HMP Surgery

FOR-PROFIT HOSPITAL – Damages Expert Regarding a Matter of Tortious Interference by a Hospital Competitor

A premier for-profit hospital associated with a national for-profit hospital company initiated a suit against a competitor in their highly desirable market to recover damages resulting from the tortious interference of the competitor poaching key employed physician practices. Despite non-compete clauses in each of the physician contracts, the competitor convinced the physicians that they would cover legal expenses for breaking this clause even though other options for practicing medicine existed in the physician contracts.

As a result, the Hospital lost key physician practices and market share to a nearby competitor which took several years to recoup with recruitment efforts.

HMP was engaged to determine the damages incurred by the Hospital as a direct result of the loss of the poached physicians through both the net present value of the Hospital and clinic marginal profits lost by the Hospital as a result of the competitor’s alleged conduct as well as the net loss in market value or goodwill of the Hospital attributable to the competitor’s alleged conduct.

Issues

  • The effects of the patient migration due to the resulting reduction in both clinic visits as well as hospital-based services at the Hospital in question had to be quantified
  • Marginal profits for both the clinics associated with the physicians as well as the Hospital associated with the lost volume also had to be determined
  • The lost patient and physician relationships and resulting need for physician recruitment

Approach

  • Using hospital-provided data as well as HMP MetricsTM, HMP performed an objective analysis for a ten-year period to construct a historical profile of both the Hospital in question as well as its competitors in order to be able to trend changes in selected operating indicators
  • Utilizing patient billing files for the patients treated by the named physicians during their term of employment, HMP determined pre- and post-interference patient patterns by clinic visits, outpatient hospital services, and inpatient hospital services for the relevant period. The patient panels for each physician formerly employed by the hospital were documented to have their referral and utilization patterns changed during the relevant period even with accounting for patients that chose to continue utilizing the hospital in question and accounting for other factors like mortality adjustments
  • The documented lost inpatient and outpatient volumes incurred for the Hospital and clinic were input into HMP’s statistical model to determine an accurate assessment of lost marginal profit for the average tenure of the named physicians
Scroll to top