On Thursday, General Roy Cooper, North Carolina Attorney filed a lawsuit on behalf of the state against Carolinas HealthCare System for illegally reducing competition and limiting costumers find better health care deals.

The complaint alleges that Carolinas HealthCare System used its market power to prevent insurers introducing better health plans and prices from other hospitals, as well as higher-quality service to consumers.

According to Renata Hess, head of the Justice Department’s Antitrust Division, this lawsuit will stop a dominant hospital from using its market power to undermine its smaller competitors’ efforts to attack patients by competing on the price and quality of their services.

It is well known that the Charlotte area, CHS is the leading hospital system. CHS controls about 50 percent of the market, which leads to billions of annual revenues. Credit: Bizjournals

In response to such allegations, Carolinas HealthCare System issued a statement saying that the company is firmly committed to providing accurate and useful information to consumers and patients as it relates to cost, quality and value of their care.

Allegations against Carolinas HealthCare System

In Charlotte, nine hospitals are run by Carolinas HealthCare network as well as Carolinas Medical Center, which is one of the United States largest nonprofit hospitals. Across forty hospitals and nine hundred health care locations in North Carolina and South Carolina, sixty thousand employees work for CHS.

The lawsuit stated that CHS uses “unlawful contract restrictions” that prohibit health insurers in the Charlotte area from encouraging customers to use less expensive services that other healthcare systems offer. This mean that CHS is using its market power to slow down competitors.

Another allegation contended in the lawsuit against CHS states that the biggest hospital network in Charlotte have encouraged insurers to steer patients towards CHS and forbids to do the same with other healthcare systems. Meaning that Charlotte area patients incur higher out-of- pocket costs for their healthcare because they are deprived of the option to benefit from choosing more cost-efficient providers.

The lawsuit does not only accuses Carolinas HealthCare of illegally weakening its competitors but also states that the vast healthcare network has “long had a reputation for being a high-priced healthcare provider.” In 2013 a group of investigators found that CHS “has enjoyed years of annual reimbursement rate increases that are premium to the market.”

While U.S. Attorney Jill Rose believes that health care costs rise, vigilant antitrust enforcement is essential to protecting the interests of consumers, these polemic accusations against CHS have compromised the North Carolina Hospital Association no to take a stand. They stated that hospitals were only a piece of the healthcare cost issue. The association hopes that any investigation will also extend to insurance companies and their tactics to limit patient choice.

Carolinas Healthcare System response to the lawsuit

Carolinas HealthCare System alleges that the corporation is committed to fair competition and looks forward to presenting its position in court. “Our arrangements with insurers are similar to those in place between insurers and healthcare systems across the country. We have neither violated any law nor deviated from accepted healthcare industry practices for contracting and negotiation.”

CHS said that they had been applauded by the United States government for the quality care and cost reduction programs they have implemented, programs it hopes to model in other parts of the country. Also, they say that Carolinas HealthCare System is firmly committed to providing accurate and useful information to consumers and patients as it relates to cost, quality and overall value of the care they receive. “We remain dedicated to making healthcare more affordable, while ensuring that we fulfill our mission. We provide financial assistance to patients in need, as well as medical education and research in the communities we serve. These and other mission-based service totaled over $1.65 billion or 19% of total operating expenses.”

Previous investigations on nonprofit hospitals in North Caroline

According to The Charlotte Observer and The Raleigh News, a study has been issued in 2012 for nonprofit hospitals in North Carolina driving up health care costs.  This investigation showed how nonprofit hospital pay millions to executive while thousands of consumers struggle to pay high medical prices.

A good example of this is the case of Michael Tarwater, Sytem’sthe retiring Carolina HealSystem’s CEO, who received $6.6 million in total compensation in 2015, and other top 10 executives that received payments exceeding 1 billion dollars.

Most of the state’s hospitals do not pay income, property nor sales taxes since they are supposed to provide benefits to communities that cannot afford to pay privet health cares. In fact, healthcare systems such as Carolinas Healthcare System are expected to give free or sharply discounts on their services.

Source: Charlotte Observer