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November 26, 2012 at 08:03 AM
The U.S. Supreme Court is hearing a case, Federal Trade Commission (FTC) vs. Phoebe Putney Health Systems Inc. et al. (11-1160), that could affect whether nonprofit hospitals and other nonprofit health care providers are subject to federal antitrust laws.
The FTC is suing over a move by Georgia to let Phoebe Putney Health System, an independent nonprofit company that has a 40-year lease on the public hospital in Albany-Dougherty County, Ga., acquire the only other hospital in the community, Palmyra Medical Center.
Phoebe Putney says the Georgia Hospital Authorities Law has decided to replace the pure free-market model for hospitals in the state with a “statutory mandate.” The mandate calls for a hospital in the state “to provide services to all indigent in the community, and to price all services on a not-for-profit basis and with a statutory limitation on rate of return,” Seth Waxman, a lawyer for Phoebe Putney, said today in oral arguments before the Supreme Court.
In the real world, the public hospital was “a natural monopoly” that grew to serve 10 times as many poor patients as the private hospital “which is very underused,” Waxman said.
Traditionally, the Supreme Court has let some state entities avoid complying with antitrust laws if the state has a “clearly articulated” reason for the policy and “actively supervises” private entities making use of the state’s freedom from antitrust constraints, according to the authors of a case summary posted by the American Bar Association.
The public hospital authority believed the best way to expand capacity was to see if the private hospital wanted to be acquired, Waxman said.
