Peoria, Ill.-based Methodist Health Services Corp. has filed a lawsuit accusing the region's largest provider of breaking antitrust laws with "exclusionary" contracts that limit commercial insurers' ability to contract with other hospitals.
Filed in federal district court in Peoria, the lawsuit alleges that OSF Healthcare Systems' Saint Francis Hospital has contractually barred Aetna, Blue Cross and Blue Shield of Illinois, Health Alliance and Humana from networking with Methodist Health Services. Citing violations of the federal Sherman Act and the Illinois Antitrust and Consumer Fraud Acts, the lawsuit is seeking $300 million in damages.
Nearly double the size and market share of Methodist Medical Center, the 600-bed Saint Francis Hospital has 800 physicians on staff, operates a nursing college and is the fourth largest medical center in Illinois.
The lawsuit contends that Saint Francis Hospital has "no valid pro-competitive business justification" for exclusionary contracts and also alleges the hospital has "forced insurers either to terminate pre-existing relationships with Methodist or exclude Methodist from any opportunity to participate in their networks."
In a media statement, OSF Healthcare System, a not-for-profit corporation that also operates health plans, said it "is confident it has fully complied with all antitrust laws and regulations while providing high-quality health care throughout the region."
Methodist Health Services has been Saint Francis Hospital's main competitor for more than a century, followed by Proctor, Peoria's third largest general hospital, which does not not offer level 1 or level 2 trauma care. The lawsuit contends that Saint Francis' OSF Medical Group has in effect been "dissuading physicians from referring patients to Methodist and from performing cases at Methodist, and ultimately decreasing Methodist's revenues."
Saint Francis Hospital has roughly 50 percent market share in greater Peoria for both inpatient and outpatient commercially insured services and, despite or because of that, had average per admission charges 37 percent higher than Methodist Medical Center in 2011, according to the lawsuit.
Filed for Methodist Health Services by attorneys from the firm McGuireWoods, the lawsuit also contends that a former OSF Health System CEO said "that Peoria should be a two-hospital town consisting of Saint Francis and Proctor Hospital."
Across the healthcare industry, debates and disputes over market share and consolidation have been percolating as health reform and changing economics impacts certain markets more than others.
In Michigan, the state supreme court is considering the use of "most-favored nation" contracts by Blue Cross and Blue Shield of Michigan (although the state Attorney General has ordered that practice to be phased out and barred in 2014).
In Texas, in 2011, the U.S. Justice Department reached a settlement with United Regional Health Care System over alleged exclusionary contracting, with the health system specifically prohibited from conditioning prices or discounts for commercial insurers based on whether those insurers contract with rival providers.