A group of orthopedic surgeons sued HCA Healthcare on Wednesday, alleging the health system is engaging in anti-competitive conduct and attempting to dominate the orthopedic surgical services market by eliminating competitors.
A dozen doctors who part of the Kennedy White Orthopaedic Center in Sarasota, Florida, allege HCA diminished the "quality, reputation and capability of the surgical practice" by prioritizing its wholly owned hospitals as a landowner and manager, according to the complaint.
HCA and the Kennedy White Orthopaedic Center have been in a partnership since 1995, where HCA serves as the General Partner and has a majority ownership of the partnership, according to the complaint.
HCA has taken profits from the facility but not reinvested in its upkeep, said Michael Taaffe, partner at Shumaker, Loop & Kendrick and an attorney representing the surgeons.
"Kennedy White went into this arrangement assuming HCA would do everything to promote the facility, keep it updated, keep it clean, keep it operating properly," Taaffe said. "And they haven't done that."
The surgeons claim HCA restricted their center's capacity, diverted patients and employees to a nearby HCA-owned hospital, affected their medical equipment and vendor pricing, and wouldn't pay for center maintenance.
HCA said in an email statement that it disagrees with the lawsuit's allegations.
"We value collaborative relationships with physicians and are proud of our decades of work together providing high-quality patient care and serving our community," HCA said.
In the same vein, he said It is anti-competitive that HCA has still not allowed its independent same day surgery centers to keep patients for up to 23 hours, which is a standard practice in Florida.
"Nobody wants to go into a hospital, where they're exposed to other illnesses, disease, influenza or COVID-19," Taaffe said. "They want to do their procedures in an outpatient setting, in a same day surgery center that doesn't have patients who are sick or have other diseases that would possibly come in contact with the patients."
HCA also offers more competitive salaries for its hospital staff than the surgical center is allowed to offer, and deters market competition by implementing an agreement that prohibits its physicians from establishing their own competing facilities, said Ryan Nichols, partner at Shumaker, Loop & Kendrick and surgery center attorney.
HCA owns four out of the eight private hospitals in the Sarasota area. It also operates four ambulatory surgery centers including the Doctors Same Day Surgery Center.
With joint venture ambulatory surgery centers, there is always going to be an inherent divergence of interests that needs to be managed between the hospital and the joint venture, said Joe Lupica, chairman at Newpoint Healthcare Advisors.
"The question would be, why would HCA put all the effort into having a surgery center if they're just going to send patients somewhere else," Lupica said. "Those executives are under pressure to do well, they have an incentive to do well in the ASC business."
Taaffe said the surgery center spent more than a year attempting to resolve the issues listed in the complaint with HCA, and was dismissed by the company.
If members of surgical practices indicate they want to terminate their partnership with HCA, Taaffe said they are discouraged to do so by financial threats from HCA warning physicians of the partnership's share value diminishing and business restrictions following the contract termination.
Through the lawsuit, the surgeons are seeking an end to the partnership between HCA and the Kennedy White Orthopaedic Center and an estimated $1 million in damages, with the HCA ordered to purchase the center's remaining ownership units.