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Novant bid for Asheville-area hospital may gain boost from lawsuit filed against Mission

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Another major roadblock — a lawsuit filed July 28 by the city of Asheville and Buncombe County — has been placed in front of Mission Hospital Inc.’s attempt to open a 67-bed community hospital in western North Carolina.

The lawsuit could improve the odds for the bids of Novant Health Inc. and AdventHealth opening a similar community hospital in the market.

AdventHealth is a Seventh-day Adventist non-profit health-care system headquartered in Altamonte Springs, Fla.

The plaintiffs filed a class-action complaint in federal District Court for Western N.C., requesting damages, injunctive relief and equitable relief under the federal Sherman Antirust Act.

Also sued are Mission’s parent company HCA Healthcare Inc. and several HCA and Mission affiliates. HCA purchased Mission in January 2019.

Mission is the region’s dominant for-profit health care system with a combined 733 beds in the market, including a children’s hospital.

The 2022 state Medical Facilities Plan listed a need for 67 acute-care hospital beds to cover Buncombe, Graham, Madison and Yancey counties, likely by 2024.

Mission, Novant and AdventHealth responded by filing certificate-of-need (CON) applications. State law requires a certificate for major infrastructure and equipment purchase, in large part to avoid duplication of services in a market.

Asheville and Bumcombe provide self-funded health insurance plans for employees. They said they filed their complaint in their respective roles of providing “affordable health care insurance plans for working families and governmental employee.”

The plaintiffs claimed that Mission’s conduct, as well as the other defendants, “has restricted competition in the (local) health care markets” that they defined as also including Macon, Madison, McDowell, Mitchell, Transylvania and Yancey counties.

The restriction of competition “thereby substantially and artificially inflating health care prices paid by plaintiffs and proposed class member health plans” for medical, surgical and outpatient services.”

The 2022 state Medical Facilities Plan listed a need for 67 acute-care hospital beds to cover Buncombe, Graham, Madison and Yancey counties, likely by 2024.

Mission, Novant and AdventHealth responded by filing certificate-of-need (CON) applications. State law requires a certificate for major infrastructure and equipment purchase, in large part to avoid duplication of services in a market.

Asheville and Bumcombe provide self-funded health insurance plans for employees. They said they filed their complaint in their respective roles of providing “affordable health care insurance plans for working families and governmental employee.”

The plaintiffs claimed that Mission’s conduct, as well as the other defendants, “has restricted competition in the (local) health care markets” that they defined as also including Macon, Madison, McDowell, Mitchell, Transylvania and Yancey counties.

The restriction of competition “thereby substantially and artificially inflating health care prices paid by plaintiffs and proposed class member health plans” for medical, surgical and outpatient services.”

“This proposed class action for unlawful restraint of trade and monopolizations seeks to redress these harms.”

Mission and HCA told The Asheville Citizen-Times that “we are disappointed in this action and we continue to be proud of the heroic work our team does daily.”

Spokeswoman Nancy Lindell said Mission’s “demonstrated” contributions to the community included $270 million in charity care and uninsured discounts it provided in 2021, expansion of hospital services, a new pediatric emergency room and a new 120-bed behavioral health hospital.

Chief complaints

The lawsuit cited HCA “has been the subject of approximately 20 Federal Trade Commission antitrust proceedings over the past two decades.” The plaintiffs claimed HCA purchased Mission “because Mission had monopoly power” in the market.

Mission has an 89.1% market share in the Asheville region and at least an individual 70% market share in each county in the region. according to the complaint.

Mission and HCA also have been accused of “embarking on a continuing, multifaceted coercive scheme designed to foreclose competition from rivals, to maintain or to enhance its monopoly power in the relevant markets, and ultimately to charge prices above their competitive level” in the markets.

“HCA supercharged the scheme after it acquired Mission, including ‘all-or-nothing’ tying arrangements requiring health insurance plans to contract with all of Mission’s services as a bundle.”

