The Department of Justice (DOJ) announced recently that it is suing Charleston (WV) Area Medical Center (CAMC) and St. Mary’s Medical Center in Huntington, WV, for unlawfully agreeing to allocate territories for the marketing of healthcare services, a move that DOJ says deprived consumers of the benefits of access to important information about competing healthcare providers.
The department filed the civil antitrust lawsuit in the U.S. District Court for the Southern District of West Virginia, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit. According to the department’s complaint, the matter centers on how hospitals compete to attract patients by marketing their healthcare services, including through print advertisements, such as newspaper advertisements, and outdoor advertisements, such as billboards. Advertising also spurs hospitals to compete for patients by investing in providing better care and a broader range of services, the complaint notes.
The complaint alleges that CAMC and St. Mary’s curtailed competition for years by agreeing to geographic limits on the marketing of competing healthcare services. CAMC agreed not to place print or outdoor advertisements in Cabell County, WV, and St. Mary’s agreed not to place print or outdoor advertisements in Kanawha County, WV, according to DOJ. The agreement disrupted competition, deprived patients of information needed to make informed healthcare decisions, and denied physicians working for the defendants the opportunity to advertise their services to potential patients, Assistant Attorney General Bill Baer, JD, of the department’s Antitrust Division, said in a statement accompanying the announcement.
“These hospitals limited competition by agreeing on how and where each would advertise competing healthcare services,” Baer said. “Marketing is an important tool that hospitals use to compete for patients. Today’s action will end the hospitals’ anticompetitive agreement and promote competition.”
CAMC is a nonprofit corporation that operates four general acute-care hospitals with a total of 908 beds and a medical staff of more than 120 employed physicians. St. Mary’s is a nonprofit corporation that operates a general acute-care hospital in Cabell County with 393 beds and a medical staff of more than 50 employed physicians. St. Mary’s also serves as a teaching hospital for medical students and residents from Marshall University School of Medicine in Huntington.
The proposed settlement prohibits CAMC and St. Mary’s from agreeing 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 between the defendants about their marketing activities, subject to limited exceptions. The hospitals also will implement compliance measures designed to prevent the recurrence of these types of anticompetitive activities.