"These hospitals conspired to deprive consumers and physicians of important health information and education, "says the Assistant Attorney General of the Justice Department's Antitrust Division.
The U.S. Department of Justice has filed civil suits levied against four health systems in Michigan that prosecutors have claimed for years unlawfully stifled competition by creating agreed-upon marketing territories.
Three of the systems, Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc., have settled the charges. Negotiations continue with the fourth system, W.A. Foote Memorial Hospital, doing business as Allegiance Health, to prohibit pacts that illegally create territories for marketing of competing healthcare services, DOJ said in a media release.
Assistant Attorney General Bill Baer of the Justice Department's Antitrust Division said in remarks accompanying the announcements that "these hospitals conspired to deprive consumers and physicians of important health information and education."
"Instead of putting patients first, these hospitals secretly agreed not to compete," Baer said. "This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices."
Allegiance Health CEO: 'Facts are on our Side'
Allegiance Health President and CEO Georgia Fojtasek, RN, said she was "disappointed" with the DOJ's decision to file suit while talks were ongoing and that "these regulators have misinterpreted Allegiance's conduct."
"These facts will show that despite the regulators' contention that Allegiance agreed with Hillsdale Community Health Center to reduce competition by limiting its advertising in Hillsdale County, the number of patients from Hillsdale County seen at Allegiance has significantly increased over time across our entire spectrum of services," Fojtasek said.
"Additionally, Allegiance's approach to Hillsdale has also made critical services not available in Hillsdale County, including Allegiance's open heart program, much more accessible for those citizens. Ultimately, Allegiance's marketing strategy has greatly benefitted consumers."
"For this and other reasons, Allegiance firmly believes that the facts are on our side and we look forward to presenting our evidence to the court," she said.
Promedica Confident in Preventive Actions
Toledo, OH-based ProMedica issued a statement claiming it didn't do anything wrong, but "we have agreed to settle this case so that we can move forward."
"We have cooperated with the Michigan Attorney General and U.S. Department of Justice and are committed to complying with the terms of this settlement," the ProMedica statement read.
"We are confident that with the action items we are putting in place—for example, training for board members, leadership, and marketing communications staff—we will be able to prevent a similar situation from happening again.
CHC Responds
In a media statement, Community Health Center of Branch County said it agreed to the settlement because it is "a small community hospital facing increasing financial challenges, [and lacks] the time and resources needed to continue to devote to this government inquiry."
CHC added that it is "taking steps beyond those specified in the DOJ/MAG's consent decree to ensure that none of our employees violate, or create the appearance of violating, the antitrust laws."
Hillsdale Community Health Center did not respond to requests for comment .
According to DOJ complaints, Hillsdale stifled competition for years by entering into agreements with Allegiance, Branch, and ProMedica to limit the marketing of competing healthcare services. Prosecutors allege the hospitals' pacts deprived patients and physicians of information needed to make informed healthcare decisions.
Patients in Hillsdale County, MI, were also prevented from receiving free medical services—such as health screenings and physician seminars—that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale, the federal complaints allege.
The proposed settlement prohibits Hillsdale, Branch, and ProMedica from working with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory. The proposed settlement also prohibits communications among the defendants about their marketing activities. The hospitals will also start compliance measures to prevent anticompetitive practices.
DOJs Antitrust Division was joined by the Michigan Attorney General's Office in the suit, which was filed the civil antitrust lawsuit in the U.S. District Court for the Eastern District of Michigan.
Prosecutors have also filed a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.
John Commins is the news editor for HealthLeaders.