# United States v. Health Choice of Northwest Missouri, Inc., et al.; Public Comments and Response on Proposed Final Judgment > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A96-13754 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** June 12, 1996 - **Citation:** 61 FR 29800 ## Text [Federal Register Volume 61, Number 114 (Wednesday, June 12, 1996)] [Notices] [Pages 29800-29873] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-13754] [[Page 29799]] _______________________________________________________________________ Part II Department of Justice _______________________________________________________________________ Antitrust Division _______________________________________________________________________ United States v. Health Choice of Northwest Missouri, Inc., et al.; Public Comments and Response on Proposed Final Judgment; Notice Federal Register / Vol. 61, No. 114 / Wednesday, June 12, 1996 / Notices [[Page 29800]] DEPARTMENT OF JUSTICE Antitrust Division United States v. Health Choice of Northwest Missouri, Inc., et al.; Public Comments and Response on Proposed Final Judgment Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16 (b)-(h), the United States publishes below the comments received on the proposed Final Judgment in United States v. Health Choice of Northwest Missouri, Inc., et al., Civil Action No. 95-6171- CV-SJ-6, United States District Court for the Western District of Missouri, together with the response of the United States to the comments. Copies of the response and the public comments are available on request for inspection and copying in Room 215, Liberty Place Building, Antitrust Division, U.S. Department of Justice, 325 Seventh Street, NW., Washington, DC 20530, and for inspection at the Office of the Clerk of the United States District Court for the Western District of Missouri, 200 United States Courthouse, 811 Grand Avenue, Kansas City, Missouri 64106. Rebecca P. Dick, Deputy Director, Office of Operations, Antitrust Division. In the United States District Court for the Western District of Missouri United States of America, Plaintiff, vs. Health Choice of Northwest Missouri, Inc., Heartland Health System, Inc., and St. Joseph Physicians, Inc., Defendants. Case No. 95-6171-CV-SJ-6. United States' Response to Public Comments Pursuant to the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16 (b)-(h) (``Tunney Act''), the United States hereby responds to the public comments received regarding the proposed Final Judgment in this case. I Background On September 13, 1995, the United States filed the Complaint in this matter. The Complaint alleges that Defendants, in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, conspired to prevent the development of competitive managed care health plans in Buchanan County, Missouri by, among other things, negotiating fees on behalf of most of the physicians in Buchanan County and forming an unlawfully structured physician-hospital organization. Complaint Paras. 24 and 25. Simultaneously with the filing of the Complaint, the United States filed the proposed Final Judgment, a Competitive Impact Statement (``CIS''), and a Stipulation signed by all the parties that allows for entry of the Final Judgment following compliance with the Tunney Act. The CIS explains in detail the provisions of the proposed Final Judgment, the nature and purpose of these proceedings, and the practices giving rise to the alleged violation. As the Complaint and CIS explain, 85% of all the physicians living or practicing in Buchanan County agreed to negotiate collectively fees and other contract terms with managed care plans seeking to enter Buchanan County, with the purpose and effect of increasing physician fees and controlling the development of competitive managed care health plans in Buchanan County. Together with the only hospital in Buchanan County, they also formed Defendant Health Choice of Northwest Missouri, Inc. (``Health Choice'') to provide managed care. At no time did the competing physicians share financial risk or otherwise integrate their practices. Since the formation of Health Choice and until the filing of the Complaint, no managed care plan had been able to enter Buchanan County without contracting with Health Choice, despite the efforts of several plans to do so. By refusing to deal with managed care plans seeking to enter Buchanan County except through Health Choice, Defendant Heartland System, Inc. (``Heartland'') and the physicians belonging to Defendant St. Joseph Physicians, Inc. (``SJPI'') were able to obtain higher compensation and a more favorable hospital utilization review program from managed care plans than they would have been able to obtain independently. The overarching goal of the proposed Judgment is to prevent Defendants from discouraging the development of competitive managed care in Buchanan County, while still permitting defendants to market a provider-controlled plan. The proposed Final Judgment consequently deals with a wide range of activities. Except for publishing the comments and this response in the Federal Register, the plaintiff and defendants have completed the procedures the Tunney Act requires before the proposed Final Judgment may be entered.\1\ The 60-day period for public comments expired on December 4, 1995. As of March 27, 1996, the United States had received 155 comments. --------------------------------------------------------------------------- \1\ The United States plans to publish the comments and this response promptly in the Federal Register. It will provide the Court with a Certificate Of Compliance With The Requirements Of The Antitrust Procedures And Penalties Act and file a Motion For Entry Of Final Judgment once publication is made. --------------------------------------------------------------------------- The comments come from a variety of sources. The most comprehensive comments were submitted by the Coalition for Quality Healthcare (``Coalition''), which describes itself as a group of health care providers and consumers in Northwest Missouri (Comments 19, 34 and 82).\2\ Another substantial comment is Comment 51, the comment of an unnamed ancillary services provider (i.e., provider of home health care, hospice care, outpatient rehabilitation services, or durable medical equipment) located outside of Missouri. Nine comments were submitted by Buchanan County citizens,\3\ in addition to 16 comments from Buchanan County ancillary services providers.\4\ A total of 105 comments were submitted by either ancillary services providers' trade associations or individual ancillary services providers located outside of Buchanan County.\5\ Finally, 19 comments were submitted by hospitals located outside of Buchanan County.\6\ --------------------------------------------------------------------------- \2\ The United States on January 19, 1996, numbered, indexed, and lodged with the Court all 143 comments it had received as of that date. For ease and convenience, the government in this Response refers to individual comments by those assigned numbers. The attached supplemental log lists the numbers assigned to the additional 12 comments the United States received from January 19 to March 27, 1996. \3\ Comments 1, 7-8, 11, 15-16, 25, and 142-143. \4\ Comments 3-6, 9-10, 12-14, 17-18, 20-21, 53, 151, and 155. \5\ Comments 22-24, 26-27, 29-33, 36-40, 42-50, 52, 54-56, 60- 71, 74-81, 83, 85-128, 130-133, 136-141, 144, and 154. \6\ Comments 28, 35, 57-59, 72-73, 84, 129, 134-135, 145-150, and 152-153. --------------------------------------------------------------------------- II Response to Comments A. Overview None of the comments oppose the main provisions of the proposed Final Judgment (Sections IV (C) and (D), V (C) and (D), and VI(B)). Only one, Comment 41, suggests that the Judgment fails to redress the violation of federal antitrust laws alleged in the Complaint. That Comment, and one other dealing with the composition of the Health Choice provider panel (Comment 2), are addressed in Subsection B below. The remaining 153 comments relate almost exclusively to how the proposed Final Judgment deals with Heartland's referral policy regarding ancillary services, a copy of which is attached to the proposed Final Judgment. Most of these comments urge that the ancillary services referral policy should either be changed or deleted from the Judgment. [[Page 29801]] They raise five different antitrust issues that are addressed in Subsections C through G below. Finally, Subsection H addresses the Coalition's contentions about the provisions of the proposed Final Judgment limiting Heartland's acquisition of physician practices (Comments 34 and 82). Subsection I addresses the Coalition's objections to the Judgment's compliance provisions (Id.).\7\ --------------------------------------------------------------------------- \7\ This Response addresses all of the antitrust issues and issues relating to the substance of the Complaint and proposed Final Judgment that are raised in the comments. Unrelated arguments and objections are not discussed. For example, the nine comments from private citizens in Buchanan County complain primarily about the quality of services and billing practices of Heartland. These complaints do not involve antitrust concerns, they are irrelevant to this case, and the Antitrust Division of the United States Department of Justice lacks authority to consider or address them. --------------------------------------------------------------------------- B. The Provider Panel Provisions Adequately Protect Competition Commenter David L. Hutchinson of East Lansing, Michigan, Comment 41, suggests that the proposed Final Judgment will not be effective in allowing for the development of competitive managed care in Buchanan County because the Judgment permits too many Buchanan County physicians to participate on the Health Choice provider panel. In particular, Mr. Hutchinson is concerned because ``Health Choice still retains 85% of the physicians working or residing in the area, this is still a monopoly because the remaining 15% will not be able to adequately compete in the quantity of service which they provide.'' The United States agrees that there would be reason for concern if 85% of the physicians working or living in Buchanan County were owners of a Buchanan County managed care plan that negotiated with payers. As the CIS explains, the concern in such a situation is that there would be an insufficient number of physicians remaining in the market with the incentive to contract with competing managed care plans that might seek to enter Buchanan County, or to form their own plans. CIS at 17. This would likely increase the cost to consumers of obtaining health care services in Buchanan County. The proposed Final Judgment, however, does not permit such a situation. The Defendants are not permitted to negotiate on behalf of competing physicians unless they meet the requirements of a qualified managed care plan. Proposed Final Judgment Sections IV (C) and (D), V (C) and (D), and VI(B). As explained in the CIS (pages 16-17), in order to satisfy those requirements, no more than 30% of the physicians in any relevant market may be owners of the plan. Id., Section II(I)(2). While the plan may, if it wishes, contract with more, or even all, of the remaining doctors (as non-provider-owned managed care plans are able to do), the plan may do that only if it is at risk for overcharging or overutilization by those subcontracting physicians. Id. This ensures that there will be a substantial pool of physicians in Buchanan County who have the incentives to contract with, or form their own, rival managed care plans in Buchanan County.\8\ See CIS at 17-19. --------------------------------------------------------------------------- \8\ Comment 2, from Robert S. Keller, O.D. of St. Joseph, Missouri, argues that the Health Choice provider panel violates Medicare regulations by excluding optometrists. The proposed Final Judgment, however, does not preclude Health Choice from having optometrists or any other type of provider on its panel. Furthermore, this issue has nothing to do with the antitrust violation alleged in the Complaint, which the proposed Final Judgment seeks to remedy. --------------------------------------------------------------------------- C. The Referral Policy Provision Is Appropriate and Adequate Relief for the Violation Alleges in the Complaint and Will Encourage, Not Impinge Upon, Patient Choice Heartland's ancillary services referral policy, with which Heartland must comply under the proposed Final Judgment, essentially requires Heartland representatives to inquire if the patient has a choice of ancillary services providers and then to honor that choice. The policy is designed to ensure that the patient has the opportunity to use an ancillary services provider other than Heartland if the patient so wishes. Many commenters contend that this referral policy is not in the public interest because they believe other policies would better ensure that patients will be able to make informed choices in selecting ancillary services providers. In opposing the referral policy of the proposed Final Judgment, the Coalition contends that the policy, ``violates a consumer/patient's right to make an informed choice among all ancillary services providers'' and that it ``enhances Heartland's capacity to monopolize the ancillary services market within Northwest Missouri and Northeast Kansas.'' Comment 82 at 2. The Coalition urges that the referral policy provision be deleted or, as an alternative, that the Court order Heartland to adopt the model referral policy that the Coalition developed after submitting its formal Comment (Comment 34) on November 21, 1995.\9\ The Coalition's model policy would require Heartland to allow on its premises an ``ombudsman,'' whose ``salary and expenses could be shared equally among the competitors (including Heartland), in order to preserve the ombudsman's independence'' (Comment 82 at 17), and who would ``operate[ ] as an independent social worker'' in order to ``fully inform the patient of his options and see that the patient is given the freedom to choose any ancillary services provider.'' (Comment 82 at Exhibit 9). --------------------------------------------------------------------------- \9\ The Coalition's model referral policy appears as Exhibit 9 to the Memorandum In Opposition To Proposed Final Judgment appended to the Coalition's December 1, 1995 Motion To Appear As Amicus (Comment 82), which the government is addressing as a comment. --------------------------------------------------------------------------- Clearly, deleting the proposed Judgment's referral policy would weaken rather than strengthen the Judgment. Further, appointment of an ombudsman paid for collectively by all ancillary services providers, a novel remedy, is unnecessary here. Requiring Heartland to observe its already promulgated policy regarding referrals for ancillary services, which provides for ready access by patients to information about the full range of ancillary services providers, is a wholly effective remedy for the specific antitrust violation alleged in the Complaint and well within the reaches of the public interest within the meaning of the Tunney Act. Cf., United States v. Microsoft Corp., 56 F.3d, 1448, 1459-60 (D.C. Cir. 1995)(decree adequate if within reaches of public interest).