CHI Franciscan to divest ASC, pay $2.5M to settle lawsuit: 5 things to know

Tacoma, Wash.-based CHI Franciscan agreed to settle a federal antitrust lawsuit related to the acquisition of an orthopedic practice and affiliation with a separate multispecialty physician group that the state's Attorney General deemed anticompetitive, according to the Washington State Attorney General's Office. 

Five things to know:

1. CHI Franciscan will pay $2.5 million to resolve the lawsuit related to its acquisition of Silverdale, Wash.-based WestSound Orthopaedics and affiliation with a 50-physician multispecialty group, Silverdale-based The Doctors Clinic, in 2016. The health system also acquired controlling interest in TDC's ASC, which it divested as part of the settlement.

2. State's Attorney General Bob Ferguson filed a lawsuit against the health system in 2017, alleging the acquisition was anticompetitive. However, CHI Franciscan reports there are at least 20 clinics outside of Kitsap County that residents use, and around 65 percent of Kitsap county residents travel outside the county for inpatient orthopedic care.

3. There was not a judgement or admission on anti-competitiveness in this case. The court dismissed other claims from the Attorney General, including claims against the health system for affiliating with WestSound Orthopaedics.

4. As part of the settlement, CHI Franciscan is required to give the Attorney General's Office notification before future acquisitions or alignments that could reduce competition for services, which is aligned with a state law that goes into effect for all hospitals in 2020. 

5. The $2.5 million settlement will be distributed between West Sound Free Clinic, Peninsula Community Health Services, Bremerton Health Center and Kitsap Mental Health, and used for direct patient services. CHI Franciscan originally requested the agency distribute the settlement in this way.

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