Investor sues UHS execs, alleging ‘unfair’ stock gains amid pandemic

The US should tax excessive CEO compensation

A Universal Health Services investor is suing several executives of the King of Prussia, Pa.-based system, alleging they unjustly enriched themselves through stock options amid the pandemic, according to Law360

The lawsuit, filed in the Delaware Chancery Court and made public July 9, accuses UHS executives and directors of taking advantage of a pandemic-related temporary hit in the company’s stock price and argues taking the stock options was “grossly unfair to the company and its stockholders.”

“The controllers and other company insiders took advantage of the temporary drop in the company’s stock price to grant and receive options to buy the company’s stock at rock bottom prices, thereby showering themselves in excessive compensation,” the lawsuit claims.

In particular, the lawsuit claims that in just 12 days after the stock options were granted, defendants made over $30 million in gains. 

Several top execs were named as defendants, including Alan Miller, UHS founder and chair and Marc Miller, CEO and president of UHS. Three other UHS execs were named, as well as Warren Nimetz, an administrative partner of law firm Norton Rose Fulbright’s New York office.

“UHS’s directors and officers deny any liability associated with the company’s routine and publicly disclosed options grant in March 2020,” attorney Matthew Madden of Robbins Russell Englert Orseck & Untereiner, representing UHS, its executives and Mr. Nimetz, told Law360. “The options grant was in line with the company’s compensation practices in prior years and took place at a board meeting scheduled months in advance.”

Mr. Madden added that UHS’ executives and officials “acted properly” and that the plaintiff’s claims are “baseless.” 

“UHS is proud of its service to patients, and stewardship of investor capital, during these unprecedented times in the healthcare industry,” Mr. Madden told Law360.

The lawsuit was filed by Robin Knight. 

California hospital beats suit over ER fee nondisclosure

California moves end surprise ER bills after Vox's reporting - Vox

A California hospital was properly dismissed from a lawsuit alleging it violated state consumer protection laws by failing to disclose emergency room visit fees before treatment, a state appellate court ruled June 29. 

Joshua Yebba filed the lawsuit against AHMC Anaheim (Calif.) Regional Medical Center, alleging the hospital violated California’s Unfair Competition Law and Consumer Legal Remedies Act when it did not disclose a separate fee for an emergency room visit before treating him. Mr. Yebba claimed he would have gone to a different ER if he knew about the fee. He sued on behalf of himself and others who allegedly were charged the separate ER fee without knowing about it. 

The lawsuit centered on whether the hospital had a duty to disclose the ER fee to patients before treating them and whether the hospital violated the consumer protection laws by not disclosing them. 

The hospital argued that it fulfilled any duty to disclose the fee because it has a written or electronic copy of its chargemaster available. However, Mr. Yebba contended that Anaheim Regional had a duty to tell him personally while checking in or to at least post a sign about the fees in the ER. 

A lower court dismissed the case against the hospital on the grounds that Anaheim Regional had no duty to disclose the separate ER fee to Mr. Yebba before treating him and that the allegations didn’t violate the consumer protection acts.

The California Court of Appeals 4th District affirmed the dismissal, saying that California lawmakers have determined what pricing information hospitals must disclose to patients and when, and a court decision increasing the requirements “upsets the legislative balance between the consumers’ right to information and the hospitals’ burden of providing it.”

Read the full court opinion here

In first federal ruling on vaccine mandates, judge sides with Houston hospital, dismissing claims from staff resisters

https://www.yahoo.com/news/federal-judge-sides-houston-hospitals-020713664.html

178 staffers at Houston Methodist hospital suspended for not complying with  COVID-19 vaccine mandate - ABC News

In the first federal ruling on vaccine mandates, a Houston judge Saturday dismissed a lawsuit by hospital employees who declined the COVID-19 shot – a decision that could have a ripple effect across the nation.

The case involved Houston Methodist, which was the first hospital system in the country to require that all its employees get vaccinated. U.S. District Judge Lynn N. Hughes said federal law does not prevent employers from issuing that mandate.