\10\ --------------------------------------------------------------------------- \10\ Many of the comments urged that the decree require Heartland to use a rotation system by which referrals would be distributed among Heartland and the other ancillary services providers. Such a system would eliminate or reduce competition by allocating patients and would raise serious antitrust concerns. Palmer v. BRG, Inc., 498 U.S. 46; United States v. Heffernan, 43 F.3d 1144, 1146-47 (7th Cir. 1994) (Posner, J.) (bid rotation agreement eliminates all competition among the participants and hence is even more serious than price fixing, which preserves competition in quality of service). --------------------------------------------------------------------------- The Coalition is incorrect in asserting that the proposed Final Judgment ``prevents patients from making an informed choice regarding ancillary services.'' (Comment 82, Memorandum In Opposition To Proposed Final Judgment, at 5, emphasis supplied). The proposed Final Judgment requires that Heartland (1) must honor a physician's order of a specific ancillary services provider unless the patient overrides that decision, (2) must ask the patient if the patient has a preference for an ancillary services provider and must honor any such preference, (3) must not tell the patient about Heartland's ancillary services providers unless the patient states he or she has no preference among ancillary services providers, (4) must honor the patient's [[Page 29802]] choice if the patient decides not to use the Heartland ancillary services providers, and, if asked, (5) must tell the patient that there are non-Heartland ancillary services providers who are listed in the telephone book, give the patient a reasonable amount of time to investigate other options, and then honor whatever choice the patient makes. If the patient again requests the names of other ancillary services providers, Heartland must name those providers.\11\ --------------------------------------------------------------------------- \11\ Heartland's attorney has told us that Heartland is considering adopting the attached revised referral policy. Basically, that policy would have Heartland personnel provide a list of Buchanan County ancillary services providers, rather than the telephone book, to patients requesting information about non- Heartland ancillary services providers. It also requires Heartland to explain to a patient who is an enrollee in a managed care plan the financial consequences to the patient of not using the plan's preferred ancillary services provider. This revision contains protections for Heartland patients in addition to those required by the Final Judgment. Adoption of the revision would not violate the Final Judgment and does not require amendment of the Final Judgment. Implementation of the revision, given the presence of other provisions in the proposed Final Judgment, would largely dispose of the objections raised in Comments 23, 27, 52, 67, 79, 94, 98, 126, and 138. --------------------------------------------------------------------------- As numerous comments illustrate, there are myriad alternative provisions that could be proposed to resolve the hospital ancillary services referral issue. The government does not dispute that some of these may be reasonable alternatives. That, however, is not a sufficient reason to reject the negotiated settlement of this case, which provides adequate and appropriate relief to remedy the violation in this case and prevent its recurrence. Microsoft, 56 F.3d at 1460-61. Significantly, the Complaint in this case did not charge Heartland with specific violations in the ancillary services market. Rather, the Complaint focuses on Heartland's efforts, along with the other defendants, to impede the development of competitive managed care health plans in Buchanan County. The ancillary services provision (Section VII(B)(1)) in the proposed Final Judgment is intended as a preventive measure to ensure that Heartland will follow its own preexisting ancillary services referral policy so that it will not abuse its market position in inpatient hospital services to restrict competition in the market for ancillary services by deterring managed care plans or other health care consumers from contracting with alternative ancillary services providers. Finally, at least one comment suggests that the referral policy provision should be stricken from the Judgment because the Complaint does not allege a specific violation involving ancillary services but rather focuses more broadly on efforts to hamper the development of managed care in Buchanan County. Comment 82 at 2, 16. There is no requirement that the government's Complaint specifically mention Heartland's ancillary services activities in order to include ancillary services relief in the Final Judgment. Relief in a consent decree is appropriate as long as it is within the general scope of the case. Int'l Assn. of Firefighters v. City of Cleveland, 478 U.S. 501, 525 (1986). The ancillary services provision of the proposed Final Judgment will help to prevent the recurrence of collaborative efforts to discourage the development of competitive managed care plans in Buchanan County, which is specifically alleged in the Complaint, and in the process also stop attempts to restrain competition in the provision of ancillary services to patients who are either uninsured or covered by other types of medical insurances. In particular, the ancillary services provision ensures that Heartland will honor the decisions of patients or their insurers regarding choice of ancillary services providers.12 --------------------------------------------------------------------------- \12\ Several other provisions are also incorporated into the proposed Final Judgment to ensure that patients and insurers are not coerced into using Heartland's ancillary services. Section VI(E) prohibits Heartland from forcing managed care plans in which Heartland does not have a financial interest from using Heartland's ancillary services in order to get Heartland's hospital services. Also, Section VII(B)(3) allows the United States access to Heartland's credentialing files to ascertain if Heartland has curtailed the hospital privileges of a physician employed by or affiliated with a competing managed care plan. The United States could also ascertain if Heartland had limited hospital privileges of a physician for ordering ancillary services from a vendor other than Heartland for any patient. --------------------------------------------------------------------------- D. The Referral Policy Provision Has No Preemptive Effect Several commenters suggest that the ancillary services provision of the proposed Final Judgment will have de jure or de facto preemptive effect on other cases. This is not correct. It is well established that ``a consent judgment, even one entered at the behest of the Antitrust Division, does not immunize the defendant from liability for actions, including those contemplated by the decree, that violate the rights of nonparties.'' Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 13 (1979). Ancillary services providers and others consequently remain free to pursue their own federal or state antitrust or other actions against Heartland for any activity they believe is illegal, and they may seek whatever remedy they deem appropriate. The ancillary services provision in this matter, therefore, does not have any ``preemptive effect'' upon the relief claimable by any plaintiff against Heartland or any other hospital, and would not prevent a court, in an appropriate case, from requiring different, or more expansive, relief.13 --------------------------------------------------------------------------- \13\ For example, the United States has been informed by the Missouri Attorney General's Office that the Missouri Attorney General is investigating Heartland's ancillary services referral practices, and other practices, to determine their legality under the Missouri Merchandising Practices Act, Sec. 407.020 RSMo, and the Missouri Antitrust Law, Secs. 416.031 RSMo. The proposed Final Judgment does not preclude or preempt any legal action by the Missouri Attorney General, or by private parties, seeking broader injunctive relief or different types of relief under either those laws or the federal antitrust laws. Moreover, in agreeing to this proposed Final Judgment, the United States does not express any view as to whether any of the practices permitted by the Attachment to the Final Judgment would be ``unfair'' within the meaning of the Missouri Merchandising Practices Act, Sec. 407.020 RSMo. --------------------------------------------------------------------------- The proposed Final Judgment also does not establish a national ceiling, or even a ceiling in Buchanan County, on what can or may be in a hospital ancillary services referral policy. The ancillary services provision in the proposed Judgment is simply, on the facts and in the procedural setting of this case, adequate relief to protect against the possibility that Heartland could use its market position in inpatient services to restrict competition in the market for ancillary services. E. Heartland May Comply With Federal or State Laws or Further Protect the Patient's Right To Choose Several commenters have suggested that the ancillary services provision of the proposed Final Judgment conflicts with hospital accreditation standards and various federal and state laws and regulations.14 There have also been claims that the proposed Final Judgment precludes Heartland from adopting additional measures intended to assist Heartland patients in choosing ancillary services providers. None of these claims and suggestions is correct. --------------------------------------------------------------------------- \14\ The Coalition, for example, asserts that the ancillary services provision of the proposed Final Judgment is inconsistent with hospital accreditation standards and Medicare regulations, primarily because ``Heartland's referral policy does not allow ancillary services providers, who have an established relationship with the patient before admission to Heartland's acute care hospital, to participate in discharge planning for their patients.- .-.-.'' (Comment 82 at 13). --------------------------------------------------------------------------- Section VII(B)(1) of the proposed Final Judgment requires only those steps needed to correct or prevent competitive problems alleged or similar to those alleged in the Complaint. Heartland in addition is independently obligated to comply with hospital accreditation standards, Medicare regulations, state or federal laws, or the [[Page 29803]] decrees in other state or federal law suits, including, if necessary, permitting outside ancillary services providers to participate in patient discharge planning. Moreover, as far as the government has been able to determine, nothing in the Heartland ancillary services referral policy, with which Section VII(B) of the proposed Final Judgment requires Heartland to comply, requires Heartland to do anything that any hospital accreditation standard or any federal or state statute, rule, or regulation of which the United States is aware prohibits. (See attached Joint Commission For Accreditation Of Healthcare Organizations accreditation standards and Medicare patient discharge planning regulations). F. The Referral Policy Does Not Harm Heartland's Rivals or Buchanan County Consumers The Coalition also contends that the referral provision will lead to a deterioration of competition in the provision of ancillary services in Buchanan County. E.g., Comment 82 at 3-4, 10-13. But these contentions assume that before the proposed Final Judgment was negotiated, Heartland was following an ancillary services referral policy that was more favorable to competing providers than the policy put in place by the Final Judgment. In fact, the government's investigation revealed that Heartland, before accepting the proposed Final Judgment, may not have always been in compliance with its stated policy.\15\ Coalition members and Buchanan County citizens will be better, not worse, off as a result of the proposed Final Judgment since the Judgment will now ensure compliance. --------------------------------------------------------------------------- \15\ This may be why Heartland's ancillary services rivals lost referrals. See Comment 82 at 12-13. If so, the proposed Final Judgment will correct the problem. Of course, another explanation for this loss of referrals may be that Heartland began offering better care and service, i.e., that it was successfully competing on the merits. This would be lawful competition properly left in place by the proposed Final Judgment. Cargill, Inc. v. Monfort, Inc., 479 U.S. 104, 116 (1986). --------------------------------------------------------------------------- Microsoft, supra, recently noted in a strikingly similar context that ``[w]hile the district court may inquire into whether a decree will result in any positive injury to third parties * * *, in the absence of such injury, it should not reject an otherwise adequate remedy simply because a third party claims it could be better treated.'' 56 F.3d at 1461 n.9 (emphasis supplied). There was no positive injury to third parties in Microsoft, and there is none in the present case. In fact, competitors and consumers are benefited by the proposed Final Judgment. G. The Ancillary Services Relief is Consistent With the Federal Antitrust Laws Comment 51 suggests more explicitly than any of the other comments that the Heartland Referral Policy, which Section VII(B)(1) of the proposed Final Judgment requires Heartland to follow, is inconsistent with the federal antitrust laws, and more particularly, with Key Enterprises, Inc. v. Venice Hospital, 919 F.2d 1550 (11th Cir. 1990), vacated, reh'g en banc granted, 979 F.2d 806 (11th Cir. 1992), order granting en banc review vacated, 9 F.3d 893 (11th Cir. 1993 (per curiam), cert. denied sub nom. Sammett Corp. v. Key Enterprises, Inc.,__U.S.