The ruling
U.S. District Court Judge Kai Scott, who ruled on Alliance’s motion to block the contract and preserve its oncologists’ admitting privileges, ultimately sided with Jefferson and allowed the contract to go forward.
Judge Scott wrote that, “while the court understands the plaintiffs’ concerns and desires to maintain the continuity of care for their own patients,” the court “is not persuaded that either of the two threshold elements for a temporary restraining order or preliminary injunction are met” – first, that Jefferson’s actions violate antitrust laws and second that the plaintiffs “will suffer immediate, irreparable harm” from having their admitting privileges rescinded.
Alliance argued that Jefferson’s contract violated federal antitrust laws and would allow Jefferson to monopolize the local oncology market.
However, Judge Scott called Alliance’s antitrust argument “lifeless” under the strict requirements for antitrust violations, explaining that, among other reasons, a monopoly is unlikely given that Jefferson competes with several high-profile oncology programs in the Philadelphia area, including the Fox Chase Cancer Center.
Judge Scott also expressed doubt that the Jefferson’s actions would cause irreparable harm to Alliance’s business. Alliance employs more than thirty oncologists affiliated with over a dozen hospitals in the greater Philadelphia area, and the inpatient services provided at Jefferson Health-Northeast did not represent a major part of its business.
Despite her ruling, Judge Scott did voice skepticism about some of Jefferson’s arguments.
“The court notes that the Jefferson defendants have briefly argued that Jefferson will be better able to ensure that its own patients receive fully integrated and coordinated care” under the exclusive provider agreement, but “it is unclear how the cooperation of ACS [Alliance Cancer Specialists] and JNE [Jefferson Health-Northeast] hospitalists really caused any problems for the coordinated care of” patients in the many years that they worked together.
It also “does not seem to necessarily serve the community to quickly sever the artery between the services that ACS provides and the services that JNE provides,” Judge Scott wrote.
She added that she would consider another motion from Alliance if the practice makes stronger arguments illustrating antitrust violations and demonstrating irreparable harm.
Currently, Dr. Chasky and Mr. Frier are considering their next steps in the case. The oncologists said they can appeal the judge’s decision or file a new complaint.
Meanwhile, Dr. Chasky and his four colleagues requested and were granted internal medicine privileges at Jefferson Health-Northeast, but given the considerable overlap between oncology and internal medicine, the line between what they can and cannot do remains unclear.
“It’s a mess,” he said.
A familiar story
Large health care entities have increasingly worked to push out or swallow up smaller, independent practices for years.
“What Dr. Chasky and his practice are going through is a little bit more of an aggressive version of what’s going on in the rest of the country,” said Michael Diaz, MD, a community oncologist at Florida Cancer Specialists, the largest independent medical oncology/hematology group in the United States. “The larger institutional hospitals try to make it a closed system so they can keep everything in-house and refer to their own physicians.”
The incentive, Dr. Diaz said, is the financial windfall that Section 340B of the 1992 Public Health Service Act generates for hospital-based oncology services at nonprofit hospitals, such as the Jefferson Health-Northeast facilities.
The 340B program allows nonprofit hospitals to buy primarily outpatient oncology drugs at steep discounts, sometimes 50% or more, and be reimbursed at full price.
When launched in 1992, the program was meant to help a handful of safety-net hospitals cover the cost of charity care, and now approximately more than half of U.S. hospitals participate in the program, particularly after requirements were loosened by the Affordable Care Act. But there’s little transparency on how the money is spent.
Critics say the incentives have created a feeding frenzy among 340B hospitals to either acquire outpatient oncology practices or take their business because of the particularly high margins on oncology drugs. There are similar incentives for hospital-based infusion centers.
In its lawsuit, Alliance alleged that such incentives are what motivated Jefferson’s recent actions.
“It’s all about the money at the end of the day,” said Christian Thomas, MD, a community oncologist with New England Cancer Specialists, Scarborough, Maine, who, like Dr. Diaz, said he’s seen the dynamic play out repeatedly in his career.
The American Hospital Association has been a vigorous defender of 340B in the courts and elsewhere, but the Association’s communications staff had little to say when this news organization reached out about the Jefferson-Alliance situation, except that they do not comment on “specific hospital circumstance.”
