The United States Department of Justice (USDOJ) and the State of Texas have reached a resolution with United Regional Health Care System in Wichita Falls, Texas, addressing concerns about anti-competitive practices. This agreement prevents United Regional from engaging in contract behaviors that were found to unfairly limit the ability of commercial health insurers to contract with United Regional’s competitors. The core of the issue, as alleged by the plaintiffs, was that United Regional was leveraging these contracts to unlawfully maintain a monopoly over hospital services, a violation of Section 2 of the Sherman Act.
According to the formal complaint, United Regional stands out as the dominant hospital in Wichita Falls. It commands an estimated 90 percent share of the general acute-care inpatient hospital service market and over 65 percent of outpatient surgical services. Furthermore, it is the sole regional provider for critical medical services, including cardiac surgery, obstetrics, and advanced trauma care. This market dominance allowed United Regional to set its prices significantly higher; its average daily rate for inpatient services to commercial insurers was approximately 70 percent greater than its closest competitor for comparable services.
The lawsuit argued that to protect its monopoly in both inpatient and outpatient surgical services, United Regional implemented a strategy of requiring most commercial health insurers to sign contracts that effectively blocked them from contracting with rival healthcare facilities. These contracts stipulated substantially increased costs for insurers if they chose to also work with a competing hospital nearby. Given United Regional’s essential status for any insurer aiming to offer health plans in the Wichita Falls area, and the severe financial penalties associated with partnering with United Regional’s competitors, almost all insurers operating in Wichita Falls were compelled to enter into these exclusionary agreements.
The consequence of these practices was to hinder competing hospitals and facilities from securing contracts with major insurers, thereby weakening their competitive position. This ultimately solidified United Regional’s monopoly within the relevant healthcare markets and contributed to elevated healthcare expenses for consumers.
The proposed settlement, designed to last for seven years, aims to reinstate fair market competition. It explicitly forbids United Regional from utilizing agreements with commercial health insurers in ways that unduly restrict these insurers from contracting with United Regional’s competitors. Specifically, United Regional is now prohibited from linking its pricing or discount structures for commercial health insurers to their decisions about contracting with other healthcare providers. Moreover, it cannot prevent insurers from forming agreements with United Regional’s rivals, nor can it take any punitive actions against insurers who choose to partner with competing providers. This settlement is intended to foster a more competitive healthcare landscape in Wichita Falls, ultimately benefiting consumers through potentially lower costs and increased choice.
