Health Law Alert: Dominant Hospitals, Dominant Insurers, and Exclusionary Conduct

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While the FTC has focused on hospital mergers, the Antitrust Division seems more concerned with conduct by which dominant hospitals or health plans implement conduct to exclude their competitors from the market. By doing so, they may obtain or maintain substantial market power in their respective markets. In recent times, the Division has brought two particularly interesting enforcement actions, which, in a sense, are mirror images of each other.

In its case against United Regional Health Care, a dominant hospital in Wichita Falls, Texas, the Division alleged in a February 25, 2011 complaint that the hospital monopolized the market for inpatient hospital services by inducing health plans not to contract with the only other hospital in the city. It allegedly entered into agreements with a number of health plans by which it accepted drastically lower prices from them if they refused to add the town’s second hospital to their networks. Many health plans took the lower price and refused to contract with the competing hospital. The exclusionary effect, thus, was in the market for hospital services, but the ultimate effect, according to the complaint, was to increase the price of health insurance by the defendant’s maintaining its monopoly power. United Regional chose to enter into a consent decree with the Division rather than litigating the case.

Please see full alert below for more information.

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