The defendants also have accused of “gag clauses that prevent insurers from communicating with employers and patients about the prices they pay for health care, and thus determine how best to reduce costs.”

“By tying their services and regions together, defendants coercively rob health plans of the ability to choose which service and providers are in or out of network.”

Mission and HCA have been criticized for understaffing as health care workers quit because of working conditions during the COVID-19 pandemic.

According to Asheville-based newspaper Mountain Xpress, Asheville Mayor Esther Manheimer, Buncombe commissioners’ chair Brownie Newman and other elected officials co-signed an opinion column in the Asheville Citizen Times in February 2020 that expressed “deep concern regarding the state of Mission Hospital Systems since the purchase by Hospital Corp. of America (HCA) last year.”

In June 2022, Buncombe commissioners sent a letter to state regulators expressing their preference for “an alternative hospital to Mission.”

Mission said in a statement to Asheville TV station WLOS that “we are confident we are the best hospital situated to provide this care because of the outstanding, advanced services we are already providing including trauma care, complex medical/surgical services, and specialty pediatric care.

“Mission Hospital has experienced capacity constraints for this type of specialized care because it is the region’s only tertiary care center, trauma center and pediatric specialty hospital.”

Meanwhile, WLOS reported that “we’ve been hearing ... so many people, the consumers, coming to us, saying they want a choice. They want competition,” according to Victoria Dunkle, communications and public relations director for AdventHealth Hendersonville.

“They’ve pointed out they want choice and options in not-for-profit, they want faith-based, they want whole-person care, which is what AdventHealth is all about.”

Hospital proposals

Novant applied June 15 for permission to build a $328.73 million community hospital campus. The health system already has an imaging center in the market.

Novant, with facilities already in the Triad, Charlotte and Wilmington, is pursuing a fourth urban health-care presence in North Carolina.

Mission has proposed a $125.04 million expansion of its existing campus.

AdventHealth has proposed a $252.12 million capital investment. Advent’s lone North Carolina hospital is in neighboring Hendersonville.

Novant has said it “has been interested in expanding our services in western North Carolina for years.”

“We have a history of serving patients in the area through our managed partnership with Ashe Memorial Hospital in Jefferson and our Asheville-based imaging center, Open MRI.

“We believe we can build on these established relationships and provide support for a growing part of the state in need of additional choice.”

Novant and Advent plan to provide a dedicated C-section operating room and between three and five procedure rooms.

Stein stance

On July 25, state Attorney General Josh Stein filed a formal objection to Mission’s certificate-of-need application with the N.C. Division of Health Service Regulation.

“The lack of competition is the result of Mission’s unique history,” Stein wrote.

“Mission effectively operated as a legislatively authorized monopoly for over 20 years, and no new hospitals have opened even after Mission’s arrangement with the state ended in 2016.”

Stein said residents of western North Carolina have been adversely affected by higher health-care costs and a reduction in quality of care in the region.

“Accordingly, the department should deny Mission’s application and instead approve an application from a qualified competitor,” Stein said.

Stein said HCA ownership’s has contributed to increased health-care costs for patients in the Asheville market.

“Mission’s application cannot demonstrate that it will enhance competition, lower costs or improve quality,” Stein said.

Stein said that the CON process provides “a much-needed opportunity to introduce competition into western North Carolina’s health care market.”

The Department of Health and Human Services “should seize that opportunity ... by denying Mission’s application,” Stein said.

State law requires that state health regulators approve a certificate of need before providers can build new health care centers or add certain equipment.

The goal of the CON process is limiting unnecessary duplication of services in a community, although some Republican legislative leaders claims the process limits the ability of independent and for-profit providers to enter markets and lower costs.

Stein said he is taking a neutral position on the Novant and AdventHealth applications.

A public hearing on the three CON applications is set for 9:30 a.m. Aug. 12 on the Asheville campus of Asheville-Buncombe Technical College.

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@rcraverWSJ

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