After months of warnings, Houston Methodist had put more than 170 of its 26,000 employees on unpaid suspension Monday. They were told they would be fired it they weren’t vaccinated by June 21.

The hospital already had made it clear it means what it says: It fired the director of corporate risk – Bob Nevens – and another manager in April when they did not meet the earlier deadline for bosses.

In recent weeks, a few other major hospitals have followed Houston Methodist’s lead, including the University of Pennsylvania, University of Louisville, New York Presbyterian and several major hospitals in the Washington, D.C. area.

Houston Methodist’s CEO Marc Boom predicts more hospitals soon will join the effort. Many hospitals and employers were waiting for legal clarification before acting.

“We can now put this behind us and continue our focus on unparalleled safety, quality, service and innovation,” Boom said after the ruling. “Our employees and physicians made their decisions for our patients, who are always at the center of everything we do.”

The lawsuit was filed by 117 workers led by Jennifer Bridges, a nurse at Houston Methodist’s Baytown hospital who declined the vaccine because she considers it experimental and dangerous. The judge disagreed, writing: “This claim is false, and it is also irrelevant.”

Learning of the dismissal from USA TODAY, Bridges vowed not to give up. She has initiated a change.org petition that as of Saturday had drawn more than 9,000 signatures and a GoFundMe to pay for the lawsuit that has raised $130,000.

“This doesn’t surprise me,” she said. “Methodist is a very large company and they are pretty well protected in a lot of areas. We knew this was going to be a huge fight and we are prepared to fight it.”

The lawsuit claimed that federal law prohibits employees from being required to get vaccinated without full U.S. Food and Drug Administration approval of the vaccines. Currently, the FDA has authorized the Moderna, Pfizer and Johnson & Johnson vaccines under a special provision for emergencies.

The judge dismissed this argument as well, saying that law does not apply to private employers. He also dismissed an argument that anyone who gets the vaccine is effectively a human subject in an experimental trial.

“The hospital’s employees are not participants in a human trial,” he wrote. “They are licensed doctors, nurses, medical technician, and staff members. The hospital has not applied to test the COVID-19 vaccines on its employees.”

The lawsuit originally was filed in Texas state court but was moved to federal court at Houston Methodist’s request. The federal judge ruled Saturday that Texas state law only protects workers from being fired if they are forced to commit a crime.

ACLA appeals dismissal of PAMA lawsuit, pushes legislative fixes

Dive Brief:

  • A trade group representing LabCorp and Quest Diagnostics has appealed the dismissal of its lawsuit challenging the implementation of the Protecting Access to Medicare Act, which sets laboratory payment rates according to market data reported by industry.
  • Federal district courts have previously dismissed the lawsuit, most recently in March, but the American Clinical Laboratory Association continues to argue that PAMA is a case of “harmful regulatory overreach” that forces an “unsustainable reimbursement model” on its members.
  • ACLA is targeting PAMA through the courts while continuing to push for Congress to change the law. The trade group said that, regardless of the outcome of the appeal, a legislative solution is needed to a law it argues has led to artificially low Medicare rates.

Dive Insight:+

ACLA began its legal case against the implementation of PAMA late in 2017, weeks after the release of the final private payer rate-based clinical laboratory fee schedule. As ACLA sees it, HHS diverged from PAMA directives by exempting “significant categories and large numbers of laboratories” from reporting market data, meaning “Medicare rates will not be consistent with market-based rates.”

The U.S. District Court for the District of Columbia dismissed the case on the grounds that ruling on the establishment of PAMA payment amounts was barred by the statute. ACLA successfully appealed that ruling in 2019. However, the lower court again dismissed the case in late March.

The trade group said the court relied “on the same conclusions that the D.C. Circuit [appeals court] rejected.” The court ruling said the case was dismissed “for lack of subject matter jurisdiction.”

ACLA’s filing of a notice of appeal restarts a process that could take months to play out. The last time the trade group appealed, there was a nine-month wait between the submission of a notice and the delivery of the opinion of the court.

While preparing its opening brief and then waiting on the decision of the appeals court, ACLA will try to tackle PAMA from another angle.

