The Federal Trade Commission (FTC), along with the vast majority of knowledgeable Albanians, believes the Phoebe/Hospital Authority purchase of Palmyra will cause costs to go up and quality to go down. The 11th Circuit Court of Appeals ruled the FTC could not stop the transaction, even though it created a monopoly, because Phoebe structured the deal in a way that made the Hospital Authority the legal buyer. The Hospital Authority is insulated from federal antitrust laws under a principle known as the “State Action Doctrine,” because it is considered a subdivision of the state.
The FTC maintains the purchase of Palmyra was a transaction between two private parties. The FTC argues Phoebe was the true buyer and used the Hospital Authority to rubber stamp the purchase only after Phoebe had a “done deal.” The justices of the highest court in the land, the Supreme Court of the United States, are concerned enough about the manner in which Phoebe and the Hospital Authority manipulated the State Action Doctrine that the justices have agreed to hear the case. Out of approximately 10,000 requests, or petitions, the Supreme Court has chosen to hear this case as one of only 75-80 cases they will review this next term.
The fact that the Supreme Court granted the FTC’s petition confirms the justices have serious concerns about the legitimacy of the transaction. Most citizens and businesses, realizing the serious implications of this case, would postpone any long-range plans until the Supreme Court renders a decision — the financial and corporate risks would be too great to do otherwise. Not so, Phoebe Putney. The boards of Phoebe are busy pushing forward and pressuring the Hospital Authority to go ahead and grant them a long-term lease by Aug. 1, so they can begin totally transforming Palmyra from a freestanding, acute care hospital into a specialty center, most likely a women’s and children’s center. These renovations will almost certainly involve removing the emergency room and intensive care units. Rest assured, the Palmyra campus will no longer look anything like a freestanding, acute care hospital. Why are they doing this? What is the rush?
Phoebe’s strategy is called “scrambling the egg.” If Phoebe can convert the other freestanding acute care hospital into a specialty center before the Supreme Court renders a decision, then even if they lose, the deed is done, and Phoebe has effectively eliminated the possibility of a competitive hospital in Albany. Getting a competitor to buy or lease the property and turn it back into an acute care hospital would be virtually impossible. Yes, if the FTC prevails in this case, other hospitals in the country will not be able to use Phoebe’s ploy of using a state agency as a straw man to avoid FTC oversight, but in Albany, Phoebe will become our only choice for a hospital, and pricing and quality will suffer.
Despite the concerns of the FTC, the interest of the Supreme Court, and public pleas to keep competition in health care, the Hospital Authority seems astonishingly ready to follow Phoebe’s lead and sign a long-term contract to let the renovations begin. Instead, Authority members should stop and earnestly study and consider the FTC’s objections to this “merger to monopoly” and not forget that what is good for Phoebe is not necessarily good for the community. Without seeking a competitive bid, without increasing the number of hospital beds available in Albany, and without doing any study to determine the financial and quality impact of this merger, the Hospital Authority seems poised to sign a long-term lease with Phoebe and then the “scrambling” will begin.
And scrambled with it will be our hopes for better quality health care and lower health care costs. Phoebe’s rates for commercial payers are already 45 percent higher than average and its hospital rates are among the highest in the state, hurting our ability to keep and grow good jobs. It is not surprising that Starbucks just announced it is building a plant in Augusta, Ga., where medical costs for that city’s P&G plant are about 40 percent lower than the Albany plant’s.
The members of the Hospital Authority should take no action that would frustrate the options available should the Supreme Court conclude the earlier purchase was subject to federal antitrust laws. The downside of keeping things as they are until the Supreme Court renders an opinion is negligible for the community. Phoebe currently has a management service agreement with the Hospital Authority to manage Palmyra in its current status as a freestanding, acute care hospital, which runs through December 2013. This continues to be a viable business model and can easily be maintained until the court renders its opinion.
The citizens of this community and future generations will be denied choice in health care if the Hospital Authority grants Phoebe a lease before the Supreme Court decision. To stop the Hospital Authority from this ill-advised course of action requires the most powerful force we have in our community — your voice. We need to urge the members of the Authority to do what is best for our community in the long run, not what serves Phoebe. Ralph Rosenberg (chairman), Dr. Charles Lingle (vice chairman), the Rev. Eugene Sherman (secretary), Fred Ghiglieri , John Hayes, Dr. John Inman, the Rev. H.B. Johnson, Lamar Reese and Dr. Steven Wolinsky are the nine members of the Hospital Authority. These nine men hold the key to the quality of health care for you and your family, and the ability of our community to keep and attract new jobs. Let them know now that you want them to stop this lease until such time as the Supreme Court renders its judgment.
Joseph W. Stubbs, MD, MACP, has been a practicing internist/geriatrician with Albany Internal Medicine since 1982. From 2009-10, he served as president of the American College of Physicians, the largest specialty society in the United States. He is currently secretary-treasurer of the national medical honor society, Alpha Omega Alpha.