On June 25th, the Department of Justice, Antitrust Division (DOJ) announced that it sued four Michigan hospital systems for allegedly allocating territories for marketing of competing healthcare services. Three of the systems—Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc.—agreed to settle the charges. The DOJ will continue to litigate against a fourth, W.A. Foote Memorial Hospital (doing business as Allegiance Health).
According to the DOJ’s complaint, hospitals compete to attract patients by advertising, direct mailings to patients, outreach to physicians and employers, conducting health fairs, and offering free health screenings. Hillsdale, Allegiance, Branch, and ProMedica’s Bixby and Herrick Hospitals each competed through these marketing efforts to attract patients. The DOJ’s complaint alleges that Hillsdale curtailed this competition for years by entering into “gentleman” agreements with Allegiance, Branch, and ProMedica to limit the marketing of competing healthcare services. The DOJ also alleges that patients in Hillsdale County, Michigan, were prevented from receiving free medical services, such as health screenings and physician seminars, that they would have received from Allegiance but for its agreement with Hillsdale.
The settlement with the DOJ prohibits Hillsdale, Branch, and ProMedica 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 among the defendants about their marketing activities, subject some limited exceptions. The settling hospitals must also implement compliance measures to prevent the recurrence of these types of practices.
The DOJ’s press release regarding the lawsuit is available by clicking here.