Category Archives: Antitrust

Virginia Hospital Profits Soared Far Above National Averages – Again – in 2021

Posted on April 2, 2023 by | 12 comments

The Business of Healthcare

by James C. Sherlock

The predictions for hospital finances in 2021 forecast Armageddon. Then the actual financial data from 5,600 U.S. hospitals in 2021 were assessed.

Based on those data the median operating margin for U.S. hospitals in 2021 was actually a loss of 1.5%. Meanwhile, the average operating margin for hospitals was a loss of 11.7%.

Virginia hospitals blew those numbers away. Crushed them. Again.

As they do every year.

Newly posted state data show that the average 2021 operating margin in Virginia acute care hospitals was a positive 12.5% in 2021.

I don’t know how many standard deviations that is, but it is a lot. We are finally number one in something to do with health care, but the bad news is that the money is paid by Virginians one way or another.

If you lost that badly in a card game, you would think something was amiss.

It is in this case. Continue reading →

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Posted in Antitrust, Business and Economy, Consumer protection, General Assembly, Government Oversight, Health Care, Not-for-profits, Regulation

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Virginia Supreme Court Gives Hope to Competitors of Regional Healthcare Monopolies

Posted on May 19, 2022 by | 5 comments

Reese Jackson, CEO, Chesapeake Regional Medical Center

Is the Virginia Antitrust Act now in play?

by James C. Sherlock

There is good news this morning for those of us hoping for more competition to regional healthcare monopolies in Virginia.

The Virginia Supreme Court (the Court) overturned the decision of the State Health Commissioner to deny the application of the Chesapeake Regional Medical Center (CRMC) to create an open heart surgical service.

Sentara Health, unsurprisingly, objected to the application and was a party to the case before the Court. It also had been a party to the hearing by the Virginia Department of Health (VDH) COPN (Certificate of Public Need) adjudication officer. That official then made a recommendation against CRMC that the health commissioner accepted. The court found his decision to be fatally flawed.

The Court remanded the original decision to the new health commissioner for re-consideration. In doing so, it overturned decisions by the Chesapeake Circuit Court (made by a visiting Norfolk judge who failed to disclose a conflict of interest) and by the appeals court that upheld that original decision.

The court found that the health commissioner made an error of law and that the courts erred in both:

  • deferring to the heath commissioner for interpretation of his agency’s own regulations without rigorous review of those regulations by the courts; and
  • applying the harmless error doctrine to that error of law.  

Continue reading →

5 Comments

Posted in Antitrust, Courts and law, Governance, Health Care

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Fix the Virginia Department of Health

Posted on April 24, 2022 by | 2 comments

Credit: PBS Healthcare Management

by James C. Sherlock

Governor Youngkin and his new administration have an opportunity to fix crucial problems in the Department of Health that have been festering for decades.

The issues:

  • How can Virginia regulate effectively its state-created healthcare monopolies?
  • In a directly related matter, how can we fix the failures, famously demonstrated during COVID, of the Virginia Department of Health (VDH) in its other missions ?

The power of Virginia’s Certificate of Public Need (COPN) to control the business of healthcare in Virginia was the original sin.  Giving that power to the Department of Health made it worse.

From that point VDH was the agent of its own corruption. Never charged by the General Assembly to create regional monopolies in its administration of Virginia’s Certificate of Public Need (COPN) law, VDH did so anyway.

Actions have consequences.

Now those regional healthcare monopolies are each the largest private business in their regions, have achieved political dominance in Richmond, and effectively control VDH. Continue reading →

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Posted in Antitrust, Charity and philanthropy, Consumer protection, Courts and law, Disasters and disaster preparedness, Efficiency in government, General Assembly, Government Oversight, Health Care

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COPN’s Regional Monopolies Helped Boost Virginia Hospitals’ Operating Margins to more than 3x National Median in 2020

Posted on February 6, 2022 by | 23 comments

by James C. Sherlock

Virginians have been assured forever by the hospital lobby that the non-profit regional monopolies established and protected by COPN nearly everywhere but Richmond:

  • are benign public servants with a charitable mission;
  • certainly don’t drive up costs;
  • that competition does not matter;
  • that the State Medical Facilities Plan on which COPN is based, like government 5-year industrial plans everywhere, is both well- managed and prescient; and
  • that limiting capacity is the key to cost containment. (It turned out that limiting capacity was also the key to hospitals being overwhelmed by COVID. Clearly disaster preparedness is not among COPN criteria.)

Well. The median operating margin for Virginia’s 106 hospitals in 2020, the latest year for which data are available, was 9.2%. Nationally, that margin was 2.7%.

