Category Archives: Antitrust

Sentara, Cone Health Call Off Merger

From Virginia Business:

“Sentara Healthcare and Greensboro, North Carolina-based Cone Health mutually called off a merger Wednesday, according to a statement by the Norfolk-based health care system.”

The Sentara Healthcare Board of Directors and the Cone Health Board of Trustees came to the mutual agreement to end affiliation plans late last week, according to the announcement.

In Wednesday’s statement, Sentara officials said, “As this work progressed, we realized that each of our communities and key stakeholders require support and commitments from our respective organizations that are better served by remaining independent. The decision was a difficult one, but both organizations remain dedicated to advancing our common goal of providing outstanding care for our respective communities.”

The outcome was right, whatever the reason. It will be interesting to see where Sentara trains its gaze next.

— J.S.

Chesapeake Regional Medical Center Sues Sentara – Again

by James C. Sherlock

A tip of the hat to my friends at Checks and Balances Project for alerting us to a new civil suit filed April 27 against Sentara by Chesapeake Regional Medical Center (CRMC).

I will comment on Sentara’s response to the suit when it is available.

The complaint alleges various instances of tortious interference by Sentara with CRMC’s business and conspiracy to do the same. I recommend you read the complaint as filed. It is quite a story.

Although I am familiar with only part of the evidence in this specific case, that being Sentara’s successful intervention against CRMC’s COPN application for open heart surgery, the other allegations match decades of Sentara business practices.

Continue reading

Hospitals 1, Patients 0

by James C. Sherlock

Since January 1 of this year, after a court battle won in late December 2020 by the Trump Justice Department, the Centers for Medicare/Medicaid Services (CMS) has required hospitals to post median payer-specific negotiated rates.

I figured the fix was in when most hospitals in Virginia still haven’t complied. The Virginia Department of Health’s vhi.org data contractor could have done it for all of them with data it already collects.

Sure enough, on April 27, the Biden administration’s CMS proposed repealing the transparency requirement. The elimination of this rule will be the latest casualty of the political power of the hospitals, especially with Democratic politicians. Continue reading

COPN Drives Richmond’s Tuckahoe Orthopedics to Be Acquired to Survive

Bon Secours’ St. Mary’s Hospital, in the same medical complex as Tuckahoe Orthopaedics.

by James C. Sherlock

This is pretty straightforward.

COPN is driving a physician shortage in Virginia because doctors are not granted the independence to practice the way they want to with the facilities and equipment they need and that in turn is depressing their incomes. Reversing Robin Hood, COPN takes from the physicians and gives to the hospitals.

I offer in this essay a direct example.

Pre-COVID projection physician shortages in Virginia

The Medical Society of Virginia is of the opinion that: 

“Virginia’s COPN has failed to improve access, control costs, and ensure quality. … COPN laws prevent private health care providers from competing with larger providers to bring patients the same service at a lower cost in a more convenient location.”

A story yesterday in the Richmond Times Dispatch announced that Richmond-based Tuckahoe Orthopedics is getting a new owner, Bon Secours. Bon Secours operates five hospitals in the Richmond area.

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New Antitrust Laws Promise Scrutiny of Virginia’s Healthcare Monopolies

by James C. Sherlock

I have written here extensively on the necessity to enforce federal antitrust laws against the anticompetitive activities of some of Virginia’s regional healthcare monopolies. 

I am happy to report federal legislative changes from the past year that will strengthen the enforcement of those laws. 

First, the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA) was reauthorized. It incentivizes corporations to self-report and cooperate pursuant to DOJ’s corporate leniency policy.

Congress also passed the Criminal Antitrust Anti-Retaliation Act that prohibits employers from retaliating against certain individuals who report criminal antitrust violations. DOJ had been waiting for that for a long time.   Continue reading

Medicaid and Medicaid Rate Increases Boost Virginia Hospital Profitability

The Business of Healthcare

by James C. Sherlock

Virginia in 2018 both expanded Medicaid and increased Medicaid reimbursement rates.  

Those changes orchestrated by Virginia hospitals took effect in 2019 and resulted in a major financial windfall to those same hospitals.

I have compared the 2018 and 2019 Hospitals Operating and Total Margins spreadsheets published by the state through its contractor vhi.org. They provide detailed financial performance information for every hospital in Virginia. The 105 hospitals in 2019 included acute care, rural critical access hospitals, children’s, psychiatric, rehabilitation and sub-acute hospitals.

We will see that when the Medicaid changes kicked in in 2019, Virginia’s wealthy urban hospital systems got richer.  

But we will also see that those same changes rescued the rural hospitals from barely breaking even in 2018 and enabled them as a class to book extraordinary profits in 2019.

We will ask at the end of the discussion whether the state-provided outsized profitability of Virginia’s untaxed non-profit hospital systems may warrant a re-examination of their tax exemptions. Continue reading

Certificate of Public Need’s Hall of Mirrors

by James C. Sherlock

Versailles Hall of Mirrors

In Versailles’ Hall of Mirrors, everything is reflected hundreds of times.

The mirrors were also a commercial. They represented an effort of Louis XIV to establish for France monopolies on the production of luxury goods.

Virginia’s Certificate of Public Need (COPN) law and regulations represent a similar structure.

Everything in the process reflects back on itself. Those reflections both reinforce the structure and cement monopolies. Though it represents the intrigue of Versailles, COPN lacks beauty and grace. But, in another similarity, neither Louis nor Virginia’s General Assembly tried to represent the interests of the people in these enterprises.

This essay will help explain how COPN works. It would be shorter if the tentacles of COPN were not so completely enveloping and self-reinforcing. This is in its entirety both legal and a scandal, as with much else in Virginia politics.