“ACLA will continue to work with policymakers to establish a Medicare Clinical Laboratory Fee Schedule that is truly representative of the market and supports continued innovation and access to vital laboratory services, as Congress originally intended,” Julie Khani, president of ACLA, said in a statement.

Congress has already delayed the next set of fee cuts until 2022. ACLA said the cuts will reduce rates for certain tests used to diagnose chronic diseases by 15%, potentially threatening access to testing. Rates were previously cut in 2018, 2019 and 2020.

Talking to investors in April, LabCorp CEO Adam Schechter said he expects the 2022 impact to “be about the same as it was in 2019, around the $100 million mark.”

117 Houston Methodist employees sue over COVID-19 vaccine mandate

Hospital employees sue over mandatory COVID-19 vaccine policy for workers |  BenefitsPRO

A group of 117 employees is suing Houston Methodist over its COVID-19 vaccination mandate for workers, ABC News reported May 29.

Houston Methodist, which comprises an academic medical center and six community hospitals, rolled out its mandatory vaccination policy March 31, setting an April 15 deadline for managers to receive at least one dose or get an exemption. More than 99 percent of the management team complied by the deadline. By June 7, all about 26,000 employees are required to be vaccinated. However, employees can receive medical or religious exemptions or a deferral if they are pregnant.

Now, 117 Houston Methodist employees have filed a lawsuit, claiming that the mandate is illegal.

The lawsuit, filed May 28 in Montgomery County District Court in Texas, alleges the hospital is “illegally requiring its employees to be injected with an experimental vaccine as a condition of employment,” according to ABC News. It specifically cites that the COVID-19 vaccines are authorized for emergency use by the FDA but have not been fully approved.

The employees allege that Houston Methodist is violating Texas public policy and the Nuremberg Code, a medical ethics code for human experimentation drafted in 1947 because of the Nuremberg trials at the end of World War II, according to the report.

The plaintiffs’ attorney, Jared Woodfill, told ABC News the health system’s mandate is meant “to promote its business and increase profits at the expense of other healthcare providers and their employees’ health. Defendants advertise to the public that they ‘require all employees and employed physicians to get a COVID-19 vaccine.’ More clearly, defendants’ employees are being forced to serve as human ‘guinea pigs’ to increase defendants’ profits.”

Houston Methodist said earlier this year that employees who do not comply with the vaccination mandate initially will have a discussion with their supervisor, then could face suspension followed by termination. The lawsuit seeks to prevent the health system from terminating unvaccinated workers.

Houston Methodist President and CEO Marc Boom, MD, shared a statement about the lawsuit with Becker’s. As of May 28, he said 99 percent of Houston Methodist’s employees have met the requirements for the vaccination mandate.

“We are extremely proud of our employees for doing the right thing and protecting our patients from this deadly virus,” Dr. Boom said. “As healthcare workers, it is our sacred obligation to do whatever we can to protect our patients, who are the most vulnerable in our community. It is our duty and our privilege.

“It is unfortunate that the few remaining employees who refuse to get vaccinated and put our patients first are responding in this way. It is legal for healthcare institutions to mandate vaccines, as we have done with the flu vaccine since 2009. The COVID-19 vaccines have proven through rigorous trials to be very safe and very effective and are not experimental. More than 165 million people in the U.S. alone have received vaccines against COVID-19, and this has resulted in the lowest numbers of infections in our country and in the Houston region in more than a year. We proudly stand by our employees and our mission to protect our patients.”

Eli Lilly fires back against HHS order to repay providers for violating 340B

UPDATE: May 21, 2021: Late Thursday, drug manufacturing giant Eli Lilly filed a motion in an Indiana district court to halt 340B-related monetary penalties, scant days after the Biden administration set a June 1 deadline for biopharmaceutical companies to comply with new conditions in the drug discount program and allow hospital contract pharmacies access to discounted drugs.

The suit alleges a Monday letter from Diana Espinosa, acting head of the Health Resources and Services Administration, gives “no legal explanation or justification for the arbitrary June 1 deadline.”

