Department of Justice Reaches A Settlement With United Regional

The future of healthcare in Texoma could soon be changing. The market could get more competitive after a settlement between the US Department of Justice and United Regional Hospital. Newschannel 6 is working to find out what the changes outlined in the agreement could mean to you.

At the heart of the matter, is a 29-page complaint by the Justice Department. It claims Untied Regional held a monopoly on the health care market by using exclusionary contracts that prevent insurers from contracting with hospitals and other health care related facilities that compete with United Regional by requiring the insurers to pay a substantial pricing penalty of they also contract with the competitors.

As part of a settlement reached Friday, United Regional will be prohibited from using exclusionary contracts for 7 years. The agreement still has to be approved by the United States District Court for Northern Texas.

While trying to determine what that means to Texoma, Newschannel 6 sat-down with Phyllis Cowling, President and CEO of United Regional. She says the impact will be minimal at the most. "It has virtually no impact for our patients. We're going to continue to honor the deeper discounts that are contained within these contracts," said Cowling.

Cowling says she does not feel the measures will make the market more competitive. "We looked at our analysis of what actually may shift as a result of the changes coming out of this resolution, we actually have estimated that the entire market may shift 0.2%," she said.

Dr. Jerry Myers, CEO of Kell West Hospital disagrees. He feels the move will make the market more competitive. "It makes the competition environment better; it allows a choice for people that did not have that choice before," said Myers. Kell West is mentioned in the DOJ complaint against United Regional several times, and is a main competitor.

Myers feels the move could help drive health care prices down in the market. "The prices are higher across the board in our county compared to others it appears the Department of Justice has also looked at that and has made some regulations and stipulations in that area too which will be healthy for our people," he said.

Echoing Myers' optimism for a better market is Attorney Rick Bunch. Newschannel 6 sought Bunch as an independent legal analyst. He has no affiliation with the suit. "Health care just got better in Wichita Falls because what's happened is the Justice Department has stepped in and broken-up a monopoly that United Regional apparently had over the last 10 years," he said. Bunch thinks things look bright for the consumer. "It will save them money, competition always brings financial savings for customers," he said.

Statements from the DOJ and United Regional are below.

Paul Harrop, Newschannel 6

WASHINGTON - The Department of Justice announced today that it has reached a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibits it from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional's competitors. The department said that United Regional unlawfully used these contracts to maintain its monopoly for hospital services in violation of Section 2 of the Sherman Act, causing consumers to pay higher prices for health care services. This is the first case brought by the department since 1999 that challenges a monopolist with engaging in traditional anti competitive unilateral conduct.

The Department of Justice's Antitrust Division, along with the Texas Attorney General's office, filed a civil antitrust lawsuit in U.S. District Court for the Northern District of Texas, along with a proposed settlement that, if approved by the court, would resolve the lawsuit.

"Unfettered competition among hospitals is vital to ensuring that patients receive high-quality, low-cost health care," said Christine Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "Today's settlement prevents a dominant hospital from using its market power to harm consumers by undermining its competitors' ability to compete in the marketplace."

According to the complaint, United Regional is by far the largest hospital in Wichita Falls. Its share of general acute-care inpatient hospital services is approximately 90 percent, and its share of outpatient surgical services is more than 65 percent. It is the region's only provider of certain essential services such as cardiac surgery, obstetrics and high-level trauma care. In Wichita Falls, United Regional's average per-day rate for inpatient hospital services sold to commercial health insurers is about 70 percent higher than its closest competitor for the services that are offered by both hospitals.

The department said that in order to maintain its monopoly in the provision of inpatient hospital and outpatient surgical services, United Regional systematically required most commercial health insurers to enter into contracts that effectively prohibited them from contracting with United Regional's competitors. United Regional's contracts required these insurers to pay significantly higher prices if they contracted with a nearby competing facility. Since United Regional is a must-have hospital for any insurer that wants to sell health insurance in the Wichita Falls area, and because the penalty for contracting with United Regional's rivals was so significant, almost all insurers offering health insurance in Wichita Falls entered into exclusionary contracts with United Regional. As a result, competing hospitals and facilities could not obtain contracts with most insurers and were less able to compete, helping United Regional maintain its monopoly in the relevant markets and raising health-care costs to the detriment of consumers.

The proposed settlement, which if accepted by the court would be in effect for seven years, restores lost competition by prohibiting United Regional from using agreements with commercial health insurers that improperly inhibit insurers from contracting with United Regional's competitors. In particular, United Regional is prohibited from conditioning the prices or discounts that it offers to commercial health insurers based on whether those insurers contract with other health-care providers and from inhibiting insurers from entering into agreements with United Regional's rivals. United Regional is also prohibited from taking any retaliatory actions against an insurer that enters into an agreement with a rival provider.

United Regional Health Care System is a private Texas nonprofit corporation, with its principal place of business in Wichita Falls. United Regional had net patient revenues of approximately $265 million for 2009.

The proposed settlement, along with the department's competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St. N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Contact: Kim Maddin, Community Relations 940.764.3044

Stevie Jo Brown, VP Marketing 940.764.3037

February 25, 2011 – United Regional Pleased with Resolution -- United Regional is pleased that this matter has been resolved. While we disagree with the Department's interpretation of the facts and would have welcomed the opportunity to address this matter in a court of law, we believe it is in the best interest of United Regional and our patients to instead move forward with our total attention and resources focused on our passion of providing excellence in health care for the communities we serve.

This resolution will not result in changes to United Regional's negotiated discounts with the affected insurance plans. We will continue to honor the current, deeper discounts within those contracts. Further, United Regional's prices are, and will continue to be, comparable with those of other high quality hospitals of similar size and capabilities. Consistent with our commitment to those we serve, 2011 represents the third year in a row that United Regional has not implemented a charge increase.

In addition, there appears to be little, if any, correlation between the involved contracts and United Regional's growth of the last few years. Instead, evidence shows that our progress is the result of many strategic and operational factors. Through the engaged efforts of our employees and physicians, United Regional has achieved tangible service, quality and safety metrics at levels that, in many cases, are considered "best in class" on a national scale. We have also made substantial reinvestments in equipment, technology, and facilities to elevate quality, service and safety for our patients. As a result patient trust and community confidence in United Regional has increased. We believe that patients will continue to choose excellence and, in doing so, will continue to choose United Regional.