__, 114 S.Ct. 2132 (1994). Relying on the later-vacated Key Enterprises decision, this comment contends that Heartland should be required to disseminate information about its ancillary services competitors, and to allow such competitors access to Heartland's hospital patients. Anything less would be, in the words of the Comment, ``inconsistent with federal antitrust policy. * * *'' Comment 51 at 2. The ancillary services provision of the proposed Final Judgment is consistent with both the federal antitrust laws and Key Enterprises. Key Enterprises was never finally resolved by the courts. A panel of the Court of Appeals reversed a trial court order that had overturned a $2.3 million jury verdict in favor of a durable medical equipment supplier who claimed that a hospital with 76% of the available beds in a local market had violated Sections 1 and 2 of the Sherman Act by coercing or unduly influencing home health agencies in that community to refer their patients to a durable medical equipment supplier in which the hospital had a financial interest. 919 F.2d at 1553, 1555. Significantly, no injunctive or other equitable relief was at issue in Key Enterprises. The case was vacated after the Eleventh Circuit granted rehearing en banc and then settled prior to en banc review.\16\ --------------------------------------------------------------------------- \16\ At least four courts have refused to consider Key Enterprises because it has been vacated: Pacifica Kidney Center, Inc. v. National Medical Care, Inc., 1993 WL 190858 (9th Cir. 1993) (unpublished disposition) at **4 n. 3; Home Health Specialists, Inc. v. Liberty Health System, 1994-2 Trade Cas. para. 70,699 (E.D. Pa. 1994) at p. 72,794; Atlanta Pulmonary Diagnostic Clinic v. Haynes, 1994 WL 258260 (N.D. Ga. 1994); and Northwest Title And Escrow Corp. v. Edina Realty, Inc., 1994-1 Trade Cas. para. 70,485 (D. Minn. 1993). --------------------------------------------------------------------------- Moreover, as noted earlier, this case is not about ancillary services markets. Heartland was not charged with restraining trade in or monopolizing any ancillary services market. Rather, Heartland was charged with conspiring with physicians to discourage the development of competitive managed care in Buchanan County. The ancillary services provision of the proposed Final Judgment is prophylactic, intended simply to prevent Heartland from exploiting its position in additional ways. The provision is effective and well within the bounds of the public interest. Nothing in Key Enterprises or any other decision requires this Judgment to contain any more relief than it does. H. The Physician Practices Acquisitions Provisions are Adequate To Remedy the Violation Alleged in the Complaint The Coalition criticizes the provisions of the proposed Final Judgment that place limits and controls on Heartland's acquisition of physician practices. Comment 34 at 6; Comment 82 at 18-19. The Coalition argues that ``the practical effect'' of three of those provisions, Sections VIII(B)-(D), will be to allow Heartland to ``monopolize the market for primary care physicians in Northwest Missouri and Northeast Kansas. * * *'' Comment 82 at 19. The Judgment's physician practices acquisitions provisions, Sections VI(D) and VIII(B)-(D) of the decree, are, in conjunction with the physician credentialing provision of the proposed Final Judgment (Section VII(B)(3)), sufficient to ensure the development of conditions that permit the growth of competitive managed care in Buchanan County. They certainly will not promote the monopolization of primary care physician services in Northwest Missouri or Northeast Kansas. Section VI(D) is the primary provision in the proposed Final Judgment regarding physician practices acquisitions. CIS at 20. It enjoins Heartland from acquiring during the next five years additional existing family practice and general internal medicine physician practices in Buchanan County without the prior written approval of the United States, and from acquiring any other existing active physician practice in Buchanan county without 90 days' prior notification. Section VI(D) was designed to, and will, prevent Heartland from obtaining control of so many physicians that it could raise prices for physician services above competitive levels or otherwise thwart competing managed care plans from entering and competing effectively in Buchanan County. Sections VIII(B)-(D) set forth the exceptions to Section VI(D). Section VIII(B) allows Heartland to acquire the practice of a physician who derives only limited revenues (less than 20% of total [[Page 29804]] practice revenues) from patients in Buchanan County (i.e., the established physician working primarily outside of Buchanan County and hence whose practice has little competitive impact in Buchanan County). Section VIII(C) allows Heartland to acquire within the first two years of a physician's arrival in Buchanan County the practice of any physician who Heartland actively recruited to Buchanan County (i.e., the new physician who would not have come to Buchanan County but for Heartland and whose practice is not yet sufficiently established to have an independent competitive impact on the market). Section VIII(D) allows Heartland to acquire the practice of any family practice or general internal medicine physician already in Buchanan County who otherwise would no longer practice primary care medicine in Buchanan County (i.e., the established physician working primarily in Buchanan County whose practice may have a significant independent competitive impact on the market but who is otherwise going to exit the market). None of these three limited exceptions will result in the monopolization or a substantial lessening of competition in the physician services market in Buchanan County. Rather, Sections VI(D) and VIII (B)-(D), in conjunction with the physician credentialing provision (Section VII(B)(3)), will ensure that Heartland does not achieve by acquisition or credentialing the anticompetitive result (preventing the development of competitive managed care) that it initially sought to accomplish through agreement with the physicians of Buchanan County, and which is at the heart of the antitrust violation alleged in the Complaint. These provisions will result, at least for the near future, in the continued presence, if not the increase, of a substantial pool of primary care and other physicians not employed by Heartland in Buchanan County.\17\ --------------------------------------------------------------------------- \17\ By its terms, this provision would not apply if any firm other than Heartland made a bona fide offer to purchase the practice for a price above the liquidation value of the practice. 4 CCH Trade Reg. Rpt. para.13,104 at 20,574. --------------------------------------------------------------------------- That continuing pool of primary care and other physicians not employed by Heartland will also protect competition in ancillary services markets in Buchanan County. Comment 34 at 2, 5, 6; Comment 82 at 19. The Coalition correctly notes that many hospitalized patients look to their physician to recommend an ancillary services provider. Comment 34 at 2. There is consequently likely to remain during the term of this Judgment a substantial stream of ancillary services referrals from doctors who are not employed by Heartland and who therefore will not automatically refer their patients to Heartland's ancillary services providers. Furthermore, the referral policy with which Heartland must comply (Section VII(B)(1) of the decree) will significantly curtail any adverse impact on competition in ancillary services in Buchanan County from possible future Heartland purchases of Buchanan County physician practices. The policy specifically requires Heartland to ask, and honor, a hospitalized patient's choice of ancillary services provider. Heartland must do that even if the patient's choice is different from the doctor's and the doctor is an employee of Heartland. The Coalition also suggests that the proposed Final Judgment is deficient because it does not prohibit Heartland from bringing into Buchanan County a physician who has not previously practiced there. Comment 34 at 6; Comment 82 at 18. By increasing the supply of physicians in Buchanan County, such conduct could be procompetitive. The proposed Final Judgment therefore does not proscribe this activity. The United States, moreover, remains free to challenge such actions in the future in a separate, independent antitrust action if this activity should prove to be anticompetitive. I. The Compliance Provisions Are Sufficient The Coalition also believes that two of the compliance provisions of the proposed Final Judgment, Sections X and XI, should be modified to (1) require the defendants to submit written reports and the United States to conduct at least annual inspections, and (2) give the Court broader powers to monitor and enforce the Judgment as Judge Oliver required in United States v. Associated Milk Producers, Inc., 394 F. Supp. 29, 46 (W.D. Mo. 1975). Comment 34 at 7; Comment 82 at 19-20. The United States believes that the compliance provisions of the proposed Final Judgment as they now stand are fully adequate to deter, detect, and correct any decree violations. Sections X and XI of the proposed Final Judgment are standard judgment compliance provisions that the government has used repeatedly in its consent decrees and litigated judgments over the 20 years since Associated Milk Producers was entered. They include the requirement that Defendants obtain from their appropriate personnel, and maintain for the government's inspection, annual written certifications that each such person (1) has read and agrees to abide by the Judgment, (2) understands that noncompliance with the Judgment may result in criminal contempt of court, and (3) has reported any violation of the Judgment to counsel for that Defendant.\18\ Furthermore, Section XII of the proposed Final Judgment, another standard decree compliance provision, allows the government to (1) inspect and copy records or documents of any of the Defendants relating to matters contained in the Judgment, (2) interview personnel of any of the Defendants about such matters, and (3) require any of the Defendants to submit written reports, under oath if necessary, about any such matter. --------------------------------------------------------------------------- \18\ The Associated Milk Producers decree, even as supplemented by Judge Oliver, did not contain this provision. 394 F. Supp. at 49- 58. --------------------------------------------------------------------------- The commenters do not suggest that these customary judgment compliance provisions have been inadequate to uncover and remedy decree violations in the government's earlier judgments. Nor do they offer any reason to expect a different result here.\19\ The government will not hesitate, as the proposed Final Judgment permits (Section IX), to seek a modification of Sections X and XI if these provisions in practice prove to be inadequate to properly enforce this decree. --------------------------------------------------------------------------- \19\ Indeed, Judge Oliver in a subsequent government antitrust consent decree did not order these supplemental provisions. United States v. Mid-American Dairymen, Inc., 1977-1 Trade Case. para. 61,508 (W.D.Mo. 1977). --------------------------------------------------------------------------- III The Legal Standard Government the Court's Public Interest Determination Once the United States moves for entry of the proposed Final Judgment, the Tunney Act directs the Court to determine whether entry of the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. Sec. 16(e). In making that determination, ``the court's function is not to determine whether the resulting array of rights and liabilities is one that will best serve society, but only to confirm that the resulting settlement is within the reaches of the public interest.'' United States v. Western Elec. Co., 933 F.2d 1572, 1576 (D.C. Cir.), cert. denied, 114 S. Ct.487 (1993) (emphasis added, internal quotation and citation omitted).\20\ The Court should evaluate the relief set forth in the proposed Final Judgment and should enter the Judgment if it falls within the [[Page 29805]] government's ``rather broad discretion to settle with the defendant within the reaches of the public interest.'' Microsoft, 56 F.3d at 1461. Accord, Associated Milk Producers, 534 F.2d at 117-18. --------------------------------------------------------------------------- \20\ The Western Electric decision concerned a consensual modification of an existing antitrust decree. The Court of Appeals assumed that the Tunney Act was applicable. --------------------------------------------------------------------------- The Court is not ``to make de novo determination of facts and issues.'' Western Elec., 993 F.2d at 1577. Rather, ``[t]he balancing of competing social and political interests affected by a proposed antitrust decree must be left, in the first instance, to the discretion of the Attorney General.'' Id. (internal quotation and citation omitted throughout). In particular, the Court must defer to the Department's assessment of likely competitive consequences, which it may reject ``only if it has exceptional confidence that adverse antitrust consequences will result--perhaps akin to the confidence that would justify a court in overturning the predictive judgments of an administrative agency.'' Id.\21\ --------------------------------------------------------------------------- \21\ The Tunney Act does not give a court authority to impose different terms on the parties. See, e.g., United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 153 n. 95 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983) (Mem.); accord H.R. Rep. No. 1463, 93d Cong., 2d Sess. 8 (1974). A court, of course, can condition entry of a decree on the parties' agreement to a different bargain, see, e.g., AT&T, 552 F. Supp. at 225, but if the parties do not agree to such terms, the court's only choices are to enter and decree the parties proposed or to leave the parties to litigate. --------------------------------------------------------------------------- The Court may not reject a decree simply ``because a third party claims it could be better treated.'' Microsoft, 56 F. 3d at 1461 n.9. The Tunney Act does not empower the Court to reject the remedies in the proposed Final Judgment based on the belief that ``other remedies were preferable.'' Id. at 1460.