Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Indiana hospital system charged with monopolizing market for ER services, (Jan 6, 2016)

By Linda O’Brien, J.D., LL.M.

A university hospital system has engaged in anticompetitive conduct by using its ambulance service to deliver the majority of emergency medical transportation patients to its emergency department, instead of to a competing hospital, according to a complaint filed in the federal district court in Indianapolis, Indiana (Prime Healthcare Services-Monroe, LLC v. Indiana University Health Bloomington, Inc., January 4, 2016).

Indiana University Health Bloomington is a non-profit corporation that operates a full-service hospital (IU Hospital) and ambulance service IU Health Bloomington Hospital Emergency Medical Transport Services (IU Ambulance). IU Ambulance is the sole municipally designated provider of emergency medical transportation services in Monroe County.

The complaint states that Prime Healthcare Services-Monroe, LLC operates Monroe Hospital, which has a full-service, 24-hour, acute care emergency medical department, similar to IU Hospital. In 2006, Monroe Hospital began operations in Bloomington, only a few miles from IU Hospital. With its fully-staffed emergency department, Monroe Hospital began to compete with IU Hospital in the market for emergency medical services.

According to the complaint, IU Hospital possesses a monopoly in the market for emergency medical services, receiving at least 80 percent of emergency department visits in Monroe County. IU Hospital maintains its monopoly, since IU Ambulance, the sole provider of emergency medical transportation services in Monroe County, delivers 95 percent of the patients it serves to IU Hospital’s emergency department. By diverting patients to IU Hospital and away from Monroe Hospital, even when Monroe Hospital is the patient’s facility of choice or closest suitable emergency medical service facility, IU Ambulance has blunted the success of Monroe Hospital’s entry into the market and effectively excluded competition to maintain IU Hospital’s dominant market share, the lawsuit claims.

There are significant barriers to entry into the market for emergency medical services, including the cost of assembling emergency medical service facilities and meeting state regulatory requirements for operating a hospital emergency department. Furthermore, the inelastic demand for emergency medical services favors the creation of monopoly power. Increases in price and changes in the quality of care and customer satisfaction have little or no effect on the demand for emergency medical services, the complaint states.

The complaint also alleges that the exclusionary conduct of IU Ambulance constitutes the unlawful abuse and leveraging of an existing monopoly to enhance that power in the market for emergency medical services in Monroe County. This ongoing monopolization has restricted the ability of competitors to compete with IU Hospital on the basis of price, quality, and service, to the detriment of consumers.

The plaintiff asserts claims for unlawful monopolization in violation of Section 2 of the Sherman Act and state antitrust laws. The action seeks injunctive relief, treble damages, pre-judgment and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-00003-RLY-DKL.

Attorneys: Irwin B. Levin and Scott D. Gilchrist (Cohen & Malad, LLP) for Prime Healthcare Services-Monroe, LLC.

Companies: Prime Healthcare Services-Monroe, LLC; Indiana University Health Bloomington, Inc.

News: Antitrust IndianaNews