CHI Franciscan padded ‘bottom line at the expense of its patients,’ attorney general says

AP file

Two recent agreements that boosted CHI Franciscan Health’s presence on the Kitsap Peninsula have resulted in rising prices for patients and reduced competition, a lawsuit filed Thursday by the state Attorney General’s Office says.

Attorney General Bob Ferguson wants the court to undo the agreements between Franciscan and two medical firms: WestSound Orthopaedics and The Doctors Clinic. The lawsuit names all three as defendants.

“These transactions were intentionally made to decrease competition, increase prices, and pad CHI Franciscan’s bottom line at the expense of its patients,” Ferguson said in a news release.

CHI Franciscan Health vice president for communications and government affairs Cary Evans said in an emailed response that Franciscan, WestSound Orthopaedics and The Doctors Clinic “attempted to negotiate in good faith with the AG to try to respond to his concerns without the need for him to file a lawsuit and cause disruption in the local health care community.”

Franciscan will “vigorously defend” its case and “believes that the AG’s allegations are misguided and unfounded,” Evans wrote.

Insurers saw double-digit price increases overnight, according to the AG’s news release, and those increases were passed to patients as out-of-pocket costs.

The lawsuit, filed under seal in U.S. District Court for the Western District of Washington in Tacoma, said both agreements violate state and federal antitrust laws.

When CHI Franciscan Health announced the agreement with The Doctors Clinic last year, hospital CEO Ketul Patel said the two organizations had a shared commitment to “enhancing access to care for our communities throughout the Pacific Northwest.”

But the AG’s office said patients on the Kitsap Peninsula now have fewer options for health care since the merger took place.

“The transactions have hobbled CHI Franciscan’s competitors while allowing it to reap the benefit of more expensive, hospital-based rates” at Harrison Medical Center in Bremerton, the attorney general’s news release states.

CHI Franciscan has “netted well over $1 million in ill-gotten gains” since the mergers last year, and the attorney general alleges a “price-fixing agreement” between CHI Franciscan and The Doctors Clinic.

The state is asking the court to force CHI Franciscan to pay back the overages, pay civil penalties and court costs, and rescind both agreements with the medical providers.

The hospital system is part of Denver-based Catholic Health Initiatives.

Kate Martin: 253-597-8542, @KateReports