A large “hub and spoke” multi-system hospital serving residents across a patient service area of more than 23 counties took legal action against four of the largest commercial health insurance carriers in the country. For nearly twenty years, the insurers kept the hub hospital out of network, but not its spoke facilities or any other regional hospital. HMP was engaged to render expert opinions regarding the permanent injury to the provider’s financial, operational and reputational status due to the carriers’ actions.
Issues
- Provider excluded for nearly twenty years from a fair opportunity to participate in in the insurer’s Preferred Provider Organization (PPO) network, as required by state law.
- Anticompetitive behavior of the commercial insurers created a tacit oligopoly that excluded the hub hospital from all PPO networks.
- Exclusion of the hub hospital over such an extended time period resulted in patient migration patterns being permanently altered
- The Irreversible disruption to patient referral patterns that coupled with lost demand put the hospital on a path of significant financial loss
Approach
- Use of a proven statistical method, Coarsened Exact Matching (“CEM”), to measure significant changes in patient utilization patterns at the payer level in a defined market
- Created and prepared a detailed damages calculation that incorporated the CEM results into a complex economic model of the hospital’s operational and financial system
- Leveraged nearly 25 years of Healthcare Cost Report Information System (HCRIS) data as well as 15 years of statewide all-payer data
- Incorporated detailed audited financial statements and Universal Billing (UB) data collected by the hospital for more than 15 years
- Conducted a series of statistical and financial analyses to demonstrate the longitudinal, market-wide effects to the hospital as a result of the carrier’s actions
- Computed damages resulting from the carriers’ conduct were in excess of $675 million
Results
- Favorable settlement of the case before trial
- Hospital was permitted entry into all of the carriers’ PPO networks
- Joint marketing effort on behalf of the hospital and the largest carrier to announce the hospital’s status change
- Analyses conducted for the case held a dual purpose of providing sophisticated, comprehensive financial and operational assessment of the hospital for internal planning and operational improvement