Bill May Threaten Spokane’s Joint Hospital Ventures Repealing Health Services Act Will Remove Anti-Trust Protection

Spokane hospital leaders want to band together to keep outsiders from taking away their patients, but the bill wiping out state health reform might stop them.

Rural hospitals and doctors hoping to gain strength and cut costs by joining ranks also may be blocked by new legislation.

“It’ll impact seriously the Eastern Washington area, and Spokane’s major project,” said Rep. Dennis Dellwo, D-Spokane, referring to the hospitals’ joint venture.

The Health Services Act of 1993 gave medical organizations a chance to petition for immunity from anti-trust laws aimed at preventing price-fixing and collusion among competitors.

But the bill dismantling the act - and now awaiting the governor’s signature - doesn’t allow protection from anti-trust laws.

Lawmakers were trying to hash out a compromise Thursday night. One suggestion was to give immunity to organizations that already have asked for it, but stop any more from applying - at least for several months, said Sen. John Moyer, R-Spokane.

Without a compromise, companies that already have combined services could end up in court, fighting for their existence, said George Schneider, a retired Spokane doctor who serves on the Health Services Commission.

“They’re going to be in jeopardy,” said Schneider. “The attorney general would look at it and say, ‘This is anti-competitive.’ Look at the millions of dollars that would go down the tubes.”

Last year, Sacred Heart and Deaconess medical centers combined their emergency helicopter and rehabilitation programs to cut duplication.

No one yet knows what the impact will be on those programs, or on the enormous joint venture now being proposed by the hospitals.

Hospital officials have been extremely secretive about details of the “physician hospital community organization,” which would include many doctors groups as well as Sacred Heart, Deaconess, Holy Family Hospital and Valley Hospital and Medical Center.

The organization would provide health care under contract with insurance companies and collect a fixed amount per patient each month, regardless of the amount of care provided, said Tom White, Deaconess president.

“If a small market like Spokane is not able to consolidate, it runs the risk of losing its volume to other communities,” said White.

Eventually, the hospitals could have a common business office, White said. Community members are being invited to serve on the board.

Insurers, meanwhile, are lobbying against any immunities from antitrust laws, said Moyer.

“They don’t want to deal with a single entity because they would be held captive by that entity with a single rate structure,” he said.

Many medical organizations are hoping the insurers lose the battle.

In Colville, Wash., Mount Carmel Hospital workers are afraid new legislation will ruin any chance of merging their laboratory with one owned by the town’s sole doctors group.

“Especially in rural communities, it can save so much money by joining together,” said Ginger Rhoades, chief financial officer at the 55-bed hospital. Rhoades said the hospital and doctors group also are forming an organization to contract with insurance companies.

A north Spokane company, Northpointe Orthopedics, also has petitioned for immunity from antitrust laws and is awaiting word from the state. The medical group wants to collaborate with other orthopedics groups, possibly combining billing and management.

“Collaboration looks like price fixing, but it’s just the opposite,” said Randall Stamper, the group’s attorney. “It’s to lower costs.”

An antitrust immunity would give the company a better chance when competing for insurance contracts, Stamper said.

Also at risk under proposed legislation is an alliance in Pullman and Moscow, where doctors are networking with Pullman Memorial Hospital and Gritman Memorial Hospital, Stamper said.

The new organization, called Palouse Health Care Network, is talking to three insurance companies about devising a plan in which the network would treat patients for a fixed cost per month.

“If we don’t have antitrust relief on a state basis, it’s going to be very hard to have community-based health care reform,” Stamper said.