DOJ Just Sent A Love Letter to Competition (And a Reckoning for Hospital Cartels)
This Lawsuit is 25 Pages of Liquid Fire that Could Rewrite Hospital Contracts Nationwide
If you’ve been paying attention to your humble correspondent’s musings of the last two weeks, you might have noticed some, shall we say, animus, toward hospitals.
Like, “may everything about the totalitarian culture and corrupt and abusive business model of the modern American hospital system burn to the ground and salt the earth with its ashes” - you know, that kind of animus.
Loyal readers may even recall that I urged Congressional Republicans to outlaw the anticompetitive contract provisions between hospitals and health plans that prohibit plans from navigating patients away from price-gouging doctors and facilities of substandard quality.
One thing I forgot to mention - anticompetitive practices are already illegal, under the Sherman Act. It’s easy to forget that because DOJ’s antitrust division NEVER EVER ENFORCES this law against hospitals.
I know, because when I worked in the White House, we were very interested in seeing that change. So we hauled in DOJ’s Antitrust Division. They said “well, we only focus on horizontal monopolies, like when one hospital eats another hospital. Go see FTC.” So then we hauled in FTC. They said “well, we only focus on for-profit companies, and most hospitals are technically (very technically) not-for-profit. Go see DOJ.”
Maddening.
Later, when we were pushing for hospital price transparency, FTC pushed out an old blog post they had published under the Obama administration that argued that price transparency would increase prices. Because that happens in every other industry where prices are known in advance. Oh wait, no it doesn’t.
So yeah, these guys were on Team Hospital, and not Team America.
But times have changed.
Last week, the Department of Justice and the State of Ohio sued OhioHealth, the dominant health system in the state capital of Columbus, and surrounding counties. The complaint? Anticompetitive practices driving up prices and lowering clinical quality for patients and employers.
You guys, this lawsuit is a miracle. It’s chicken soup for the health reformer soul.
Let’s take a lackadaisical stroll through the 25 pages of government at its best, shall we?
America’s original “stop acting like a cartel” law
First, a primer on the Sherman Act, which is America’s original “stop acting like a cartel” law. If you’re conspiring to rig the market, fix prices, carve up territory, or otherwise strangle competition, congratulations - you may have just volunteered for federal court. It’s the statute that tells monopolists and their little friends: compete or get enjoined.
The government accuses OhioHealth of conspiring to choke competition from other hospitals and to prevent health plans from offering lower-cost, higher-quality coverage options that exclude OhioHealth’s shoddy care and way-above-market rates. These shenanigans, implemented primarily through corrupt and allegedly illegal contract provisions with health plans, have driven up the cost of both care and coverage in Columbus.
But even if you’re nowhere near Columbus, you can’t afford to click away yet. What OhioHealth is doing matters to all of us. It’s happening everywhere. And what the court decides here will change hospital and network contracts across the country - for good.
If you keep reading, you’ll get the list of what employers, health plans, network sponsors, policy makers, everyday citizens, and hospitals and other providers who contract with networks need to be doing right now to prepare for the fallout.
Paid subscribers get the inside scoop.
