Thursday, October 08, 2009
Carilion agrees to sell 2 outpatient sites
An FTC complaint last year challenged Carilion's purchase of the centers, claiming that the move stifled competition.
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By agreeing to sell two outpatient centers it acquired last year, Carilion Clinic appears to have resolved a Federal Trade Commission complaint that it was buying up the competition in Roanoke.
As part of a proposed agreement announced Wednesday, Carilion will sell the two centers within three months to a buyer or buyers approved by the FTC.
Last year, the FTC challenged Carilion's purchase of the Center for Advanced Imaging and the Center for Surgical Excellence -- claiming that the health care giant stifled competition by absorbing the two independent operations that had offered low-cost alternatives to its own services.
"I would say that this agreement is a huge victory for patients in the Roanoke area," said Jeff Perry, acting deputy assistant director of the FTC's antitrust division.
"This restores competition in the Roanoke area for imaging services and outpatient surgery services," he said.
The commission approved the proposed consent order on a 4-0 vote and will take public comment for 30 days before deciding whether to make it final.
Shortly after the FTC filed a complaint in July, Carilion offered to sell the two centers and began settlement talks with the commission.
"The two centers are a very small part of our overall business and the consent agreement is an expedited way to resolve the issue," Carilion spokesman Eric Earnhart said. "We are currently considering several potential buyers."
Earnhart declined to comment further.
Had Carilion maintained control of the two clinics, it would have faced competition from just one other provider, HCA Inc. That would have created a near-monopoly, the FTC maintained, and could have led to an 800 percent increase in the out-of-pocket expenses for some procedures.
The Center for Advanced Imaging offers services such as MRIs and CT scans; the Center for Surgical Excellence provides gastroenterology and invasive pain management services and outpatient surgery.
Both clinics had been independently operated by Odyssey Imaging LLC and were marketed as low-cost alternatives to Carilion before they were bought by the Roanoke-based health system.
When Carilion purchased the two centers, "I think their main motivation was to buy the market share," said Martin Hellkamp, CEO of Odyssey.
The FTC has argued that competition among health care providers contains costs and improves the quality of care by offering more options to patients.
The largest health care provider and employer in Roanoke, Carilion controls nearly 80 percent of the region's hospital beds. As the health care system converts to a clinic model, critics have accused it of creating a monopoly and driving prices up.
Ken King, president of the Citizens Coalition for Responsible Healthcare, said the FTC's action validates some of the Roanoke-area group's concerns about Carilion's expanding role.
"It's nice to hear that Carilion is willing to recognize that this is a cost-related matter, and it's important to all citizens that we have good but cost-efficient health care," King said.
There was no official word Wednesday on potential buyers for the two centers. But according to Hellkamp, "there is a lot of local interest, and I've made no secret about also being interested."
As part of the FTC agreement, Carilion must divest not just the two centers but other assets associated with them, such as patient records, medical equipment, government permits and contracts.
The agreement also contains provisions that the FTC says will make it easier for the new owners of the centers to restore the competition that Carilion eliminated.
For example, Carilion is prohibited for six months from trying to hire any physician that has referred patients to the Center for Advanced Imaging, to allow the new owners to build their own referral base. The agreement also prohibits Carilion from restricting its physicians who have referred patients to the center from continuing to do so.
Regulatory actions like the one taken against Carilion are rare. FTC spokesman Mitch Katz could recall just two other cases in Virginia in recent years in which the commission challenged a hospital's acquisition of new operations.
Comments on the proposed agreement between the FTC and Carilion may be sent to: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Ave. N.W., Washington, DC 20580. Electronic comment may be submitted to: public.commentworks.com/ftc/carilionclinic.
Staff writer Duncan Adams contributed to this report.




