Economic Credentialing
Modern Healthcare recently reported on what may be a test case within our legal system. Two groups of physician-investors have sued Memorial Hermann Healthcare System for allegedly orchestrating an insurance boycott that financially drained the 99-bed Physician-owned Houston Town & Country Hospital.
In 2003, a group of 109 physician-investors formed a limited partnership called Stealth, and each doctor invested between $25,000 and $150,000 to build the $65 million hospital and medical office building.
Town & Country Hospital then opened in November 2005 as a general acute-care hospital located on a 26-acre campus in west Houston.
According to the lawsuits filed in Harris County District Court, Memorial Hermann—an eight-hospital not-for-profit system that is the largest in Houston with a 25% market share—began a concerted effort to pressure insurance companies to avoid contracting with Town & Country and by the summer of 2006, with only a handful of insurance contracts, Town & Country faced financial disaster and required additional capital to stay open.
Allegedly Memorial Hermann told insurers, including Aetna, Cigna Corp., Humana and UnitedHealth Group that they would terminate their contracts or demand 25% rate increases if they contracted with Town & Country.
They allegedly also had as their strategy to deny managed-care contracts, lobby the state of Texas to require certificate of need to build, and punish doctors who invest.
All physician hospitals that don’t have the protection of a big entity (large healthcare system) are being subjected to this kind of pressure from hospitals like Memorial.
Meanwhile, on June 8, Memorial Hermann filed a federal lawsuit against Stealth asking the court to rule that the hospital system acted appropriately.
Specifically, Memorial Hermann is asking the court to find it is free to enter into exclusive or semi exclusive contracts with insurers “even if the effect of such contracts is to exclude Stealth from contracting with one or more insurers.”
The Texas attorney general’s antitrust department is also now investigating Memorial Hermann
The physicians also claim Memorial Hermann removed some of them from committees and staff positions, terminated certain privileges of their practice at the hospital and threatened to terminate medical staff credentials at system hospitals.
This is what is referred to as economic credentialing which is being challenged in many other states.
This is a simple story. A bunch of doctors wanted to create their own hospital or healthcare facility that competed with the established system. Once opened, the Goliath, Memorial, did everything it could to drive them out of business and hurt the doctors. This is similar to what Microsoft has done in the tech industry.
Legal and healthcare experts nationally are waiting to hear what the court says about Memorial Hermann’s actions.
Can Memorial Hermann and other systems engage in this kind of activity?
This is a battleground and a test case that will need to look at many different issues.
If Memorial can do this, it sends a message to other doctors that if you try and go against us, we will squish you like a bug.
Physicians have no problems with competition as long as there is fairness in the playing field.
This hospital by filing its own lawsuit appears to be admitting they are using a monopoly type of transaction to eliminate the competition.
The court will have to decide.
In 2003, a group of 109 physician-investors formed a limited partnership called Stealth, and each doctor invested between $25,000 and $150,000 to build the $65 million hospital and medical office building.
Town & Country Hospital then opened in November 2005 as a general acute-care hospital located on a 26-acre campus in west Houston.
According to the lawsuits filed in Harris County District Court, Memorial Hermann—an eight-hospital not-for-profit system that is the largest in Houston with a 25% market share—began a concerted effort to pressure insurance companies to avoid contracting with Town & Country and by the summer of 2006, with only a handful of insurance contracts, Town & Country faced financial disaster and required additional capital to stay open.
Allegedly Memorial Hermann told insurers, including Aetna, Cigna Corp., Humana and UnitedHealth Group that they would terminate their contracts or demand 25% rate increases if they contracted with Town & Country.
They allegedly also had as their strategy to deny managed-care contracts, lobby the state of Texas to require certificate of need to build, and punish doctors who invest.
All physician hospitals that don’t have the protection of a big entity (large healthcare system) are being subjected to this kind of pressure from hospitals like Memorial.
Meanwhile, on June 8, Memorial Hermann filed a federal lawsuit against Stealth asking the court to rule that the hospital system acted appropriately.
Specifically, Memorial Hermann is asking the court to find it is free to enter into exclusive or semi exclusive contracts with insurers “even if the effect of such contracts is to exclude Stealth from contracting with one or more insurers.”
The Texas attorney general’s antitrust department is also now investigating Memorial Hermann
The physicians also claim Memorial Hermann removed some of them from committees and staff positions, terminated certain privileges of their practice at the hospital and threatened to terminate medical staff credentials at system hospitals.
This is what is referred to as economic credentialing which is being challenged in many other states.
This is a simple story. A bunch of doctors wanted to create their own hospital or healthcare facility that competed with the established system. Once opened, the Goliath, Memorial, did everything it could to drive them out of business and hurt the doctors. This is similar to what Microsoft has done in the tech industry.
Legal and healthcare experts nationally are waiting to hear what the court says about Memorial Hermann’s actions.
Can Memorial Hermann and other systems engage in this kind of activity?
This is a battleground and a test case that will need to look at many different issues.
If Memorial can do this, it sends a message to other doctors that if you try and go against us, we will squish you like a bug.
Physicians have no problems with competition as long as there is fairness in the playing field.
This hospital by filing its own lawsuit appears to be admitting they are using a monopoly type of transaction to eliminate the competition.
The court will have to decide.
Labels: competition, credentialing, economic, healthcare, Heart Hospital
posted by Anonymous at 6:10 AM
5 Comments:
Nothing unusual. Floyd has done everything it can to monopolize Floyd County in a wide range of healthcare-related services.
I wonder if eliminating insurance companies and putting the clamps down on "entrepreuers" in the medical system in this country would help. I am a capitalist in many aspects but I truly feel that medical care in this country should be more of a moral thing then a profit thing. I realize that universal healthcare would not stop the thieves in this world but it may reduce their numbers and create a fairer playing field by having across the board rules for whoever is giving the care.
HEALTH CARE COMPANIES ARE RAKING IN DOUBLE DIGIT PROFITS AS ARE THE COMPETENTLY MANAGED HOSPITALS THE ODD MAN OUT IS THE PATIENT AND THE DOCTOR BOTH OF WHOM ARE PAYING FOR IT, THE DOCTORS ARE FINALLY BEGINNING TO BAND TOGETHER TO FIGHT THESE 2 MONSTERS AND IT WONT BE PRETTY WHAT HAPPENS.
Hey crazy! Glad to see you're back. When did you get out of the clink?
Very useful information provide in this blog...
Managed Care Credentialing
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