A “year-long systematic effort” to “destroy the competition.”
Allegations of conspiracy with real estate investors to push New Jersey health system into bankruptcy. Accusations of neglecting the poor and uninsured.
All of the above is making its way into a lawsuit that is standing up a three-hospital health system in New Jersey against the state’s largest health system, accusing it of conspiring to eliminate competition.
CarePoint Health filed the case against RWJBarnabas Hi on September 6. Plaintiff alleges that RWJBarnabas pursued a multi-year anticompetitive scheme to “monopolize the provision of general emergency hospital services and allied health services in northern New Jersey.”
CarePoint consists of the 349-bed Christ Hospital, the 224-bed Bayonne Medical Center and the 348-bed Hoboken University Medical Center. RWJBarnabas Health includes 12 acute care hospitals and four children’s hospitals, along with other locations and services, including outpatient centers, ambulatory care centers, home care and hospice programs, and accountable care organizations.
The trial alleges that RWJBarnabas conspired with real estate investors, state officials and Horizon Blue Cross Blue Shield (New Jersey’s largest payer) to usurp revenue from CarePoint patients and push the health system into bankruptcy.
CarePoint argued that RWJBarnabas’ goal was to force the shutdown of Christ Hospital and Bayonne Medical Center but to acquire Hoboken University Medical Center because of the more lucrative mix of payers. That alleged plan “ignores the needs of poor, underinsured and charity care patients that CarePoint serves in its role as a safety net for a hospital system in Jersey City and surrounding areas,” the lawsuit states.
The complaint says RWJBarnabas issued a false letter of intent to acquire Christ Hospital and Hoboken University Medical Center in 2019. Carepoint claims RWJBarnabas did not actually want to buy those hospitals — instead, RWJBarnabas conspired with “players in real estate” to gather market knowledge and competitive intelligence to “freeze programmatic growth and any significant hiring or construction at Christ Hospital.”
CarePoint initially believed the offer was made in good faith. Negotiations stalled after CarePoint began to believe that RWJBarnabas had plans to hold the real estate “hostage.” RWJBarnabas spread rumors about consolidating and closing Christ Hospital or downsizing it to a small emergency department, which led to the exhaustion of doctors, staff and patients at the hospital, the lawsuit alleges.
The case drew attention to a satellite emergency room RWJBarnabas opened in “coordination with Horizon” in 2017, just five blocks from CarePoint’s Bayonne Medical Center. The resulting churn of urgent care patients has cost CarePoint at least $80 million over the past three years, according to the lawsuit. Carepoint alleges that the satellite emergency room was built and began operating without the necessary approval from the New Jersey Department of Health.
Carepoint also claims it lost at least $227 million as a result of RWJBarnabas’ diversion and referral efforts to its Jersey City medical center. RWJBarnabas diverted the transport of ED patients away from CarePoint facilities and to the medical center, particularly patients with private medical insurance or financial means to pay for transport and the resulting ED or hospital services, the lawsuit alleges. Additionally, RWJBarnabas allegedly referred uninsured patients and those covered by Medicare or Medicaid to CarePoint facilities.
These practices constitute “flagrant disregard” of a 2016 agreement reached earlier litigation over ambulance service in Jersey City and the surrounding area, CarePoint said. The insurance information that RWJBarnabas used to divert and manage EMS transport was obtained through Horizon, according to the complaint.
The suit also alleges that RWJBarnabas and his co-conspirators claim “undue influence over NJDOH and the Governor’s Office to prevent CarePoint from growing community programs, receiving funding to serve the underinsured and underserved, and creating obstacles to CarePoint’s evolution into a regional health powerhouse with a sound financial base.”
RWJBarnabas’ wrongdoing violated the Sherman Antitrust Act and the New Jersey Antitrust Act, the lawsuit alleges.
A statement by RWJBarnabas categorically denied the allegations.
The lawsuit is “another in a series of baseless complaints filed by CarePoint, an organization whose management clearly prefers to shift the blame to others rather than take responsibility for the unsatisfactory results of its own poor business decisions and actions over the years,” a RWJBarnabas spokesman said. The spokesman would not comment on the specific allegations beyond what the health system said in a statement last week.
This isn’t the first time RWJBarnabas’ alleged anti-competitive business practices have made headlines this year. In June, the health system canceled its merger with St. Peter’s Health System after the Federal Trade Commission block the transactionsaying it would harm competition and increase prices.
Photo: Flickr user Doug Kerr