\22\ As Judge Greene has observed: \22\ Citing United States v. Central Contracting Co., 537 F. Supp. 571 (E.D.Va. 1982), the Coalition wrote the government in November 1995 and requested all ``determinative'' materials and documents called for by 15 U.S.C. Sec. 16(b) (Comment 19). The United States replied that there are no such materials or documents. The Coalition suggests in Comment 82 that this response shows that ``the DOJ has not been forthcoming with disclosure of the underlying factual materials supporting the proposed policy.'' Memorandum In Opposition To Proposed Final Judgment at 5. The Coalition suggests, apparently because of Associated Milk Producers, that the government's response requires the Court to make a more careful review in this instance than might otherwise be the case. This approach is unwarranted in the present matter even if the Coalition's reading of Associated Milk Producers is correct. Here there simply are no documents which, either along or as a group, have such singular or particularized significance as to be ``determinative'' under 15 U.S.C. Sec. 16(b). The Coalition is incorrect in suggesting that the Department never produces determinative documents. The Department has done so in 19 cases since the Central Contracting decision. --------------------------------------------------------------------------- If courts acting under the Tunney Act disapproved proposed consent decrees merely because they did not contain the exact relief which the court would have imposed after a finding of liability, defendants would have no incentive to consent to judgment and this element of compromise would be destroyed. The consent decree would thus as a practical matter be eliminated as an antitrust enforcement tool, despite Congress' directive that it be preserved. United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983) (Mem.). Moreover, as noted above, the entry of a governmental antitrust decree forecloses no private party from seeking and obtaining appropriate antitrust remedies. Thus, Defendants will remain liable for any illegal acts, and any private party may challenge such conduct if and when appropriate. If any of the commenting parties has a basis for suing Defendants, they may do so. The legal precedent discussed above holds that the scope of a Tunney Act proceeding is limited to whether entry of this particular proposed Final Judgment, agreed to by the parties as settlement of this case, is in the public interest. Finally, the Tunney Act does not contemplate judicial reevaluation of the wisdom of the government's determination of which violations to allege in the Complaint. The government's decision not to bring a particular case on the facts and law before it at a particular time, like any other decision not to prosecute, ``involves a complicated balancing of a number of factors which are peculiarly within [the government's] expertise.'' Heckler v. Chaney, 470 U.S. 821, 831 (1985). Thus, the Court may not look beyond the Complaint ``to evaluate claims that the government did not make and to inquire as to why they were not made.'' Microsoft, 56 F.3d at 1459 (emphasis in original); See also, United States v. Associated Milk Producers, Inc., 534 F.2d 113, 117-18 (8th Cir. 1976), cert. denied, 429 U.S. 940 (1976). Similarly, the government has wide discretion within the reaches of the public interest to resolve potential litigation. E.g., United States v. Western Elec. Co., 993 F.2d 1572 (D.C. Cir.), cert. denied, 114 S. Ct. 487 (1993); United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983) (Mem.). The Supreme Court has recognized that a government antitrust consent decree is a contract between the parties to settle their disputes and differences, United States v. ITT Continental Baking Co., 420 U.S. 223, 235-38 (1975), United States v. Armour & Co., 402 U.S. 673, 681-82 (1971), and ``normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation.'' Armour, 402 U.S. at 681. The ancillary services provision (Section VII(B)(1)) in the proposed Final Judgment is a preventive measure to protect against the possibility that Heartland could abuse its market position in inpatient hospital services to restrict competition in the market for ancillary services by deterring managed care plans or other heath care consumers form contracting with alternative ancillary services providers.\23\ This Judgment has the virtue of bringing the public certain benefits and protection without the uncertainty and expense of protracted litigation. Armour, 402 U.S. at 681; Microsoft, 56 F. 3d at 1459. --------------------------------------------------------------------------- \23\ Managed care plans in general are making greater use of competition among ancillary services providers to reduce premium costs and to reduce the number and duration of hospitalizations. See, e.g., K. O'Donnell & E. Sampson, ``Home Health Care: The Pivotal Link In The Creation Of A New Health Care Delivery System, Journal of Health Care Finance, Volume 21, No. 2, pages 74-86 (1994); and G. Leavenworth, ``The Fastest Growing Segment Of The Health Care Industry Combines Cost-Effective, High--Quality Care With The Comforts Of Home,'' Business & Health, vol. 13, special issue, p. 51 (Jan. 1995). --------------------------------------------------------------------------- IV Conclusion After careful consideration of these comments, the United States concludes that entry of the proposed Final Judgment will provide an effective and appropriate remedy for the antitrust violation alleged in the Complaint and is in the public interest. The United States will therefore move the Court to enter the proposed Final Judgment once, as 15 U.S.C. Sec. 16(d) requires, the public comments and this Response have been published in the Federal Register. Dated: May 17, 1996. Respectfully submitted, [[Page 29806]] ---------------------------------------------------------------------- Allen S. Vanbebber, Deputy United States Attorney, Western District of Missouri, Suite 2300, 1201 Walnut Street, Kansas City, Missouri 64106-2149, Tel: (816) 426-3122. ---------------------------------------------------------------------- Edward D. Eliasberg, Jr., Gregory S. Asciolla, Attorneys, Antitrust Division, U.S. Dept. of Justice, Room 414, 325 7th Street, N.W., Washington, DC 20530, Tel: (202) 307-0808. Certificate of Service I, Edward D. Eliasberg, Jr., hereby certify that copies of the Response to Public Comments in U.S. v. Health Choice of Northwest Missouri, Inc., et al., was served on the 17th day of May 1996 by first class mail to counsel as follows: Thomas D. Watkins, Esquire, Watkins, Boulware, Lucas, Miner, Murphy & Taylor, 3101 Frederick Avenue, St. Joseph, Missouri 64506-0217 George E. Leonard, Esquire, Shugart, Thomson & Kilroy, 12 Wyandotte Plaza, 120 West 12th Street, Kansas City, Missouri 64105-0509 Richard D. Raksin, Esquire, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603 Jack Briggs, Health Choice of Northwest Missouri, Inc., 510 Francis Street, St. Joseph, Missouri 64501 Brian B. Myers, Esquire, Lathrop & Norquist, 2345 Grand Avenue, Suite 2600, Kansas City, Missouri 64108 Thomas M. Bradshaw, Esquire, Dianne M. Hansen, Esquire, Armstrong, Teasdale, Schlafly & Davis, Suite 2000, 2345 Grand Boulevard, Kansas City, Missouri 64108 Glenn E. Davis, Esquire, Diane E. Felix, Esquire, Armstrong, Teasdale, Schlafly & Davis, One Metropolitan Square, Suite 2600, St. Louis, Missouri 63102-2704 ---------------------------------------------------------------------- Edward D. Eliasberg, Jr. Hospital Inpatient--Ancillary Services Referral Policy I. General Statement After a patient or other appropriate person (collectively, ``patient'') has been identified (via screening, assessment, discharge planning, staff, family, physician, or other means) as being in need of appropriate home health, hospice, DME, or outpatient rehabilitation services (referred to collectively as ``Ancillary Service''), and, if necessary, a physician's order has been obtained, the following procedures will be used by a non-physician referring person when connecting patients to the appropriate Ancillary Service. Our focus is on patient choice. II. Service Referrals A. If a physician orders an Ancillary Service and specifies the provider to be used (whether specifically written in the chart or other written notification), then a referring person shall contact the patient indicating that the physician has ordered an Ancillary Service and has ordered that a particular provider be used. If necessary, the patient should be informed of any financial considerations (i.e., managed care). The patient should then be asked whether the particular provider is acceptable, and if so, referred to that provider. (If the patient does not wish that provider, see subsection B below). B. If a physician orders an Ancillary Service, but does not specify the provider to use, then the patient shall be contacted and informed that his physician has ordered an Ancillary Service; if necessary, the patient should be informed of any financial considerations (i.e., managed care); and the patient shall be asked if he has a preference as to which provider to use: 1. If the patient has a preference, that preference shall be honored. 2. If the patient has no preference, a referring person shall indicate that Heartland has an excellent, full accredited Ancillary Service that is available to the patient, and the appropriate Heartland brochure may be given. If the patient accepts, then the referral shall be made to Heartland's Ancillary Service. 3. If the patient has not accepted Heartland's Ancillary Service (see subsection B(2) above), or asks what other providers are available, a referring person shall state that there are other providers in the community that may offer the Ancillary Service, and provide the patient with the list of providers attached. If appropriate, this list may be provided verbally. [PATIENT SHALL BE GIVEN A REASONABLE AMOUNT OF TIME TO INVESTIGATE OTHER OPTIONS.] If the patient at this point chooses a provider, that choice shall be noted on the patient's chart and the referral made to the provider chosen. Copies of the Comments and the United States' Response to Public Comments, with all omitted attachments, are available for inspection in Room 200, Liberty Place, (202/514-2481), United States Department of Justice, Washington, DC and at the Office of the Clerk of the United States District Court for the District of Western Missouri, Kansas City, Missouri. Lodging of Public Comments Regarding Proposed Final Judgment United States of America, Plaintiff, vs. Health Choice of Northwest Missouri, Inc., Heartland Health System, Inc., and St. Joseph Physicians, Inc., Defendants. Case No. 95-6171-CV-SJ-6. Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. Secs. 16 (b)-(h) (``Tunney Act''), Plaintiff United States of America hereby lodges with the Court the comments the government has received to date from the public regarding the Proposed Final Judgment in this case. Attached to this pleading is a log listing for each comment the date the government received the comment, the date of the comment, the name and address, if available, of the commenter, the number of pages, and a brief description of the comment. As the log indicates, the government received six comments in which the commenter requested anonymity. While those comments have been described in the log, five of those comments have been returned to their authors. The government has explained to those authors by means of accompanying transmittal letters that comments in Tunney Act proceedings become part of the public record. The government has invited each of these authors either promptly to submit a revised comment not disclosing the author's identity or to resubmit the original comment if the author no longer objects to public disclosure of the author's identity. The sixth comment is an anonymous handwritten letter without return address in which the author's supervisor at Defendant Heartland Health System, Inc. is specifically named and claimed to be the primary cause of the problems in this matter. That comment will not be made available to the public unless the Court desires the government to do so. The government anticipates that it soon will be filing its response to all the comments, as required by the Tunney Act, 15 U.S.C. Sec. 16(d). Dated: January 19, 1996. Respectfully submitted, [[Page 29807]] ---------------------------------------------------------------------- Alleen S. Vanbebber, Deputy United States Attorney, Western District of Missouri, Suite 2300, 1201 Walnut Street, Kansas City, Missouri 64106-2149, Tel: (816) 426-3122. ---------------------------------------------------------------------- Edward D. Eliasberg, Jr., Gregory S. Asciolla, Attorneys, Antitrust Division, U.S. Dept. of Justice, Room 9422, 600 E Street, NW., Washington, DC 20530, Tel: (202) 307-0808. Certificate of Service I, Edward D. Eliasberg Jr., hereby certify that a copy of the foregoing document was served on the 19th day of January 1996 by first class mail to counsel as follows: Thomas D. Watkins, Esquire, Watkins, Boulware, Lucas, Miner, Murphy & Taylor, 3101 Frederick Avenue, St. Joseph, Missouri 64506-0217 George E. Leonard, Esquire, Shugart, Thomson & Kilroy, 12 Wyandotte Plaza, 120 West 12th Street, Kansas City, Missouri 64105-0509 Richard D. Raskin, Esquire, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603 Jack Briggs, Health Choice of Northwest Missouri Inc., 510 Francis Street, St. Joseph, Missouri 64501 Brian B. Myers, Lathrop & Norquist, 2345 Grand Avenue, Suite 2600, Kansas City, Missouri 64108 Thomas M. Bradshaw, Esquire, Dianne M. Hansen, Esquire, Armstrong, Teasdale, Schlafly & Davis, 1700 City Center Square, 1100 Main Street, Kansas City, Missouri 64105 Glenn E. Davis, Esquire, Dianne E. Felix, Esquire, Armstrong, Teasdale, Schlafly & Davis, One Metropolitan Square, Suite 2600, St. Louis, Missouri 63102-2704 ---------------------------------------------------------------------- Edward D. Eliasberg Jr. Note: The following list indicates where tables, newspaper articles and attachments have been taken out, you can obtain copies of these complete documents in our Department of Justice, Premerger Office, Liberty Place Building, ATR Division, Room 215, 325 Seventh Street, NW., Washington, DC 20530. 1. Sept. 26, 1995 letter from Robert S. Keller, O.D. 2. Letter from the Administrator of St. Joseph Nursing Home 3. Anonymous note (had newspaper articles) 4. Mark L. Wyble, Coordinator, Patient & Community Relations from Total Home Health Care 5. Oct. 3, 1995 from Citadel Health Care, written by Lowell Fox, Administrator 6. Nov. 4, 1995 letter from Richard C. Bosworth, R.Ph., Coalition of Quality Health Care 7. Nov. 20, 1995 letter, Hill Country Health Services, Inc., from Ron Julian, Administrator. 