The State of Washington has settled an antitrust lawsuit with Tacoma-based CHI Franciscan that alleged that the health system engaged in price fixing of orthopedic services in the Kitsap, Washington area.
In July 2016, CHI Franciscan acquired the assets of WestSound Orthopaedics, a practice of seven orthopedic physicians based in Silverdale, Washington. Two months later, CHI Franciscan announced its partnership with The Doctors Clinic, a multispecialty physician group that had seven locations and 50 physicians. Prior to the acquisition and partnership, WestSound, The Doctor’s Clinic and CHI Franciscan were each other’s closest competitors for orthopedic services.
In August 2017, Washington State Attorney General Bob Ferguson sued CHI Franciscan in federal court alleging that combination of the three largest providers of orthopedic services in the area significantly reduced competition and was an illegal price-fixing agreement in violation of antitrust laws. The complaint alleged that the deals between the orthopedic service providers resulted in higher prices, increased wait times, and fewer locations and services available.
According to the complaint, the Attorney General’s Office’s investigation turned up documents from CHI Franciscan and The Doctor’s Clinic executives discussing the deals in a way that was harmful to patient care. CHI Franciscan’s Chief Financial Officer Mike Fitzgerald, wrote in an email, “I am all for taking advantage of hospital-based pricing…It would be great to drop a couple of million more to our bottom line, if we think we can do it.”
CHI Franciscan released a statement saying that its affiliations with WestSound Orthopaedics and The Doctors Clinic will remain in place. The court removed WestSound Orthopaedics from the lawsuit and officially ended the trial on March 15, 2019.
Details of the settlement have not been finalized, but CHI Franciscan said that the settlement was “good for patients and doctors on the (Kitsap) Peninsula, keeps our highly skilled doctors in our community and ensures everyone has access to great care close to home.”