Virginians paid over $1.5 billion more for hospital visits than they would have if our hospitals had cumulatively posted a 3% operating margin, which has been at or near the national median  for years. Continue reading →

23 Comments

Posted in Antitrust, Campaign finance reform, Charity and philanthropy, Consumer protection, Crime , corrections and law enforcement, Disasters and disaster preparedness, General Assembly, Governance, Government Oversight, Health Care

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Another Brick in the Wall Around Sentaraland

Posted on December 21, 2021 by | 6 comments

by James C. Sherlock

Which one of these doesn’t match?

Story in Virginia Business Dec. 20:

EVMS, ODU and Sentara sign health center agreement.

Eastern Virginia Medical School, Old Dominion University and Sentara Healthcare entered into a memorandum of understanding Friday to work toward a collaborative academic health center….

That’s right. EVMS and ODU are state institutions. Sentara just acts like one. Is anyone at the Virginia Department of Health interested in this?

The Attorney General’s Office should have been up to its neck in this agreement, probably to nix it. Continue reading →

6 Comments

Posted in Antitrust, Health Care

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Should Choice of Supplier Extend to Natural Gas?

Posted on October 31, 2021 by | 16 comments

Artist rendering from the Chickahominy Power LLC website.

by Steve Haner

Should there be retail choice for natural gas? The developers of a proposed natural gas-fired merchant electricity plant are testing the waters with a proposal to bypass their local monopoly supplier by building their own one-customer pipeline to another source.

In the electricity arena, this is an old issue as large industrial or commercial uses have agitated for the right to seek lower-cost competitive suppliers to Dominion Energy Virginia or Appalachian Power Company. The battle has raged at the General Assembly and in front of the State Corporation Commission.

Under state law a large-enough customer can opt out of the monopoly power company under certain conditions. Similar mega-customers exist in the natural gas arena, but there is no comparable provision in state code allowing them to choose alternative gas suppliers.

The proposed Chickahominy Power LLC plant in Charles City County, which will also be ready to burn hydrogen to produce electricity if and when hydrogen is available for that, has many certificates and permits it needs from the state. The war on fossil fuels crowd did its best to block the permits but has failed, so far.

It also has a wholesale market for the 1,650 megawatts of electricity it will produce, and in general the expansion of merchant generation not built and controlled by the monopoly utilities is considered an economic boon. The 2020 Clean Energy Economy Act, among many other things, will require the use of more purchased power agreements by the utilities.

What Chickahominy lacks at this point is an agreement with Virginia Natural Gas, service which might require a new 24-mile connection. This was to be one of two such plants in Charles City served by a planned expansion of the VNG pipeline in Virginia, but that project was mobbed by environmental opposition and abandoned by the utility last year. Continue reading →

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Posted in Antitrust, Consumer protection, Economic development, Energy, Environment, Regulation

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Sentara, Cone Health Call Off Merger

Posted on June 2, 2021 by | 1 comment

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.

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Posted in Antitrust, Business and Economy, Health Care, Uncategorized

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Chesapeake Regional Medical Center Sues Sentara – Again

Posted on May 4, 2021 by | 4 comments

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 →

4 Comments

Posted in Antitrust, Courts and law, Health Care

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Hospitals 1, Patients 0

Posted on April 29, 2021 by | 4 comments

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 →

4 Comments

Posted in Antitrust, Health Care

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

Posted on April 10, 2021 by | 15 comments

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.

Continue reading →

15 Comments

Posted in Antitrust, Health Care, Uncategorized

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New Antitrust Laws Promise Scrutiny of Virginia’s Healthcare Monopolies

Posted on March 25, 2021 by | Leave a comment

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 →

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Posted in Antitrust, Health Care

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Medicaid and Medicaid Rate Increases Boost Virginia Hospital Profitability

Posted on March 20, 2021 by | 15 comments

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 →

15 Comments

Posted in Antitrust, Business and Economy, Consumer protection, General Assembly, Health Care, Money in politics, Not-for-profits, Public safety & health

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Certificate of Public Need’s Hall of Mirrors

Posted on February 24, 2021 by | 17 comments

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 →

17 Comments

Posted in Antitrust, Courts and law, Efficiency in government, Ethics, General Assembly, Government Oversight, Health Care, Political Influence, Regulation

Certificate of Public Need – This Seems Promising

Posted on February 20, 2021 by | 16 comments

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 →

16 Comments

Posted in Antitrust, General Assembly, Government Oversight, Health Care

Virginia’s Legendary Corruption Blocks Antitrust Enforcement

Posted on February 5, 2021 by | 12 comments

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 →

12 Comments

Posted in Antitrust, Business and Economy, Consumer protection, Courts and law, Crime , corrections and law enforcement, General Assembly, Governance, Health Care, Public corruption, Scandals

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