8. Nov. 19, 1995 letter, from Dennis O. Davidson, M.D. 9. Nov. 23, 1995, Home Health Insights, Inc., from Ross Feezer 10. Nov. 27, 1995, Shepard's Crook Nursing Agency, Inc., from Suzanne Wilkinson, Administrator/Owner 11. Nov. 27, 1995, Metro Home Health Care Services, Inc., from Richard A. Porter, President/Administrator 12. Nov. 29, 1995, Kevin Miller, RRT, RCP 13. Dec. 4, 1995, Gibson Health Services, from Patricia A. Gibson, RN, MPH 14. Dec. 4, 1995, Heritage Home Health Inc., from Matthew F. Komac 15. Nov. 21, 1995, Metro Home Health Care Services, Inc. from Richard A. Porter 16. Anonymous letter (had clippings) 17. Feb 28, 1996, Missouri Alliance for Home Care, from Dale E. Smith September 26, 1995. Gail Kursh, Chief, Prof. & Intellectual Prop. Section/Health Care Task Force Dear Ms. Kursh: I am grateful for the opportunity of writing to you regarding my concerns with reference to Heartland Health Systems here in St. Joseph. I am a retired Senior Citizen and a patient of a Dr. in the group aligned with the hospital. I like my Dr. but don't approve of the monopoly the hospital has over the Dr.'s services as well as options given to the patients in several areas. Also, I understand the referral to specialists is down-sized. The Pres. of the hospital was quoted as saying ``he was not being paid to be stupid,'' but he is being paid to have integrity and high standard of morals. Yours truly, Helen Kadera P.S. I with so many, many others are grateful that this situation is being investigated. Optometry Dr. Joyce Keller Stroud Dr. Robert S. Keller 3605 Faraon Street, St. Joseph, Missouri 64506, Telephone (816) 364- 2000 26 September 1995. Gail Kursh, Chief, Intellectual Prop. Section, Health Care Antitrust, U.S. Dept. of Justice, 600 E. St. N.W., Room 9300, Washington, D.C. 20530 Dear Ms. Kursh: It is my hope that you have received a copy of the St. Joseph News Press of 24 September 1995. I want to point out that the Heartland Hospital new HMO, called Community Health Plan, is excluding Optometry in providing eye health care to its members. I refer to total eye health, with the exception of surgery. Optometrists can treat most eye health conditions and recently in Missouri, that included glaucoma. Since 28 August 1995, I have sought an opportunity to appear before the Board of Community Health Plan to point out that Medicare and Medicaid utilize the services of Optometry to the fullest extent of their licensure. Enclosed is a copy of the regulations defining the scope of the various professions. Heartland is in the process of being the gatekeeper for Medicaid in our area of Missouri, and they cannot be allowed to usurp Federal Regulations or any patients right to choose. Very truly yours, Robert S. Keller, O.D. Gail Kursh, U.S. Dept Justice, 600 E St. N.W. Rm. 9300, Washington, D.C. 20530 Dear Ms. Kursh: First, we don't want to talk against our Hospital as it is good to have a hospital in our city. But we expect the Hospital to be a Hospital, and not in competition with nearly every business in our town. Other businesses such as pharmacies, medical supplies Insurances, Nursing homes, all other nursing needs, such as Home health care programs, laboratories, rehab programs, and so on, it goes on and on. We in the nursing home and convalescent business have to go through the state of Missouri to apply for Licenses and permits to start a convalescent center, we are inspected at least twice a year, more if they see fit. We have many rules to go by. We have to be approved by the State to operate. We don't think the same rules apply. Now Heartland Health systems has taken over so many of the services we had for years here in St. Joseph--without any permission from the State of Missouri without going through the processes required for nursing facilities. They have opened a skilled and intermediate care nursing home without contacting the State or going through the process. I have talked with a Regional Manager for the Division of Social Services and told him out plight, He said we can't do anything as Hospitals can do things and we can't say anything to them. There surely is some regulations for them as well as anyone else. As of now in St. Joseph, MO. if the doctors don't belong to Heartland Health Systems, they can't take their patients there, which is double expense. A Doctor used to be in his office and the patient went there first, then if they needed hospitalization, fine, otherwise the Doctors office was cheaper. Also now if you need medications, the Doctors goes through Heartlands Pharmacy which cuts our own Hometown pharmacies. Our St. Joseph Surgical Supply is having a rough time, our suppliers of Health Care are all suffering and all nursing Homes are really hurting. Our facility alone is over 40 patients down and if we call a Doctor about anyone who is sick, they immediately say send them to the Hospital, we'll check them out here, which is very expensive. The ambulance service here is terribly expensive and is [[Page 29808]] owned by Heartland Health systems. This is another reason the Medicare program is suffering and Doctors could come to the Nursing facilities to see their patients as in the past but they seldom do that now. Mr. Kruse not only has bought up the Drs. offices and buildings and clinics around St. Joseph and areas outside of St. Joseph, the Doctors had to join Heartland in order to use the hospital. An official of our State, said it would be good for the government to look into other hospitals he has worked for. If all our nursing homes are forced to close, it would be a big loss to our city businesses, where we buy our supplies, also the employees would be out of work and we as business owners would be hurt. The banks that loaned us money to build and operate. I understand the money Heartland's loans come from outside the St. Joseph area. The min trouble we have with Heartland is the when we send our patients to them as have for years, instead of returning them to us for their rehab, and care, they are transferring them to their skilled and intermediate care units, until there Medicare days are used. Two of our employees have met and talked with Heartlands Social Service Dept. they made the remark, ``we have to send them to our nursing home, we don't have a choice. Their Social Service Dept. call daily to check on vacancies, of which we have 40. However refferals are few and far between. In the past the majority of our patients came from the hospital. We in the health care business in St. Joseph are all hurting, we appreciate any effort to stop Heartlands monopoly. Sincerely; Administrator St. Joseph Nursing Home. Dear Sir: We are all so very upset--We owe thousands of dollars on our nursing home--It's rather new & the bank didn't want to loan money to a nursing home they didn't feel secure because of something that happened years ago--Finally they did--Now this we are down over 40 beds & no hope. If we call & doctor he tells us to send them out to the hospital & he'll see them. Ambulance is $400.00 just for that. Then they keep the patient & put the patient in their nursing home. This is in all nursing homes in St. Joseph--All pharmacies are suffering, all supply companies are suffering. Will you please help us in St. Joseph. Please, please. Beltone Knapp Hearing Aid Center 1150 South Belt Highway, St. Joseph, MO 64507, (816) 232-3386, FAX: (816) 232-4362 Sept. 29, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section/Health Care Task Force, Anti-trust Division, U.S. Dept. of Justice, 600 E. Street, N.W., Room 9300, Washington, D.C. 20530 Re: Heartland Hospital Comments Dear Gentlemen: On Sept. 24th, 1995 the St. Joseph News-press ran an article on the Heartland Hospital's problem and potential problems with both the federal and state governments. In this geographical area we have only one hospital, and one physicians office that specializes in problems of the ear. At least one other ear specialist was purported to have been forced out. It is our understanding that any patient who has any questions of possible hearing problems is tested and if over 65 is billed to medicare. If there is a loss, they are sold hearing aids by the hospital. To our knowledge they are not given a choice or advised of the many immediate and long term benefits of being fitted by a dispenser other than the hospital. If there is to be true competition than this system needs some changes. Sincerely, Roger E. Knapp, President. October 4, 1995. Gail Kursh, Health Care Task Force, Department of Justice, Antitrust Division, 600 E Street, N.W., Room 9300, Washington, D.C. 20530 Dear Ms. Kursh: As an 18 year employee of a Nursing Facility in St. Joseph Mo., I am writing in regard to the Anti Trust Suit against Heartland Health Systems in St. Joseph. In the 18 years that I have been at this facility we have more vacancies as this time than we have ever had. We feel it is still the monopolization of Heartland. If we send a patient to the hospital they are treated in the acute hospital, transferred to extended care for rehab, until their Medicare days are used. Sometimes they are then transferred to the Medicaid unit. The nursing homes in St. Joseph all have rehab available and there really isn't any reason for patients to remain in the Hospital for the length of time they are kept. I believe it is abusing Medicare and Medicaid as well as private insurance. This did not happen in the past, only under the present management. They have bought the Drs. groups, this has caused a trickle down effect in our city. It has affected everyone in the Health Care Industry. Heartland now has a 210 bed nursing facility, when there are many vacancies in the nursing homes in this area. If you use the Doctors they have bought, you use Heartlands Pharmacy, Laboratory, exray, and supplies. This has even gone so far as to hurt office supply businesses, as the Doctors in the past have bought their office supplies from the local businesses, now they buy through Heartland. As far as Nursing Homes go, we all have vacancies and can't see there was a need for 210 beds at Heartland. I understand they will be adding an Alzhiemers Unit. There is a total of 500 beds available, when these are utilized, how many vacancies will we have and how many homes will be forced to close. We were of the opinion it was against the law to have a monopoly. Heartland definitely has a monopoly in St. Joseph. We have written the Justice Department in the past, as of this date we can see no difference in Heartlands attempts to monopolize the Health Care providers in Buchanan County and Northwest Mo. Finally the summary I read does not rectify the monopoly Heartland already has. Doctors, laboratories, pharmacies, long term care, suppliers, and home health. We remain optimistic that the anti-trust department can help the providers in and around our area. Sincerely, Dee Frye, P.O. Box 1308, St. Joseph, MO 64502. I am writing in reference to a newspaper article concerning Heartland Health System of St. Joseph, MO. I have had quite a few bad dealings with the doctors in St. Joseph and Heartland Health System and Physician's acute care services--which are affiliated with Heartland. Our insurance provider is Health Net, which my husband carries through his employer. I have seen numerous instances of poor patient care, medical negligence, mis-diagnosis and probable medical malpractice. Over- billing of patient accounts and trying to get more money out of the patient, than the insurance says we have to pay. Another area you may want to check into is the med-clinic which is a doctor-owned clinic in St. Joseph. Patients who have went to the clinic for a problem are given inaccurate lab results and inaccurate diagnosis and told to come back to be rechecked again, and when these patients go to their regular doctor there is nothing wrong with them. I live 25 miles north of St. Joseph, and my family drives 70+ miles to use a hospital in Kansas City. The care is so bad at Heartland, I wouldn't take a dog there. I hope we never have a life threatening emergency--they probably wouldn't make it to Kansas City, but they would be better off, than going to Heartland. Sincerely, Alona S. Miller, 20421 County Road 223, Union Star, MO 64494. October 3, 1995. Professions and Intellectual Property Section, Health Care, Task Force, Anti Trust Division, U.S. Department of Justice, 600 E Street N.W., Room 9300, Washington, D.C. 20530 Attention: Gail Kursh, Chief Dear Ms. Kursh: Recently in the St. Joseph Newspress the article on HEARTLAND HOSPITAL, St. Joseph, Missouri pertaining to the anti- trust suit that is pending against them. You might find it very interesting to the treatment that a local doctor * * * Dr. Charles Willman received from them. He filed law suits again the hospital and some doctors but was unable to get by the Judge Bartlett in Kansas City and also unable to be heard in Jefferson City, Missouri. Dr. Willman was a very fine surgeon and was my person doctor. They refused him practice at the hospital and you might find it very helpful if you investigated this case. Dr. Willman gave up his practice and now lives in Springfield, Missouri due to financial reasons. [[Page 29809]] Sincerely yours, Joy Schiesl, Five Lindenwood Lane, St. Joseph, Missouri 64505. Bender's Total Home Health Care 3829 Frederick Avenue, St. Joseph, Missouri 64506, 816/279-1668, 800/ 633-9781, Fax 816/279-6425 Gail Kursch, Dept. of Justice, Antitrust Division, 600 E Street NW, Room 9300, Washington, DC 20530 This is to make you aware of a grave concern we and others (providers and patients) have regarding the new Referral Policy of Heartland Health Systems. That policy, as stated in the proposed Final Judgment against Heartland Health Systems, HealthChoice of Northwest Missouri and St. Joseph Physicians Inc. by the U.S. Justice Dept., has clearly been developed to serve the best interests of Heartland and its subsidiaries, and certainly not the best interests of patients. Not only are patients unlikely to be given an equal, unbiased choice of providers, the new policy guarantees that patients will not be given unbiased information or assistance with which to make necessary decisions. There are several reputable providers of home health care, hospice, home medical equipment, oxygen and outpatient rehabilitation services serving St. Joseph and the surrounding area. In an effort to achieve total vertical integration, Heartland has created subsidiaries to fill each of these ancillary services. In doing so, Heartland has become a direct competitor with each of the independent providers for whom Heartland is the primary referral source. To further control referrals, Heartland also now ``owns'' an HMO, an managed care agency and several physicians' practices. While being ripe for abuse, this situation is not of itself necessarily harmful to independent providers nor to patients. Actually, we contend that fair competition encourages providers to improve the service they render and to hold down costs, which ultimately benefits consumers. However, the procedures which Heartland's discharge planners have been ordered to follow are harmful to the ultimate consumer good by preventing fair competition. The previous referral policy was that every patient for whom ancillary services were ordered would be made aware of all area providers of