A Medical Device Daily

Evanston Northwestern Healthcare (ENH; Evanston, Illinois) managed to fend off a worst-case scenario in a decision handed down yesterday by the Federal Trade Commission. The FTC ruled that while ENH’s purchase of nearby Highland Park Hospital (Highland Park, Illinois) was anti-competitive, ENH nonetheless did not have to sell the unit to rectify the situation.

In a statement on the FTC web site, the agency states that it will require ENH to “establish separate and independent contract negotiating teams” for Highland Park and the other two units in the system, Evanston Hospital and Glenbrook Hospital, all three of which are located in suburban Chicago.

ENH picked up Highland Park for roughly $200 million in 2000 and has since then invested better than $150 million to upgrade the facility, a fact that played into the FTC decision to abandon a divestiture requirement imposed previously by an administrative law judge, Stephen McGuire.

FTC filed the initial complaint in February 2004, four years later, although precisely what drew the agency’s attention is not clear.

Judge McGuire’s initial ruling called for divestiture within 180 days of the October 2005 decision, concluding that the purchase “substantially lessened competition” and led to higher prices for insurers, specifically for managed care organizations (MCOs). The affected MCOs are not identified in the FTC press release.

ENH appealed McGuire’s decision to the FTC, which voted 5-0 to confirm McGuire’s finding of anti-competitiveness, but provided an alternate remedy in the form of separate negotiating groups.

The commission’s announcement stated that its investigation showed that “senior officials at Evanston and Highland Park anticipated that the merger would give them leverage to raise prices, and the merged firm did in fact raise its prices immediately and substantially after the transaction.”

FTC said that it found lacking the company’s counter-argument that the price increases “reflect ENH’s attempts to correct a multi-year failure by Evanston Hospital’s senior officials to charge market rates.”

However, the commission also concluded that “the potentially high cost inherent in the separation of hospitals that have functioned as a merged entity for seven years ... instead warrant[s] a remedy that restores the lost competition through injunctive relief.”

Mark Neaman, president/CEO of ENH, said in a prepared statement that the decision “validates our commitment as an integrated healthcare delivery system ... that benefits the patients and families we are privileged to serve.”

Neaman also said that the $150 million investment has “dramatically improved the breadth, depth and quality of care in the region” and “has increased patient access and treatment, not made ‘victims’ of select HMOs.”

80 Puerto Rican doctors indicted

More than 80 doctors and licensing board administrators from Puerto Rico have been indicted by a U.S. federal grand jury for taking part in a large scale fraud that helped unqualified doctors in the self governing U.S. territory obtain medical licenses through alleged bribery and deception.

Most of the defendants are Puerto Rican and have been practicing as doctors in Puerto Rico, including in emergency departments, but so far, according to the authorities, none has practiced on the mainland. A medical license from Puerto Rico is recognized in five states: Arizona, Florida, New York, Texas, and Virginia.

The defendants are said to have obtained the false licenses by various means, including bribing officials with up to $10,000 and by substituting exam papers submitted by successful candidates for their own. A secretary at the licensing board reportedly cut and paste extracts of papers from successful candidates into the papers submitted by some of the defendants so they could be passed off as authentic.

Some of the cases are thought to have involved “intermediaries,” people who approached doctors who failed their exams and told them they could get licenses by other means. The intermediaries liaised between the doctors and the licensing board officials.

Some of the defendants had failed their medical exams a dozen times. Most of them did their medical training overseas, for instance in the Dominican Republic, Mexico and Cuba.

One of the people arrested is the former executive director of the licensing board in Puerto Rico, Pablo Valentin. Television news showed him being led away by local police and agents from the FDA.

The fraud is said to have stretched back to 2001 and perhaps much earlier. Also, there could be implications in other areas of the law. For instance, if the defendants have prescribed medication while unlicensed, they could face charges under the Controlled Substances Act. And if they have submitted claims to Medicare or Medicaid while unlicensed, these actions may attract charges of false statements and mail fraud. The Associated Press reported that the defendants could face prison terms of five to 20 years. The federal authorities are also searching for nine other suspects, believed to be in Puerto Rico, the Dominican Republic, Florida and Philadelphia.

Earlier this month a group representing Puerto Rican optometrists agreed to settle Federal Trade Commission charges that they orchestrated and carrying out agreements among the group’s members to refuse, and threaten to refuse, to deal with payors, unless the payors raised the fees paid to the optometrists.

The complaint and consent order was reported yesterday to settle the FTC’s charges against the following respondents: Colegio de Optometras de Puerto Rico (San Juan, Puerto Rico), Edgar D vila Garcia, MD and Carlos Rivera Alonso, MD. The consent order settling the commission’s charges bars the group and two of its leaders from engaging in such conduct, while allowing them to participate in legal joint arrangements.

The FTC alleged that the organization targeted Ivision International, which has offered vision care services and products in Puerto Rico since 1997.