For the second time in less than a year, the U.S. Department of Justice (DOJ) has filed an antitrust complaint against hospital systems that agreed to not advertise on billboards or in print in each other’s home county. Last time it was a number of hospital systems in Michigan. This time, it is two hospital systems in West Virginia, Charleston Area Medical Center, Inc. (CAMC), in Kanawha County, and St. Mary’s Medical Center, Inc. (St. Mary’s), in Cabell County.
What exactly did CAMC and St. Mary’s agree to do (or not do)?
According to the DOJ’s complaint, since at least 2012 CAMC and St. Mary’s agreed to limit their marketing for competing healthcare services. More precisely, CAMC agreed to not place print or outdoor advertisements in Cabell County where St. Mary’s is located, and St. Mary’s agreed to not place print or outdoor advertisements in Kanawha County where CAMC is located. Both hospital systems had their marketing departments monitor and enforce their agreement.
In May 2013, for example, St. Mary’s director of marketing complained to CAMC’s counterpart after CAMC ran a newspaper ad promoting a CAMC physicians’ group in The Herald-Dispatch, and succeeded in getting CAMC to agree to remove the advertisement. In an email quoted in the complaint, St. Mary’s director of marketing wrote to other St. Mary’s senior executives:
I talked with CAMC and they agreed this ad violated our agreement not to advertise in Charleston paper if they didn’t advertise in Huntington paper. Their director of marketing Says [sic] she pulled the ad but was concerned it might still run again one more time this Sunday. I can’t call the HD [Herald-Dispatch] and make sure because they could challenge this type of handshake agreement That [sic] prevents them from getting advertising dollars from a different advertiser. We’ll see and I’ll follow up from there but after Sunday I am confident we won’t see CAMC again in HD.
Consistent with its agreement with St. Mary’s, and as described by St. Mary’s director of marketing, CAMC asked The Herald-Dispatch to remove the advertisement.
Why does the DOJ care so much about agreements between competitors to limit advertising/marketing?
Advertising/marketing are important tools that companies use to compete against one another. In the healthcare field, hospitals use advertising/marketing to compete for patients. Hospitals, for example, use marketing to inform patients about their quality, the scope of their services, and the expertise of their physicians. The goal of that marketing is to increase patient volume and share.
What should you do if you have an agreement with your competitor to limit your advertising/marketing?
“Seek immediate [legal] help …”