Is There a Doctor in the House? : Court ruling suggests sometimes there may be one too many
The pricing of health-care services is virtually a mystical process. About the only indisputable fact is that medical care is preternaturally expensive. But now a California doctor’s challenge to one hospital has resulted in a Supreme Court ruling that clears the way for federal antitrust suits against hospitals.
In a 5-to-4 decision, the Supreme Court applied to hospital review panels the criteria of the Sherman Antitrust Act, which makes it illegal to conspire to interfere with competition in interstate commerce and therefore keep prices high. The court ruled that hospital peer review committees may be subject to antitrust suits if their actions restrict interstate commerce.
The medical profession uses peer review panels to ensure quality. Hospitals in most states, including California, establish teams of doctors to set quality standards and to evaluate staff performance. Critics maintain that the peer group procedure can be misused to keep out true competition and, in effect, inflate prices.
In Summit Health Ltd. vs. Pinhas, Beverly Hills ophthalmologist Simon J. Pinhas sued Midway Hospital Medical Center and its parent company Summit Health Ltd., alleging the hospital’s peer review committee conspired to revoke his hospital privileges because he refused to follow a surgical requirement of having a second surgeon in attendance.
In Pinhas’ view, adhering to that backup doctor requirement would have been unnecessarily costly. The hospital maintains that the issue is one of professional performance.
A federal judge in Los Angeles ruled the allegations had little to do with interstate commerce and dismissed the suit. But a federal appeals court in San Francisco reinstated the suit. Now the Supreme Court agrees.
Justice John Paul Stevens wrote that restricting competition for surgical services at even a single hospital can have “a potential harm” with a wide impact on patients, some of whom come from outside of California. The Pinhas suit now goes back to the lower court for trial where the merits of the case on the Sherman Act standard will be heard.
The Supreme Court ruling clears the way for more antitrust lawsuits against hospital peer review panels. The committees exist to ensure quality medical care but if there are instances of anti-competitive behavior, the Supreme Court now has provided a potential remedy. All reasonable efforts to contain medical costs are to be applauded.
