The City of Brevard, North Carolina, sued HCA Healthcare for allegedly inflating health care costs after acquiring Mission Health.
Nashville, Tennessee-based hospital giant HCA controls more than 85% of the emergency care market in the Asheville, North Carolina area and at least 70% of that market in the surrounding region, city officials said in a complaint filed Friday in North Carolina. Federal Court of Carolina. This leverage allegedly allowed the HCA to force insurers and employers into anti-competitive contracts that included all-or-nothing clauses that required them to include all of their medical facilities in health plan networks and steered patients away from competitors.
The City of Brevard is seeking class certification for similar health plans that have paid for emergency or outpatient services from HCA since June 3, 2018, and an injunction preventing future alleged behavior. The allegations are similar to those outlined in an August lawsuit filed in state court by residents of North Carolina.
“HCA acquired the assets of the Mission [in 2019]largely because the Mission had monopoly power in [general acute care] the market in the Asheville region is a monopoly power that HCA knew it could use to maintain and enhance Mission’s monopoly power in the relevant markets,” the complaint alleges.
The HCA said in a statement that the lawsuit “doesn’t disappoint,” especially since its CEO had a productive meeting with Brevard Mayor Maureen Kopelof and other community leaders less than a month ago.
“Mayor Kopelof never once mentioned this apparently long-planned lawsuit, which is disappointing and undermines what we saw as a sincere effort to build open, constructive relationships and lines of communication. We will now focus our attention and efforts on the vigorous defense of the lawsuit. while continuing to provide excellent health care to the citizens of western North Carolina,” a company spokesman said.
In addition to all-or-nothing contract terms, HCA allegedly used anti-management clauses, stub orders that prevented price transparency and prevented employers from implementing tiered or narrow chains. While the anti-competitive behavior took place prior to the $1.5 billion acquisition of Mission, it escalated after the deal closed in 2019, the lawsuit alleges.
The complaint alleges that since HCA’s purchase of Mission, HCA has reduced outpatient services in the area surrounding Asheville, reducing access and forcing patients to travel to HCA facilities in Asheville.
“HCA itself has stated in recent Florida regulations that in a county with a monopoly hospital system, insurers have “limited ability to negotiate market rates for hospital services” and that “[a] a large and growing body of literature suggests that health care providers with significant market power can and do negotiate higher rates than competitors.” lawsuit claims.
According to an analysis by RAND Corp. in claims data from 2018-2020, the North Carolina healthcare market was ranked the 20th most expensive for employers. North Carolina employers paid commercial insurers 266.4% of what Medicare would have paid for the same services. This metric calculated relative prices, which were the negotiated rate paid by private health plans.
Employers paid Asheville’s HCA Mission Hospital more than three times what it would pay Medicare for the same inpatient and outpatient services, according to RAND. data.
More hospital deals are being challenged by state and federal regulators as emergency care markets become more concentrated.