the required service(s) in an unbiased way. Should a patient have questions about any of these, the discharge planner, working on the patient's behalf, would seek accurate information. This policy, if followed, would foster fair competition; would encourage providers to compete based on merit, not artificial barriers or deal-making; and most importantly, would benefit patients. The new policy states that if a patient does not express a preference of provider, the discharge planner shall make a sales pitch for Heartland's own service. If the patient does not accept Heartland's Ancillary Service or asks what other providers are available, they shall be told to look in the telephone book. Only if the patient asks again for information on other providers are the referring personnel to verbally (not in writing) identify the independent providers that can serve the patient's needs. At no time is the discharge planner to act on the patient's behalf by providing impartial information that would facilitate the patient choosing one of Heartland's competitors. Obviously, this new policy blatantly prevents free, informed patient choice by denying equal access to information. Discharge planners who should be impartial patient advocates are turned into agents for heartland's ancillary services. No other provider is allowed to put literature into the hands of patients. No other provider is allowed access to patient charts. No other provider's capabilities can even be outlined to patients and families who could benefit from their service. We do not expect each independent provider to be allowed to walk the halls ``fishing'' for patients or to give an aggressive sales pitch to every patient that is admitted. What is expected is fairness. Equal access to accurate information by patients and impartial efforts by those who are supposed to be assigned (and allowed) to serve the best interests of the patient--not those of Heartland. Heartland's Ancillary Services should be treated no better or worse than any other provider, but should compete for the opportunity to serve the needs of the patient based upon merit. Give the patients equal, unbiased information and impartial assistance and let them choose. We have no complaint against hospital personnel, in fact most with whom we have had dealings over recent years (as patients and as a provider of products/services) have been extremely efficient and helpful. Our concern is with the new policy which, not only threatens the viability of independent businesses, but betrays the trust of unsuspecting patients who assume that their interests are being handled by impartial sources. Mark L. Wyble, Coordinator, Patient & Community Relations. October 9, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section, Health Care Task Force, Anti-trust Division, U.S. Department of Justice, 600 E Street, N.W., Room 9300, Washington, D.C 20530 Dear Gail Kursh: I recently saw an article in the St. Joseph newspaper indicating that the Justice Department was accepting written comments on the proposed consent decree concerning Heartland, Health Choice and St. Joseph Physicians, Inc. What I cannot understand is how Heartland Health Systems, the parent of all these organizations, and supposedly a non-profit organization, can contribute over three million dollars to the purchase and development of land for an industrial park in St. Joseph. If Heartland Health Systems has that much extra money to throw around then whatever they are doing must be a real serious violation of the anti-trust laws and should require more serious penalties than the slap on the wrist they are receiving in the consent decree. A concerned citizen of St. Joseph, Missouri Coalition for Quality Healthcare October 10, 1995. To all who have been affected by Heartland's business practices, both providers and patients: We are a group of business professionals and citizens concerned about the fairness in the healthcare market in St. Joseph. We Want Our Voice To Be Heard The Justice Department recently filed in district court a ``Final Judgment'', which, according to the competitive impact statement filed with it ``* * * will restore the benefits of free and open competition in St. Joseph and will provide consumers with a broader selection of competitive health care plans.'' The Coalition for Quality Healthcare, and other concerned citizens, want you to become familiar with the ``proposed Final Judgment.'' The United States District Court for the Western District of Missouri has filed this civil action suit against Heartland Health Systems, Health Choice of Northwest Missouri, Inc., and Physicians, Inc., on September 13, 1995. After 60 days, (November 13, 1995) this Final Judgment will be entered into court. Once finalized, no changes will be allowed into the decree for a 5- year period. We believe that the proposed final judgment should be modified and clarified before it has been filed and entered by the court. Appropriate steps are needed to ensure equal access and to foster patient care. In order to ensure equal access to available services provided by many sources other than Heartland, as well as adequate patient choice in obtaining those services, we believe that certain restrictions need to apply to Heartland Health Systems. These restrictions would serve to foster and support cost reduction through total market competition, and should include the following: Strengthen limitations on the hospital's ability to refer its patients to its own hospital-based components. Require the hospital to use a rotation system, which assures equitable referrals to all providers in the area. A legislated rotation system would guarantee that hospital staff could not unfairly influence hospitalized patients in the selection of necessary providers and would provide a means of accountability. Require the hospital to permit (on their premises, during normal working hours) representatives of freestanding providers--other than their own hospital-based components--to visit their patients who have been admitted for hospitalization; and to expose the patient population to the availability of outside services as well. In order to ensure compliance with the above, make the hospital post, for public examination, their daily referrals to both their hospital-based component and to other providers in the community. Situation It is time we made the hospital accountable for their actions! They say they have a [[Page 29810]] referral policy, and they follow it * * * let's make them abide by it. Hospitals who exceed 30% of referrals to their own components, should be subject to a fine. Recommendation We recommend that violators be fined $50,000 per day. What We Would Like To See First and foremost, we would like to see the patients offered informed consent and the right to choose. We feel that all people need to be educated on this fact. As a provider, your business may be adversely affected by Heartland's use of its monopoly power. As a patient at Heartland, you may have been ``coerced'' into using a Heartland based component, disregarding ``Your Right to Choose''. Please join us for an informative meeting: Who: The Coalition for Quality Healthcare When: Tuesday, October 17 &/or Thursday, October 19 Where: Stan's Golden Grill Time: 6:30 It is only necessary to attend one of these meetings. We wanted to create an option in an effort to accommodate everyone's busy schedule. We will make every attempt to contain these meetings to approximately 1\1/2\ hours. RSVP your attendance today to: 279-5393. Our goal is to submit to the United States District Court for the Western District of Missouri our recommendations to amend the ``Final Judgment''. We as a group of professional healthcare providers and concerned citizens, must take this stand now, or abide by the decree that will be enforced as of November 13, 1995. Together, we CAN make a difference. Questions? Call 279-5393. Sincerely, The Coalition for Quality Healthcare Citadel Health Care 5026 Faraon Street, St. Joseph, MO 64506, (816) 279-1591, Fax (816) 232-3775 October 3, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section, Health Care Task Force, Department of Justice, Antitrust Division, 600 E Street, Room 9300, Washington, D.C. 20530 Dear Ms. Kursh: We are a small 100-bed skilled nursing home sitting in the shadows of Heartland Hospital of St. Joseph, Missouri. By doing a good job in all respects, we have been able to survive. But being a neighbor to an octopus, when the octopus is trying to eat you every day, is no fun. The ``Final Judgement'' filed with the district court falls far short of creating a level playing field. Heartland conducted an elaborate building campaign and vastly expanded it's new ``campus'', then had it's older facility left mostly vacant. Being good business persons, they chose to convert that hospital structure into a skilled nursing home, directly affecting 400 other long term care beds operated by private entities. Heartland's intrusion into the market added a 50% increase in nursing home beds in a state where a certificate of need is/was required, except that they used political influence to circumvent the certificate of need laws to be our monster competitor. Does Heartland refer persons to our nursing home? Fat chance! They raid our census every time we have someone that becomes ill enough to need hospital or rehabilitation treatments. If those residents leave us, and they either have Medicare available coverage, or have private insurance, or are lucky enough to be financially secure, they never come back to us. They or their families are ``sold the Heartland philosophy'' (that Heartland can do more than any other nursing home, and do it so much better that nobody should ever leave Heartland's sphere of care). We have four such cases just in the month of September 1995, and know that those people will not be back until they are indigent, at which time Heartland will dump them like the next load of garbage, back to a nursing home. Or if the person makes significant recovery, Heartland refers everyone possible to it's wholly owned ``Heartland Home Health Care'', which looks like it is just about to force all three other home-care businesses out of business. This seems grossly unfair, considering that again Heartland is the ``new kid on the block''. The other home care agencies were in business long before Heartland entered that market. Is it coincidence that Heartland is thriving and all other health care businesses in the area are struggling for survival? Not hardly. Heartland has already bought approximately 80% of all the available physician services in the area. And if the doctor wants to keep his job (not his practice--just his job), he will do as Heartland directs. In the long term care industry, survival depends upon a facility's relationship between local physicians and the hospital. Where does that leave every long term care provider in St. Joseph? Answer: 1) Competing for patients with the hospital; 2) Depending upon referrals by doctors that are employees of Heartland, operating medical practices that are owned by Heartland. If a potential nursing home admission is first seen at the hospital, if there is room in Heartland's facility and there is a way to induce the family to stay there, that is what happens. If the potential admission is seen in one of Heartland's medical practices (and they own approx. 80% of all the providers in the area), the Heartland provider is certainly referring potential clients to Heartland's nursing center. If when the managed care capitation occurs, Heartland will now be in a position to absolutely bankrupt all the other nursing facilities in the area because they have a large, former hospital to expand into. They can bid services below their competitor's cost of staying in business because of their competitive advantage * * * an advantage based upon monopolistic principles of eliminating competition. It is relevant to note that Heartland's per diem rate is approximately 25% higher than other competitive nursing homes here, they are 95% filled with private paying residents, and the composite private pay census of all other homes in this area is approximately 25%. Heartland has staff persons whose responsibility is to recruit from the hospital to fill their nursing home with private paying persons. Nobody else in this area has access to walk the halls of the hospitals to recruit persons in need, and have the ``closed market'' already captured. We know that Heartland has spent huge sums of money defending its right to acquire and operate all of the health care industry in a large area of northwest Missouri. Unless something is done in the near term future, they will squeeze their smaller counterparts like a huge python kills its prey. And when there is no life left, Heartland will swallow the remains. When the competition is gone, so will be all ability to make independent health care choices, and so will go the availability of services to the masses. Heartland is flourishing because it already has captured the private pay market that can and does pay market rates. The rest of us must accept public assistance patients, or not accept any at all. Heartland gets all the private pay clientele, not because they necessarily provide better product, but because it's hospital has first access to those folks. If they were not sold a ``bill of goods'', why else would someone opt to pay 25% premium for services in a hospital-converted nursing home when they could have a much homier accommodation in some of this city's nursing facilities? Unfair competitive advantage! Please do not turn your backs on the providers that took care of this community before Heartland became a megopoly. Those providers all survived and provided good service until the hospital pushed them aside. Given any kind of equal opportunity access patients, those facilities can still compete. It is the lack of access, due to Heartland's vertical integration, that threatens the livelihood of the other health care businesses in this area. Thanking you in advance for any assistance you may provide, I remain. Sincerely, Lowel Fox, Administrator. October 11, 1995. Ms. Gail Kirch Health Care Task Force, U.S. Dept. of Justice, 600 E St., NW., Room 9300, Washington, DC 20530 Dear Ms. Kirch: Regarding Heartland Health System and St. Joseph Physicians Inc. in St. Joseph, MO. I prefer to go the a doctor of my choice and a hospital of my choice. I have gone out of St. Joseph for years and hope to continue to do so. Heartland Health, under Lowell Kruse, has been attempting to ``keep everyone in the area'' for years. There needs to be a full scale investigation. Sincerely, Evelyn W. Nask, 2720 Francis, St. Joseph, MO 64501. October 8, 1995. Dear Ms. Kursch, Chief, Professions & Intellectual Health Care Task Force: I wish to comment on your proposed consent decree