Specialty hospital claims conspiracy to drive it to close

A lawsuit illuminates tensions between such facilities and community hospitals as they compete for patients.

By Katherine Vogt, AMNews staff. May 23/30, 2005.

A physician-owned orthopedic hospital in Kansas has alleged in a lawsuit that many of the leading acute-care hospitals and insurers in its market conspired in an attempt to drive it out of business, underscoring the rising tensions between specialty facilities and their competitors.

Heartland Surgical Specialty Hospital LLC of Overland Park, Kan., has filed a lawsuit in U.S. District Court in Kansas City, Kan., claiming that local general acute-care hospitals pressured insurance carriers to deny managed care network contracts to Heartland.

"The hospitals have been unabashed in their scheme, publicly describing the emergence of specialty hospitals like Heartland as 'the biggest threat we face,' and publicly applauding the insurance companies for keeping Heartland out of their networks," the lawsuit said.

As a result, the lawsuit said, Heartland has been cut off from health care "lifeblood," leaving much of its state-of-the-art facilities unused and causing severe financial damage to the 2-year-old, 49-bed hospital.

The lawsuit, which seeks to stop the "boycott" and seeks unspecified damages, names several defendants, including hospital giant HCA's Midwest Division. The HCA subsidiary, which operates 12 acute-care hospitals in the Kansas City area that compete with Heartland, dismissed the lawsuit as baseless.

"It's a desperate and frivolous lawsuit. At HCA, we believe that specialty hospitals, which use physician self-referral as the business model for their financial success, are endangering the future of quality health care across the country," the company said in a prepared statement.