Health First Hit with Antitrust Class Action in Florida

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Three plaintiffs allege Health First, Inc. has engaged in “pervasive and long-term exclusionary conduct” as a means to maintain and strengthen a monopoly in the market for acute care in Florida, even after a settlement over similar allegations roughly five years ago. 

The 35-page proposed class action claims Health First, “unchastened” after agreeing in 2016 to a settlement with a multi-specialty physician group over alleged anticompetitive conduct, has picked up where it apparently left off by suppressing and injuring competition in the market for acute care services, which include short-term healthcare treatments patients receive at a hospital to address an acute trauma or urgent need that may or may not require an overnight hospital stay.

According to the antitrust complaint, Health First has monopolized and foreclosed competition within the acute care market by, for instance, acquiring the largest competing physician group, Melbourne Internal Medical Associates; leveraging its market power in adjacent markets into the acute care sector; engaging in “pervasive and highly effective” exclusive dealing in hospital referrals; and executing a group boycott of competitors. Per the case, Health First’s conduct has squashed competition from both rival acute care hospitals in Brevard County or Southern Brevard County and from potential market entrants given the fact that they all need access to physicians and their referrals to have a chance to compete in Florida’s acute care market. 

In addition to the alleged harm done to competitors in the form of lost profits, Health First has also injured health plans, who’ve in turn been “overcharge[d]” for services, the suit claims, alleging regular consumers have also felt the effects of the defendant’s apparent monopolistic conduct. 

“And it has delivered sub-par care to its patients, threatening their health and longevity,” the complaint alleges. 

There exist essentially no substitutes for acute care services, and consumer demand for such is “generally inelastic” because immediate healthcare is often necessary to prevent death or long-term harm, the lawsuit relays. As a result, there is what the case calls “extremely low cross-elasticity of demand” between acute care services and outpatient services that do not require the use of hospital services. In addition, the suit says the choice of hospital acute care services is largely determined by physicians and based on the medical needs of a patient, not on the relative cost of the services. 

“Accordingly,” the complaint says, “a monopolist can impose a small but significant price increase in the price of acute care hospital service without causing patients to switch to outpatient services or other health care options.” 

As of 2014, Health First held an 86.8 percent share of the market for acute care services in Southern Brevard County, a market share that has increased in recent years, according to the case. Per the suit, Health First’s share of the same product market in the broader Brevard County is currently estimated at more than 90 percent, which the case attributes to the defendant’s alleged abilities to exclude rival providers of acute care services and raise prices on patients and health plans “well above competitive levels.” 

The lawsuit looks to cover a class of patients and health plans using Health First acute care and seeking relief for direct payments made to the defendant for acute care on or after April 19, 2017. The complaint specifies that such payments, for patients, are defined as their co-insurance payments computed as percentages of Health First acute care fees and not limited by health plan annual, out-of-pocket maximums or otherwise.

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