concerning Heartland, Health Choice and St. Joseph Physicians Inc. in St. Joseph. [[Page 29811]] It is not my desire to have my choice of doctor(s) and hospital eliminated. If I choose to go outside Heartland Health System for medical treatment I want that to be a viable option for me. It appears Mr. Lowell Kruse and Heartland Health System are attempting to create a monopoly in N.W. Missouri, thereby running competitors out of business. There needs to be a large scale investigation (without warning) of this entire system. I also think the doctor should be in charge of the patient, not the administrator on the insurance company. Sincerely, Ruth Serrells, 2730 Felix St., St. Joseph, MO 64501. cc: State of Missouri, Attorney General's Office, Attn: Mr. Gary Kraus, Superior Court, Box 899, Jefferson City, MO 65102 November 4, 1995. Gail Kursh, Chief, Professions and Intellectual Property Section Health Care Task Force, Department of Justice, Antitrust Division, 600 E Street NW., Rm. 9300, Washington, DC 20530 Dear Ms. Kursh: This is an explanation of how I feel Heartland's policy and competition has affected my business over the last few years and how it will affect me in the future if strict guidelines are not put into place. Heartland is competing with me directly for my nursing home patients and for my regular customers as though they were a standard business competing for profits. Competition is good and will always be the best system to keep all of the business community on the leading edge of giving the patients the best quality care they can possibly receive. As a ``for profit'' business, I must pay taxes and incur expenses in the day-to-day activities that control how I do business. Heartland, on the other hand, is competing directly for my patients and other laboratory, home health, and hospice care, etc. that they want to control, on a non-profit basis * * * How is that possible? Their desires and efforts are towards controlling all aspects of healthcare in the entire Northwest Missouri area. My business has decreased two-fold in the nursing home area. One is in direct competition for my customers in the homes and secondly through Heartland's in-house referral policy. When a patient is admitted into Heartland Hospital from a nursing home, they are ``captured'' into Heartland's system. When these patients are discharged, they are, on many occasions, discharged into Heartland's skilled or intermediate care facility and are then serviced by Heartland's own pharmacy. As you research past history you will see Heartland has already been in trouble for not giving their patients a real choice in their Heartland Centre facility. As a matter of fact, Heartland used to make their long-term care center patients sign a statement that they would only get their pharmaceuticals through the Heartland pharmacy. It has only been recently, (within the last two or three years) that Heartland was forced by Medicare to allow other pharmacies into their nursing home setting. At that time, Heartland officials sent a letter to their patients which lead the patient and families to believe that if they didn't use Heartland's own pharmacy, Heartland could not guarantee the quality of service they would receive. This is a very scary thought to these elderly patients and their families. It is also a statement that could not be further from the truth. Given this ``threat'', does the patient really have a choice in pharmacy? My total prescription volume, down by 20% in the last two years, is partially due to Heartland's policy to discount their prescription ``copay'' to all their employees for the purpose of increasing the volume of their new pharmacy. Even if we could afford to do this (reimbursement for our services by the Heartland HMO does not leave room for any more discounts) our contract with the claims processor makes discounts an unfair business practice. It should also be noted that Heartland, because of their position as a hospital and now an HMO, receive deep discounts on prescription drugs. Sometimes Heartland may pay as much as 80% less for the same pharmaceuticals that I buy at wholesale prices. This constitutes another aspect of unfair competition. There is no way I can cut my prices to adequately compete when I have to pay so much more for the same items. Several years ago Heartland had another pharmacy which tried to compete with existing pharmacies and could not make it on standard competition. Needless to say, Heartland has found this ``unfair'' competition much more lucrative. Jake's also does not receive any referrals of patients as they leave the hospital and have needs for walkers, canes, crutches, wheelchairs, commodes and numerous other healthcare necessities for recuperation at home. This is an area I know all to well. I used to own a business that worked exclusively in home care supplies and fell to Heartland's unfair and unprofessional business practices. After building a quality business, having a past, non-exclusive, service contract with Heartland, and a letter of intent for continuation of this contract along with increased equipment needs forcing a large expenditure on my part, Heartland began doing business with another company without notice. This forced me into a sale situation which was less than desirable. My major concern is for the patient's overall healthcare. Competition is what keeps hospitals, pharmacies, hospices, and other healthcare services accountable to the general public and each individual consumer. Competition encourages business to be the best that it can be. St. Joseph has only one hospital. The public is not able to compare Heartland's services to another hospital and choose the one which best provides for their specific needs. The new Heartland HMO seals the fate of true competition, not allowing for any choice what-so-ever in hospital services. If competition is further impeded, if Heartland is allowed to go forward with their plans without strict checks and balances, who benefits except the pocketbook of Heartland? If these other services, represented by many companies, are allowed to fall by the wayside, who will be able to hold Heartland accountable? What guarantees will be in place that will make sure the patient's welfare and comfort are the driving force of healthcare decisions? I am deeply concerned that without the variety of businesses now involved in the many areas of healthcare in the St. Joseph community, Heartland will have a ``captive audience''. It will not make decisions based on what is best for the patient, but will judge a patient's healthcare treatment by money saved * * * by profit generated. You have the power to ensure that fair competition exists in the St. Joseph community. It is within your power to ensure that Heartland's domain is not allowed to continue to snowball and over- run its competitors. Unfortunately, if nothing is done to strictly control Heartland, by the time it is realized that lack of competition breeds apathy and poor service, the competitors will be gone. In closing, I want to thank you for the opportunity to speak to these issues. I hope you are able to see the crisis faced by myself and my colleagues. If I can be of further assistance, please feel free to contact me at the address and phone number listed below. Sincerely, Richard C. Bosworth, Coalition of Quality Health Care, 2318 N Belt Hwy., St. Joseph, MO 64506. Armstrong, Teasdale, Schlafly & Davis Attorneys and Counselors 1700 City Center Square, 1100 Main Street, Kansas City, Missouri 64105, (816) 221-3420, Fax (816) 221-0786 November 13, 1995. Edward D. Eliasberg, Jr., Antitrust Division, U.S. Dept. of Justice, 600 E. Street, N.W., Room 9420, BICN Bldg., Washington, D.C. 20530 Re: U.S. v. Health Choice of Northwest Missouri, et al., Civil Action No. 95-6171-CV-SJ-6, Pending in U.S. District Court, Western District of Missouri Dear Mr. Eliasberg: This office represents The Coalition for Quality Healthcare, a Missouri non-profit corporation made up of businesses in the St. Joseph and northwest Missouri area who provide ancillary healthcare services to the public. In connection with our representation, we are preparing to respond to the proposed Final Judgment in the above matter. We obtained a copy of the proposed Final Judgment (consent decree), Stipulation, Complaint and Competitive Impact Statement from the district court. We were informed by the district court that no ``determinative'' materials or documents called for by Sec. 16(d) of the Tunney Act were filed with the court. We also called your Department to request those documents or materials and were told that none exist in this case. Section VII of the filed Competitive Impact Statement recites that ``No materials and documents of the type described in Section 2(b) of the APPA, 15 U.S.C. Sec. 16(b), were considered in formulating the proposed Final Judgment.'' In light of the fact that this suit [[Page 29812]] resulted from a multi-year investigation by your Department, during which administrative depositions were taken and documents produced by defendants, it seems improbable under the circumstances that no documents exist which your office considered determinative in drafting the proposed consent decree. This very issue was taken up by the district court in United States v. Central Contracting Co., Inc., 537 F.Supp. 571 (1982). In Central Contracting, in response to a request for materials called for by the Tunney Act, the Department of Justice asserted that ``there were simply no documents or materials * * * that contributed materially to the formulation of the proposed relief.'' Id. at 573. The Court found the government's assertion disingenuous in light of the government's similar claims in 172 out of 188 prior cases that it considered neither documents nor any materials determinative. Id. at 577. The Court refused to blandly (and blindly) accept the government's certification that no documents or materials led to the government's determination that it should enter into a consent decree. Id. at 575. Rather, the Tunney Act required a ``good faith review of all pertinent documents and materials and a disclosure'' of those materials called for by the Act. Id. at 577. We hereby request on behalf of The Coalition for Quality Healthcare that the United States produce to this office and file with the U.S. District Court for the Western District of Missouri a list of any materials and documents which the United States considered ``determinative'' in formulating the proposed Final Judgment, so that we or any members of the public may request copies of specific documents from your Department. I look forward to your prompt response to this request. Very truly yours, Thomas M. Bradshaw, P.C. TMB:kag cc: Ms. Kristin Helsel, President, Coalition for Quality Healthcare Glenn Davis, Esq. Heritage Home Health Central Office: 169 Daniel Webster Hwy., Suite 7, Meredith, NH 03253, 603-279-4700, Fax 279-1370 Branch Office: 500 Commercial St., Unit 302B, Manchester, NH 03101, 603-669-5700, Fax 669-5755 November 14, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section/Health Care Task Force, Department of Justice, Antitrust Division, 600 E Street, NW, Room 9300, Washington, DC 20530 Re: DOJ's recommended home health, DME and hospice referral policy for Heartland Hospital Dear Chief Kursh: I read with interest an article that appeared in . . . home health line, November 13, 1995, Vol. XX, No. 43, that referenced the above mentioned policy. Please take a moment to consider the following: (1) The main source of referrals for home health services come from hospitals. The vast majority of consumers of home health services are patients discharged from hospitals in need of follow-up care. (2) Free standing home health agencies can not reasonably duplicate such a facility (hospital). (3) Free standing Medicare certified home health agencies are inspected according to the same federal regulations as hospital based home health agencies. There are no requirements or need for further ``independent review or evaluation'' by the hospital. (4) Vertical integration and monopolizing of referrals can and will not serve long term cost containment. (5) Medicare beneficiaries should be offered a list of all participating Medicare providers when they are in need of services. (6) Hospitals should have discharge planners that are not affiliated with any home health agency, including the hospital based home health agency. Referrals could then be made to the best provider for the given circumstances. Often times, even though the hospital based agency can not properly service a patient, the referral is given to them, only to have the patient left without service entirely or on their own to locate another provider. Hospitals are reimbursed for offering discharge planing to their patients to locate the best possible scenario of services for that patient and to ensure that persons' discharge is a safe and successful one. In the current environment, however, discharge planners are fast becoming ``casefinders'' for Hospital based home health agencies. (7) Hospital discharge planners often refer patients to other types of Ancillary services, that they are not affiliated with, when the hospital does not own facilities or agencies offering that type of service without doing an independent review or evaluation. For example, a referral to a skilled nursing, sub acute of rehabilitation facility. (8) Hospitals are no longer the community providers they once were. They take the homes of people who owe them money. They employ attorneys, accountants, MBA's, image consultants and more. They advertise. Health care is a business. Hospitals are profiting from that business. They should not be allowed to continue unchecked. Thank you for your consideration. Sincerely, Carolyn A. Virtue, Administrator. MS&R--Medical Sales & Rentals 1411 Memorial, Bryan, Texas 77802, (409) 776-5555 November 14, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section/Health Care Task Force, Department of Justice, Antitrust Division, 600 E. Street, N.W. Room 9300, Washington, DC 20530 Re: United States v. Health Choice of Northwest Missouri, Inc., et al., Case No. 95-6171-CV-SJ-6 The Coalition for Quality Healthcare is correct. Heartland Hospital is taking away a person's freedom of choice. Allowing the hospital to eliminate competition will eventually lead to poor service and poor quality of care. The independent businessman is the backbone of this country and that will be eliminated if the hospital is allowed to keep referring their patients to themselves. Your recommended referral policy for Heartland Hospital is not correct. It is ``big business'' orientated and does not consider the patient or the independent businessman. A local hospital opened their own DME company last year. Since that time two independent companies have had to change their