. Palos representatives did not respond to requests for comment.
As it has become more difficult to pay for healthcare, hospitals rely on making the majority of their money from third-party insurers because those revenues often outweigh Medicare, Medicaid and self-pay options, said Marc Brown, a Chicago-based healthcare litigation consultant and managing director in the financial advisory services at AlixPartners, a global consulting firm based in New York.
For a health system, having trade secrets, such as payment rates and schedules negotiated with third-party insurers, exposed can curb business. However, though it might slow operations, it won't necessarily affect patients, he said. It may actually benefit them if hospitals are competing for patients and begin to offer more affordable services than other systems in the area, but there's no guarantee that would happen.
"If you knew what your competitor was charging, you could do one of two things: You could undercut the price if you're trying to drive volume or there's a potential to raise prices," Brown said.