In April 2009, West Penn Allegheny Health System launched an antitrust lawsuit against UPMC, the Pittsburgh region's largest health system, and Highmark, the region's largest health insurer.
Antitrust suits are notoriously expensive and time consuming. On Oct. 29, 2009, after dozens of costly legal filings involving 19 different attorneys, West Penn's antitrust case against UPMC and Highmark was thrown out by U.S. District Court Judge Arthur Schwab. Now, West Penn has filed an appeal that will prolong the costly case.
The only winners in this case will be the lawyers. West Penn has virtually no chance of succeeding on its antitrust claim, but if it were somehow to beat the odds and convince the Court of Appeals to allow its lawsuit to continue, this litigation would only increase already excessive health-care costs in the Pittsburgh area and divert attention from more productive use.
Without a doubt, Pittsburgh suffers from an absence of effective competitors to Highmark and UPMC. According to economists, if one monopoly involved in providing health care is bad, two monopolies are worse.
There is also little doubt that West Penn has been victimized by UPMC's aggressive tactics (in addition to its own missteps), and that higher payments from Highmark would help it fend off challenges posed by UPMC's relentless expansion.
Nonetheless, West Penn will lose its antitrust claim. As the U.S. Supreme Court has explained in case after case over the past 30 years, antitrust laws do not protect against competition; they protect consumers from higher prices and the manipulation of supplies. And as one federal appeals court explained in another case involving hospitals and an insurer, "[C]ompetition is a ruthless process ... [T]he antitrust laws are not a balm for rivals' wounds."
West Penn's antitrust claim is especially implausible because it does not seek to end practices that raise health-care costs but to participate in them. Even if West Penn were able to force Highmark to pay it more money, Highmark undoubtedly would raise premiums to cover the additional cost. This hardly sounds like a formula for reducing the cost of health care in Pittsburgh, which is already too expensive for many.
It is easy to sympathize with West Penn's plight. UPMC has become the dominant health-care provider in the region and has often flexed its muscle at West Penn's expense. No antitrust award, however, could replace innovation, quality of care or other productive means of competing against UPMC.
After Microsoft was found to have unlawfully maintained a monopoly in an action brought by the federal government, it paid more than $3 billion to settle antitrust claims brought by its competitors. Between 2003 and 2005, Microsoft paid $750 million to TimeWarner AOL, $775 million to IBM, $536 million to Novell, $900 million to Sun Microsystems, $761 million to Real Networks Inc., $23.25 million to Be Inc., $60 million to Burst Inc. and likely others.
Yet today's technology headlines center on none of those antitrust beneficiaries (have you ever even heard of Be or Burst?), but instead on two companies that relied on creativity and innovation -- Google, a company created during Microsoft's dominance, and Apple, a company that had been all but dead.
West Penn correctly argues that meaningful competition against both UPMC and Highmark would benefit the region and reduce costs. Proposals for health-care reform being debated in Congress seek to promote such competition through health-care cooperatives and/or the "public option."
Health-care reform might work. A lawsuit that wastes substantial amounts of time, energy and money will not.
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