day to day business strategies because they no longer get referrals from the area's major hospital. We are fighting to stay in business. Please call me at 409-776-5555 if you would like more opinions or viewpoints. Sincerely, Nathan L. Cook, Owner/President. HealthCare Personnel Moorings Professional Building, Suite 407, 2335 Tamiami Trail No., Naples, FL 33940, (941) 261-8700 FAX (941) 261-7206 November 15, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section, Health Care Task Force, Department of Justice, AntiTrust Division, 600 E St., N.W. Room 9300, Washington, D.C. 20530 Re: United States v. Health Choice of Northwest Missouri, Inc., et. al. Case No. 95-6171-CV-SJ-6 Dear Ms. Kursh: The proposed final judgment for U.S. v. Health Choice is a death knell for quality care in the home health care setting. Competition supports and promotes a high quality of care, evidenced by clinical outcomes, cost-effective clinical guidelines, patient satisfaction and appropriate utilization of community resources. Your proposed judgment creates a monopoly for hospital- based home health care agencies and the end of competition in home health care. Hospitals have a ``captured audience'' of vulnerable patients who feel dependent upon the hospital staff. Patients are not likely to defy a discharge planner's referral to the hospital home health agency for fear that their defiance would create an environment where the patient's continuing needs (in-patient needs and paperwork for reimbursement needs) may not be met or may be delayed. Additionally, hospitals exert their influence over physicians (with hospital privileges) to refer only to the hospital-based agency in order to support the hospital. Some hospitals have even moved their home health agency from being a separate entity to a hospital department, so that self-referrals are not subject to GAO investigations instituted by Rep. Pete Stark (D-Calif.). A second reason may be to shift administrative costs. I have been in home health agency administration for twenty years. In the past two years I have seen hospitals discontinue [[Page 29813]] a referral rotation system, discontinue hospital access to patients by agencies who serve them, refer only to their own agency, call physicians to ask why a hospital patient was referred to an outside agency, and hide all referral data and percentage of referrals to hospital based or outside agencies. All these practices reinforce a hospital-based home health care monopoly. Hospital arguments for promoting their own agency at the exclusion of outside agencies include continuum of care, referrals to other agencies would require hospital credentialing of outside agencies, and hospitals always give the patient a choice. It is easy to refute these claims. The traditional continuum of care has always been from organization to organization, be it a hospital or other community resource agency, with patient information transferred between professionals who are trained to focus on continuity and coordination of care. Just because a home health agency has the same name or is affiliated with a hospital does not, in itself, assure quality, continuity or coordination of care. Continuum of care actually is a reimbursement train for the hospital, in the absence of their desired hospital-based reimbursement bundling. The responsibility of a discharge planner includes knowledge and judgment regarding all home health care community resources that would benefit the patient. Traditionally, in cities as large as Cleveland, Ohio and as small as Naples, Florida, discharge planners have always known resources available, and have received feedback regarding the quality of care from those agencies. Besides, state home health agency licensure laws establish standards that agencies must meet, so hospitals should know that standards are met and don't need to ``credential'' them. Finally, hospitals ALWAYS state they give the patient a choice, yet many outside agency patients have told outside agencies that during their hospitalization, hospital representatives have almost insisted they use the hospital-based agency and demand to know why the patient would NOT want to use an affiliated agency. Also, physicians who refer to outside agencies tell outside agencies that as soon as the patient is admitted, before the physician even discusses discharge with the patient (to advise them of the physician's choice of agency), the hospital-based agency has already been in to talk with the patient and already has them signed up as a referral for their agency. The physician does not even have a choice. Thank you for the opportunity to send you my comments on your proposed final judgment for the above mentioned case. Please don't be persuaded by big hospital corporations and hospital lobbyists to pass a judgment that abolishes competition in home health care and effectively gives patients no choice and no recourse when a complete monopoly occurs. Sincerely, Greg Eggland, Director. Health Personnel Incorporated 1110 Chartiers Avenue, McKees Rocks, PA 15136-3642, (412) 331-1042, FAX: (412) 331-2774 November 16, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section/Health Care Task Force, Department of Justice, Antitrust Division, 600 E. St., N.W., Room 9300, Washington, D.C. 20530 Dear Chief Kursh: After reading the article that appeared in the 11/13/95 edition of Home Health Line I feel it is necessary as a free standing home health care agency to comment on the Department of Justice's proposed referral policy for Heartland Hospital. This policy will be precedent setting for all hospitals across the nation and fails to take into consideration a number of things such as: The main source of home health referrals is hospitals and hospitals have a captive referral source which cannot be duplicated in any other way. Yet, they are a very expensive source of home health care and often provide a poorer quality of care. Hospitals pass through some of their administrative and general costs to their home health agencies and get away with this ``double dipping''. The cost of a visit is increased by passing through costs of the hospital and this does not help cost containment efforts. Also, at least in this area of the country, hospitals do not individualize their care. They discharge patients from homecare before they stabilize which sends them back to the hospital and increases health care cost. One way to stop this is to enforce regulations: Freestanding agencies must meet the same certification and/or licensure standards as hospital agencies. Therefore, hospitals should have a rotating list which assures equitable referrals to all qualified providers (one that meet Medicare certification (licensure) standards and have the necessary services). The hospital should have to make their percentage of referrals public knowledge to each agency. The discharge planner should offer a list of all participating Medicare providers in the service area and the discharge planner should have no affiliation with any agency. By the way, hospitals often cannot service the patient adequately and so the patient is left without care, i.e. a physical therapist is not available to see the patient in a timely manner (four weeks later a physical therapist is starting to see the patient). No home health aide is available so the hospital agency tells the patient that they do not qualify for a home health aide. (For example, the patient has a fractured arm and myocardial infarction but, does not qualify for an aide?) Although, your policy puts the physician back in control, it fails to take into consideration the fact that here in Pittsburgh, if doctors refer to another entity outside the hospital, the hospital can revoke their privileges. (This is happening in Pittsburgh.) You need to write the settlement so that hospitals cannot retaliate or put pressure on the doctor to refer to their agency. Referring the patient to the phone book is inappropriate as the patient cannot tell which providers can give the kind of care they need or who is Medicare certified. Also, the list of other providers needs to be written as sick or well people, cannot remember many, if any, names and they need the phone numbers. This issue covers more than the antitrust issue you seem to be addressing. The settlement fails to address the Anti-kickback Law which prohibits hospital doctors (doctors paid by the hospital) from referring to a hospital owned agency and the Stark II Law. According to these laws, no agency can receive referrals from any physician who has been paid more than $24,999.00 by that agency. If a hospital or doctor owns more than a 5% financial interest in an agency, they cannot self refer. Health Personnel, Inc. has tried to address these issues with HCFA since 1986 and no one has been able to resolve these problems. In addition, the American Federation of Home Health Agencies has had discussions with Mr. Thomas Hoyer at HCFA in Baltimore regarding the patient choice issue. I hope you will resolve these problems and legal questions. Sincerely, Phyllis W. Fredland, Director of Nursing. Home Health Specialists November 16, 1995. Gail Kursh, Chief, Professions & Intellectual Property Section, Health Care Task Force, Dept. of Justice, Antitrust Div., Washington, D.C. 20530 Dear Ms. Kursh: I have recently read the D.O.J., proposed referral policy for home health, DME and hospice for Heartland Hospital. I personally find this totally absurb. If this proposal passes it not only will affect the freestanding home health industry, but will also affect a patient's right to choose, even though the bill offers some small reference to freedom of choice. The government reports that Medicare will be broke by the year 2007, and then a bill such as this is recommended for hospital based agencies. Evidently there has been no investigation of the cost of hospital based agencies versus freestanding agencies for patient care and supply reimbursement. To allow a hospital to elaborate on their agency and state that they know nothing of the other agencies in town is absurb, when we all know that being a discharge planner, they have had some dealings with the other agencies in their area. Freestanding agencies have received a bad deal, since the beginning of hospital agencies when it comes to referrals and this will only make it worse. We provide the same quality and conservative care that they state they provide and at a lower cost. As it stands right now in our area, we are not allowed to place brochures in our hospital, visit our former patients, because that is considered solicitation by the hospital, and we are not allowed to view the admittance and discharge rooster. This only [[Page 29814]] started when they opened there own agency. A rotation of referrals would give everyone a fair chance to provide the care for the patients that we should all strive for. This would stop the hospitals attempting to monopolize the health care industry and could possibly reduce the legal and judicial fees that are being used due to law suits over the monopolizing of care. The posting of referrals would then allow the freestanding agencies to view how referrals are given and provide some insight into the qualifications and professionalism of the discharge planners, who in some instances are placed in the hospitals by competing home health agencies. If the bill is passed as the D.O.J. recommends, you will see slowly the fading away of freestanding home health companies the provide a large number of jobs to people in our area. I hope that the people reviewing this proposed policy really know the impact that this will have on the health care industry and take into consideration that it is hard enough now for freestanding agencies to receive referrals from hospitals, knowing fully well the discharge planners are not playing by the regulations that are in existence now, and this would make it easier to violate regulations, while at the same time allowing an industry of freestanding ag to die away. Please, for all the freestanding agencies that are in existence please review this referral policy closely and make discharge planners to rotate referrals as well as make available to home health agencies the list of the referral list. Sincerely, Donna Isabell, Administrator/President, Home Health Specialists, Inc. November 6, 1995. Dear Gail: My name is Kathy Smith. I read an article in the St. Joe newspaper on Sept. 24, '95 concerning Heartland Health System. This article really hit home with me. This hospital, or so called hospital, has ruined my life. Let me tell you my story. I broke my ankle on April 12th of this year. I was taken to the hospital by some friends. (My husband works the late shift so he met us at the hospital later.) I waited in the emergency room for one hour and 45 minutes. In that time, no one came out to check on me. I finally had my husband go ask a nurse for a blanket. My body was beginning to shake. I imagine shock was starting to set in. Finally I get back to E.R. and am taken on to X-ray and I wait some more for a doctor to come and set my foot. I find out I need surgery. They will do it tomorrow (April 13). I leave E.R., its after 2:00 in the morning. Surgery is done the next afternoon. All went well, or so I am told. I get released on the 14th & I go home. Now, you have to understand, I'm 33 years old, and am married and have two small boys, ages 3 and 5. I'm walking or hoppling around with a walker, can't fix supper, can't do all the chores around the house, that I used too. This hurts, I've never had to depend on other people. But I figured, I'll be up and around in 6 to 8 weeks, just like the doctor had stated. End of story? I wish, it's only the beginning! One week after the 1st surgery in April, I came down with a high fever of 103 degrees, then the chills, and nausea. I called my doctor, he wasn't in. I told the nurse, or the secretary or whoever, and they said they would get a hold of him and have him call me. He did, about 45 minutes later. I told him all the symptoms, and do you know what he said, I must be coming down with a cold or maybe the flu. Take some Tylenol. I went back to the doctor, every week for the next month, then every 2 weeks for awhile. I had a place on my ankle that wasn't healing. He (the doctor) would squeeze on my leg and say that was fat draining out. He even brought in a colleague, and they both agreed that was what it was. (No not once in his office did he wear rubber gloves when he touched my ankle (leg).) Finally after about a month, he decided to put me on antibiotics (actually he gave me a choice, go in the hospital or take antibiotics.) Now, when you have a family that depends on you, what choice if any would you have taken? So I took antibiotics. Even when I [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-13754. Public record. Not legal advice.