Two recent COPN decisions affect my home area of South Hampton Roads. Those cases pointed to the systemic roadblocks to successfully challenging Sentara Healthcare’s dominance here which will never be surmounted while COPN stands as is. Continue reading

Certificate of Public Need – This Seems Promising

by James C. Sherlock

Democrats, the primary bulwarks for the Certificate of Public Need (COPN) law in Virginia, took the opportunity last year to create as part of a major revision to COPN law a new 19-member State Health Services Plan Task Force.  

That group is to advise the Board of Health on the content of the newly renamed State Health Services Plan (ex-State Medical Facilities Plan (SMFP).

I wish the task force luck.  They will need it.

The new task force is apparently a temporary casualty of COVID-19, but it shows how desperate the Democrats (read hospitals) are to revitalize COPN after a 2019 Chesapeake Circuit Court decision and supporting appeals court decision in Chesapeake Hospital Authority d/b/a, etc. v. State Health Commissioner and Sentara Hospitals.  

Both decisions exposed it for what it is — a regional monopoly protection racket that is subjectively applied — and found the administration of the COPN system in Virginia to be incompetent at the same time. Continue reading

Virginia’s Legendary Corruption Blocks Antitrust Enforcement

Great Seal of Virginia

by James C. Sherlock

Readers of this blog have indicated an unquenchable appetite for information about and discussion of Virginia’s Certificate of Public Need (COPN) law and its administration.

This essay informs on the negative impacts of the COPN law and the Virginia Antitrust Act (the Act) itself on the enforcement of antitrust laws against Virginia’s regional hospital monopolies.

First, know that the business activities that some of Virginia’s hospital monopolies exhibit can already be deemed illegal under both federal and state antitrust laws. But the Act gives them a special dispensation, complicates both state and federal antitrust enforcement and results directly in the in-your-face anticompetitive activities we see every day.

The federal government (and once even Bob McDonnell as Virginia Attorney General) occasionally have intervened to block interstate mergers or in-state acquisitions before they occur, but always within the federal administrative and court systems, and they have never challenged COPN decisions.

But no government agency has ever sued over the business activities of Virginia’s COPN-constructed monopolies. Continue reading

Probably a Coincidence – COPN, the Monopolization of Health Care and the Marginalization of the Poor

by James C. Sherlock

The Business of Healthcare in Virginia

I have been asked many times about how freer markets in healthcare can coexist with our need to treat the poor. I will try to briefly cover some of the complexities of the answer to that question.

And I will show that of all of the government healthcare control systems, COPN is the only one that has proven to disproportionally hurt poor and minority populations by its decisions and their effects.  

And it does so by design. Continue reading

COPN Scores a Kill

by James C. Sherlock

More than eleven months ago I wrote an essay titled, “The Legal Corruption of (Virginia’s Certificate of Public Need) COPN.” That system needs overhaul, not adjustment, and the people of Hampton Roads need help.  The Governor needs to lead in both efforts.

Today I offer the third in a series (first two here and here ) of essays providing background and potential future solutions to the closure of Bon Secours DePaul Hospital in Norfolk.

This is the story of the public, state-sponsored execution of DePaul and a simultaneous attempt to create a bleak future for Bon Secours in Hampton Roads.

COPN mortally wounded that hospital in 2008. It lasted until now as Sentara gnawed away at it  Its death was announced this past week. Pending is how Bon Secours will look at its future in Hampton Roads.

Continue reading

DePaul Hospital’s Closing Presents a Unique Opportunity for Hampton Roads

De Paul Medical Center Jan. 29, 2021. Photo Credit: James C. Sherlock

by James C. Sherlock

Not too long ago, before the decline of the malls and COVID, the healthcare community coined what they called the Nordstrom Rule.

The meaning was that if you wished to optimize profits in your healthcare business, build it close to a Nordstrom. The theory was that Nordstrom had already done the market research to identify concentrations of wealthy customers.

I wrote yesterday about the Sisters of Charity and Bon Secours, Catholic charities both. The Sisters were not in it to serve wealthy patients. They purposely located their hospitals among the poor. So 19th and 20th century of them.

Sentara, a more sophisticated public charity, avoids locations close to the poor.

In 1991, Sentara purchased the Humana Bayside Hospital in Virginia Beach, renaming it Sentara Bayside Hospital. That cleansed Virginia Beach of a competitor. But Bayside served Virginia Beach’s largest concentration of economically disadvantaged minorities. So Sentara closed it at the first opportunity.

The Virginia Department of Health brokered the closing of Bayside in 2008 under the cover of the Certificate of Public Need (COPN) process that fatally wounded DePaul, allowing Sentara to relocate the Bayside beds to the new Sentara Princess Anne, far from the minority citizens of Bayside.

The closest hospital for many residents served by Bayside was then, you guessed it, DePaul. No longer. Continue reading

Mark Zuckerberg, Call Your Lawyer

by James C. Sherlock

“You don’t need a Weatherman To know which way the wind blows.” — Bob Dylan, Subterranean Homesick Blues.

Consider this:

“Facebook was hit with twin lawsuits by the Federal Trade Commission and attorneys general from dozens of states on Wednesday, in one of the most serious challenges ever to the Silicon Valley giant. The cases could potentially result in Facebook being broken up.

Here’s what you need to know.

The FTC and the states accuse Facebook of abusing its dominance in the digital marketplace and engaging in anti-competitive behavior.

“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition,” Ian Conner, Director of the FTC’s Bureau of Competition, said in a statement. “Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

And that story was dated Dec. 11, 2020. 

Maybe last week was not the best time for Facebook to kick that hornets’ nest with another potential antitrust violation. Continue reading