DOJ Deal Ends Monopoly for Texas Health System

John Commins, for HealthLeaders Media , March 1, 2011

URHCS is the largest hospital in Wichita Falls, controlling about 90% of general acute-care inpatient hospital services, and 65% of outpatient surgical services. It is the region's only provider of cardiac surgery, obstetrics and high-level trauma care. URHCS's average per-day rate for inpatient hospital services sold to commercial health insurers is about 70% higher than its closest competitor for the services that are offered by both hospitals.

DOJ said URHCS systematically demanded most commercial health insurers to sign contracts that required the insurers to pay significantly higher prices if they contracted with a nearby competing healthcare facility. Since URHCS is a must-have hospital for any insurer that wants to sell health insurance in the Wichita Falls area, and because the penalty for contracting with the health system's rivals was significant, almost all insurers offering health insurance in Wichita Falls entered into exclusionary contracts with URHCS.

The proposed settlement -- now under consideration by a U.S. District Judge in North Texas -- would be in effect for seven years. It would ban URHCS from using agreements with commercial health insurers that improperly inhibit insurers from contracting with competitors. In particular, URHCS would be banned from conditioning the prices or discounts that it offers to commercial health insurers based on exclusivity. URHCS also would be banned from taking retaliatory actions against an insurer that contracts with a rival provider.

John Commins is a senior editor with HealthLeaders Media.

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