Michigan hospitals conspired to hide information from consumers

Four hospital systems in south-central Michigan had an unlawful marketing territory agreement that deprived consumers and physicians of important information about competing providers for years, according to the Department of Justice (DOJ), which filed a lawsuit against the hospital systems in the Eastern District of Michigan. “These hospitals conspired to deprive consumers and physicians of important health information and education,” said Assistant Attorney General Bill Baer of the DOJ’s Antitrust Division. “Instead of putting patients first, these hospitals secretly agreed not to compete.”

Unlawful agreement

Hospitals compete to attract patients by advertising, including the use of direct mailings to patients, outreach to physicians and employers, conducting health fairs, and offering free health screenings. According to the DOJ’s complaint, four hospitals—each the only hospital in its respective county—entered into agreements to limit the marketing of competing health care services. As a result, patients and physicians were deprived of information needed to make informed health care decisions, and some were prevented from receiving free medical services like health screenings and physician seminars that, in the absence of the unlawful agreements, they would have received.

The hospitals sued by the DOJ are:

  • Hillsdale Community Health Center (Hillsdale)—a Michigan corporation headquartered in Hillsdale, Michigan, with a general acute care hospital located in Hillsdale County, Michigan. Hillsdale has 47 beds and a medical staff of over 90 physicians.
  • Community Health Center of Branch County, Michigan (Branch)—a Michigan corporation headquartered in Coldwater, Michigan, with a general acute care hospital located in Branch County, Michigan. Branch has 87 beds and a medical staff of over 100 physicians.
  • ProMedica Health System Inc. (ProMedica)—an Ohio corporation headquartered in Toledo, Ohio, with locations in northwest Ohio and southern Michigan, including Bixby and Herrick Hospitals in Lenawee County, Michigan. Bixby is a general acute care hospital with 88 beds and a medical staff of over 120 physicians. Herrick is a general acute care hospital with 25 beds and a medical staff of over 75 physicians.
  • A. Foote Memorial Hospital, doing business as Allegiance Health (Allegiance)—a Michigan corporation headquartered in Jackson, Michigan, with a general acute care hospital located in Jackson County, Michigan. Allegiance has 480 beds and a medical staff of over 400 physicians.

The complaint alleges that Hillsdale curtailed competition for years by entering into agreements with Allegiance, Branch, and ProMedica to limit the marketing of competing health care services.

Settlement

Three of the hospital systems—Hillsdale, Branch, and ProMedica—agreed to settle the charges, while the DOJ will continue to litigate against Allegiance. The proposed settlement would prohibit the three systems from entering into agreements with other health care providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory. It also prohibits communications among the hospital systems about their marketing activities and requires them to implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future.

The proposed settlement will be published in the Federal Register. Written comments may be submitted within 60 days of its publication.