Antitrust suit against CHS could have national impact

The federal antitrust lawsuit filed last week against Carolinas HealthCare System could have a national impact on lowering hospital costs for patients, not only in Charlotte but throughout the nation, reports the Charlotte Observer.

In the complaint, the U.S. Justice Department and the N.C. Attorney General’s Office accuses Carolinas HealthCare, which runs 40 hospitals including Carolinas Medical Center and is the state’s largest hospital system, of raising healthcare costs through illegal efforts to prevent competition.

Fiona Scott Morton, a Yale University economics professor, said the case could establish an important legal precedent. If the Justice Department wins this case, then hospitals across the country would feel compelled to remove contract provisions that tend to reduce competition and increase health care prices, “it would be good for consumers in the sense of lower prices and more competition,” she predicts.

Barak Richman, a Duke University law professor with expertise in antitrust enforcement, says these contract provisions are the “best hope to have meaningful health care competition.” According to the lawsuit, CHS attempted to reduce competition and bolster its own revenues by imposing illegal contract restrictions that make it harder for insurers to steer customers to lower-cost hospitals. Because its the largest healthcare provider in Charlotte, CHS system was able to power through those provisions in negotiations with insurers.  

Carolinas HealthCare has hired Jim Cooney, a prominent Charlotte lawyer, and Boies, Schiller & Flexner, a firm that has fought in many of the nation’s highest profile legal battles in preparation for this lawsuit.

“In my experience, the justice department doesn’t bring action unless they think they have the ability to win,” said Scott Morton, who previously helped enforce antitrust laws as a deputy assistant attorney general for the Justice Department. “I suspect they have very good facts here.”

Richman believes that even if the Justice Department wins its case, larger healthcare system will just find another way to restrict competition and increase prices, with the main problem being increasing hospital and health system consolidation. 

“The cost of health care in the U.S. is extraordinarily high,” Richman said. “We’re not getting our money’s worth.”