The Justice Department and the state of Ohio on Feb. 20 filed a civil antitrust lawsuit against Columbus-based OhioHealth alleging the nonprofit health system has for years wielded its market power to lock out competition and drive up healthcare costs for patients and employers across Central Ohio.
The complaint, filed in the U.S. District Court for the Southern District of Ohio, accuses OhioHealth of imposing contractual restrictions on commercial payers that prevented them from offering lower-cost, “budget-conscious” health plans. Specifically, regulators allege OhioHealth has used so-called “all-or-nothing” contracting provisions to require insurers to include all of its facilities in every commercial insurance network they offer, regardless of how OhioHealth’s prices compare to competitors, effectively foreclosing the development of narrow-network or tiered plans that could save patients and employers money.
The allegations have direct implications for the ASC industry. The complaint alleges OhioHealth’s contracts barred payers from implementing site-of-service steering, a plan feature that generates savings by incentivizing patients to have procedures performed in lower-cost settings, such as ASCs, rather than more expensive hospital outpatient departments. The restrictions, if proved, would mean commercially insured patients in Central Ohio were steered away from ASCs even when doing so would have meaningfully reduced their out-of-pocket costs. The complaint also alleges OhioHealth blocked payers from offering price transparency tools that would allow members to comparison shop across providers and sites of care.
OhioHealth is a 16-hospital system and the dominant health system in the Columbus area, controlling more than 35% of inpatient acute care hospital beds in the Columbus market, a share the Justice Department says is notably greater than that of its next largest competitor. That market position, prosecutors allege, is what gives OhioHealth the leverage to extract anticompetitive terms from insurers, including by tying access to its rural hospitals, which payers must include to maintain adequate network coverage, to acceptance of broader contractual restrictions.
OhioHealth’s primary competitors in the Columbus market are Ohio State University Wexner Medical Center and Mount Carmel Health System, owned by Livonia, Mich.-based Trinity Health. The Justice Department alleges OhioHealth charges payers “significantly higher” reimbursement rates than other providers, while its services “are not generally higher quality than those of its local rivals.”
The Justice Department’s Antitrust Division and Ohio Attorney General Dave Yost are asking the court to block OhioHealth from enforcing contract provisions that restrict insurers from offering plans providing financial incentives or information encouraging members to use competing providers or lower-cost sites of care. The complaint also seeks to prohibit OhioHealth from retaliating against any insurer that attempts to introduce such plans.
“OhioHealth has been cooperating with the Department of Justice throughout its review of our managed care agreements,” a spokesperson for the health system said in a statement to Becker’s. “We are confident in our position and remain committed to full compliance with all applicable laws and regulatory requirements. As this is active litigation, we will not comment on specifics beyond what has been publicly disclosed.”
It is the first civil antitrust enforcement action brought by the department’s Antitrust Division in roughly a year, and officials say it is one of several probes into dominant health systems nationwide. The case has clear precedents. Sacramento, Calif.-based Sutter Health reached a $575 million settlement with the state of California in 2021 over similar “all-or-nothing” contract allegations, followed by a $228.5 million class-action settlement. A comparable case against Charlotte, N.C.-based Atrium Health was settled in 2018.
For the ASC industry, the lawsuit serves as a reminder of how much hospital contracting practices can shape the competitive landscape, and how much is at stake when site-of-service steering is taken off the table.
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