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The city of Brevard, North Carolina sued HCA Healthcare for allegedly inflating healthcare costs after it acquired Mission Health.
Nashville, Tennessee-based hospital giant HCA controls more than an 85% of the acute care market in the Asheville, North Carolina area and at least 70% of that market in the surrounding region, city officials claim in a complaint filed Friday in a North Carolina federal court. That leverage allegedly allowed HCA to force insurers and employers into anticompetitive contracts that included all-or-nothing provisions that required them to include all of their facilities in the health plan networks and steered patients away from competitors.
The city of Brevard seeks class certification for similarly situated health plans that paid for acute or outpatient services from HCA since June 3, 2018 and an injunction preventing future alleged conduct. The allegations are similar to ones posed in an August lawsuit filed in state court by North Carolina residents.
“HCA purchased Mission’s assets [in 2019], in significant part, because Mission had monopoly power in the [general acute care] market in the Asheville Region—monopoly power that HCA knew it could exploit to maintain and enhance Mission’s monopoly power in the relevant markets,” the complaint alleges.
HCA said in a statement that the lawsuit is “beyond disappointing,” especially since its CEO had a productive meeting with Brevard Mayor Maureen Copelof and other community leaders less than a month ago.
“At no point did Mayor Copelof mention this apparently long-planned lawsuit, which is frustrating and undermines what we thought were sincere efforts to build open, constructive relationships and lines of communication. We will now turn our attention and efforts to vigorously defending the lawsuit, while continuing to provide excellent healthcare to the citizens of western North Carolina,” a company spokesperson said.
In addition to all-or-nothing contract terms, HCA allegedly used anti-steering clauses, gag orders that impeded price transparency and prevented employers from implementing tiered or narrow networks. While the anticompetitive conduct took place prior to the $1.5 billion Mission acquisition, it ramped up after the deal closed in 2019, the lawsuit alleges.
Since HCA’s purchase of Mission, HCA has cut outpatient services in the region surrounding Asheville, reducing access and compelling patients to travel to HCA’s Asheville facilities, the complaint alleges.
“HCA itself stated in recent regulatory filings in Florida that, in a county with a hospital system with monopoly power, insurers have ‘limited ability to negotiate market-driven rates for hospital services’ and that, ‘[a] large and growing body of literature suggests that health care providers with significant market power can and do negotiate higher-than-competitive payment rates,'” the lawsuit alleges.
The North Carolina healthcare market ranked as the 20th highest-pricedfor employers, according to RAND Corp.’s analysis of 2018 to 2020 claims data. North Carolina employers paid commercial insurers 266.4% of what Medicare would’ve paid for the same services. That metric computed relative prices, which represented the negotiated rate paid by private health plans.
Employers paid HCA’s Mission Hospital in Asheville more than three times as of what it would’ve paid Medicare for the same inpatient and outpatient services, according to RAND data.
State and federal regulators are challenging more hospital transactions as acute care markets become increasingly concentrated.
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