Justice Department OKs Joint Hospital Effort

HealthLeaders Media Staff, September 8, 2009

The Department of Justice has raised no objections to a proposal by Savannah, GA-based Memorial Health Inc. and St. Joseph's/Candler Health System to form a money-saving joint purchasing agreement for surgical and medical supplies.

Memorial and St. Joseph's/Candler each own acute tertiary care hospitals that serve Southeast Georgia and the low-country area of South Carolina. Memorial owns and operates the Memorial Health University Medical Center. St. Joseph's/Candler owns and operates St. Joseph's Hospital and Candler Hospital. The JPA negotiations began two years ago, and the two health systems requested the DOJ antitrust review.

Executives at the rival nonprofit healthcare systems say this collaborative effort furthers their charitable mission to provide quality and cost efficient healthcare to the community, especially in light of declining governmental reimbursement.

"This shows an unprecedented level of cooperation between St. Joseph's/Candler and Memorial that will benefit patients in our region," says Paul P. Hinchey, president/CEO of St. Josephs'/Candler. "It will allow us to maintain community outreach programs threatened by Medicaid and Medicare cuts that are extremely important to many disenfranchised groups now trying to seek healthcare."

DOJ determined that the proposal meets the so-called "safety zone" provisions in the Antitrust Enforcement Policy in Health Care, which require that the cost of all products purchased through the JPA account for less than 20% of the total revenue of all products and services sold by each participant. It also requires that products purchased through the JPA from a given supplier account for less than 35% of that suppliers' sale of those products in the market.

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