Modern Healthcare

A muddier outcome in Washington state

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WASHINGTON ATTORNEY GENERAL Bob Ferguson’s settlement of his antitrust case against CHI Franciscan was less definitive than the outcomes in the other recent cases.

He had accused the hospital system of engineerin­g the purchase of WestSound Orthopaedi­cs and the affiliatio­n with the Doctors Clinic to capture a large share of orthopedis­ts and other physicians in Kitsap County, fix prices at a higher level, and shift more services to its Harrison Medical Center in Bremerton. But the settlement left in place CHI Franciscan’s purchase of WestSound and its tight profession­al services agreement with the Doctors Clinic, while placing relatively modest conditions on joint contractin­g by the hospital system and the clinic.

Ferguson’s bargaining position was weakened by a federal District Court decision in March granting CHI Franciscan’s motion to summarily dismiss his allegation that the acquisitio­n of WestSound reduced competitio­n and violated antitrust law. That may be the first time since the 1990s that a defendant won summary judgment on a horizontal merger claim in an antitrust case, one expert said.

In addition, the judge required the parties to go to trial on whether the transactio­n between CHI Franciscan and the Doctors Clinic was a true merger, as the two organizati­ons claimed, or whether they remained two competing provider groups. If Ferguson lost on that issue, his antitrust case would be dead because a merged entity cannot be cited for price-fixing.

The attorney general settled that claim with CHI Franciscan and the clinic by requiring a $2.5 million payment to other healthcare providers and expanding the types of value-based contracts they could participat­e in.

But the two sides differed sharply in their characteri­zation of the settlement.

“This was a matter where we identified anticompet­itive effects and ongoing harm to consumers and saw a need to act quickly,” said Jonathan Mark, senior assistant attorney general in Washington. “We believe the remedies in the consent decree are sufficient to address the anticompet­itive effects we alleged.”

For its part, CHI Franciscan said there never was any court judgment or admission that it engaged in anticompet­itive conduct, noting that the settlement preserved its deals with WestSound and the Doctors Clinic. It was particular­ly important for hospitals all over the country that Ferguson failed to establish that a profession­al services agreement with a physician group constitute­d price-fixing, an attorney for the hospital system said.

“The AG lost this lawsuit and is now twisting the facts to match his baseless allegation­s,” said Cary Evans, the hospital system’s vice president for government affairs. “Had we not affiliated, the closing of the Doctors Clinic and WestSound would have resulted in less choice, decreased access, and high costs for residents.”

 ?? GETTY IMAGES ?? The two sides in the settlement of an antitrust case brought by Washington Attorney General Bob Ferguson differed sharply in their characteri­zation of the agreement.
GETTY IMAGES The two sides in the settlement of an antitrust case brought by Washington Attorney General Bob Ferguson differed sharply in their characteri­zation of the agreement.

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