Thursday, May 02, 2013

This story was not from The Onion

It was not my plan to publish another post on this topic for some time, but you'll soon see why I felt compelled to.

As I was writing my recent piece about the potential financial slide of a private-equity-owned health care system, I never, ever, ever considered that part of the workout of such a system might be to sue an insurance company in another state for a terminated buy-out deal of another hospital.

And yet here it is.  Here are excerpts from Robert Weisman's report in the Boston Globe (not The Onion):

Steward Health Care System, which terminated an agreement to buy a Woonsocket, R.I., hospital last fall, charged in a lawsuit Wednesday that Rhode Island’s largest health insurance company blocked the deal by failing to negotiate reasonable health care payments.

In a complaint filed in state Superior Court in Providence, Steward, which runs a chain of hospitals and doctors groups across Eastern Massachusetts, alleged Blue Cross & Blue Shield of Rhode Island engaged in anticompetitive practices and interfered with prospective contractual relations to thwart Boston-based Steward’s proposed acquisition of Landmark Medical Center.

Steward, owned by the New York private equity firm Cerberus Capital Management, demanded a trial by jury and asked for Blue Cross & Blue Shield to pay unspecified financial damages as well as reimburse its attorneys’ fees involved in taking the court action.

The collapse of Steward’s deal to take over Landmark marked a setback in the health care chain’s efforts to build a national for-profit hospital and physician network.

But while it has negotiated with financially troubled hospitals in Florida and Maine, in addition to Landmark, it has yet to complete an out-of-state deal.

6 comments:

Anonymous said...

This story takes the usual disagreements between hospitals and payers to new heights. Also, it's the pot calling the kettle black, since Steward had the hospital in Quincy declare bankruptcy after they agreed to buy it, thus nailing its creditors to Steward's advantage. Payback is hell, as they say.

e-Patient Dave said...

> failing to negotiate reasonable prices

To be clear, that means this?

1. They say Blue Cross wasn't paying enough to make Cerberus profitable enough?

2. They're saying that that's an anticompetitive practice?

Is there a write-up anywhere of what specifically Cerberus is complaining about?

I don't remember who here first pointed out that the name of the company, Cerberus, refers to the mythological three-headed dog that allows people into Hell but won't let them out. Who knew that chutzpah existed in Greek mythology??

Anonymous said...

Years ago when post medical training finally allowed me a trip abroad, I asked where in Paris to have a good well priced lunch. I was told by seasoned travelers watch for where the workers in a neighborhood flocked to dine. The advice always stood me in good stead as I followed office and hospital workers along with workmen to find great food at great prices. When a hospital system in financial freefall cannot even beat their own medical and nursing staff into coming for care; the desperate workout might include blaming BCBS for their own folly. Massachusetts needs very badly to own up to some big problems on the horizon. Open the doors and let some light in. Greater equity regarding reimbursements among the Boston teaching hospitals as well as real numbers as to quality. For now, patients as well as healthcare professionals are voting with their feet.

Anonymous said...

Cerberus wanted to be paid at a rate comparable or at least close to comparable to other community hospitals rather than far less, as they had previously been paid.

Blue cross of Rhode Island refused to increase the reimbursement for Landmark (a Rhode Island hospital).

There was probably pressure from other community or academic hospitals to keep the fees landmark was paid low.

That is what the law suite is about. Why are some hospitals paid much more than others for essentially the same service. As what were the motivations for having much lower reimbursement for Landmark - which Steward wanted to buy.

Anonymous said...

The biggest irony here is that Blue Cross and Landmark both refuse to say publicly how much Landmark is getting paid...I'd like to see the numbers.....

Joe Gorman said...

Just remember steward...you'll never get a dog to walk upright. Or a worm.