Lilly previously filed an almost identical lawsuit January 2020. The Indianapolis-based biopharma said it expected the government to follow the briefing schedule outlined in that suit before mandating compliance with 340B and forcing it to pay “substantial and irretrievable sums of money.”

“If the Court ultimately decides Lilly was required to extend 340B pricing to contract pharmacies, Lilly will comply with that decision. Conversely, if the Court ultimately decides manufacturers are not required to extend 340B pricing to contract pharmacies, then we surely expect the government will comply with that decision. But there is no explanation or justification for the government’s attempt to make Lilly pay now, other than to evade this Court’s review and leave Lilly without recourse for such payments,” the motion reads.

In the petition, Lilly, which brought in $6.2 billion in profit last year, alleges the shifting terms of the program are due to HHS director Xavier Becerra bending to political pressure to “take action” against drug manufacturers, as pharmaceutical prices continue to climb.

Lilly asked the district court to temporarily block HHS from moving against Lilly until the drugmaker’s request for a preliminary injunction is resolved; and for an accelerated legal schedule to settle its claims before the looming June deadline.

An HRSA spokesperson declined to comment on the suit.

Dive Brief:

  • HHS’ Health Resources and Services Administration called out six pharmaceutical companies Tuesday for violating rules under the 340B drug discount program, ordering them to repay affected providers for previous overcharges and warning of more penalties if they don’t comply.
  • In July 2020 some drugmakers stopped giving the 340B ceiling price on their products sold to covered entities and dispensed through contract pharmacies, while others limited sales by requiring specific data or selling products only after a covered entity demonstrated 340B compliance, according to HRSA.
  • In letters from Diana Espinosa, acting administrator of HRSA, the agency requested AstraZeneca, Eli Lilly, United Therapeutics, Sanofi, Novo Nordisk and Novartis give an update on their plans to restart selling covered outpatient drugs at the 340B price to covered entities that dispense medications through contract pharmacies by June 1.

Dive Insight:

Providers and drugmakers have sparred for years over the 340B drug discount program that requires pharmaceutical companies to give discounts on outpatient drugs for providers serving low-income communities.

AHA along with five other provider groups in December filed a federal lawsuit against HHS, alleging the department failed to enforce 340B program requirements and allowed actions from drug companies that undermined the program. That lawsuit was later dismissed.

But with the change in administrations, providers now seem to have an ally in the fight.

Previously, as California’s Attorney General, newly minted HHS chief Xavier Becerra led a group of states pushing the agency to force drugmakers to comply with the law late last year.

Provider groups cheered the move after raising the alarm last year that an increasing number of drug companies were refusing to offer discounts to such eligible hospitals.

“The denial of these discounts has damaged providers and patients and must stop. It is vital that these companies immediately begin to repay the millions of dollars owed to these providers,” 340B Health CEO Maureen Testoni said in a statement.

In separate letters to drugmakers, HRSA outlines complaints against them and their actions, ultimately saying their policies violated the statute and resulted in overcharges that need to be refunded. The companies must work to ensure all impacted entities are contacted and efforts are made to pursue mutually agreed upon refund arrangements, according to the letters.

Any additional violations will be subject to a $5,000 penalty for each instance of overcharging under the program’s Ceiling Price and Civil Monetary Penalties final rule.

The American Hospital Association also praised the agency in a release for “taking the decisive action we’ve called for against drug companies that skirt the law by limiting the distribution of certain 340B drugs through community pharmacies.”

Hospitals in the 340B program provide 60% of all uncompensated care in the U.S. and 75% of all hospital care to Medicaid patients, according to 340B Health.

UnitedHealth’s Surgical Care Affiliates fires back at DOJ in collusion case

Senate narrowly confirms new head of Justice Department's criminal  division, who worked for Russian bank | PBS NewsHour

Surgical Care Affiliates, which is part of UnitedHealth Group’s Optum division, hit back at the Department of Justice’s defense of a federal case accusing SCA of agreeing with competitors to not poach senior-level employees.

In a May 14 proposed reply brief supporting its bid to dismiss the case, SCA argued the Justice Department’s defense is unlawful and violates due process rights.

“The government seeks to criminally prosecute as a per se Sherman Act violation an alleged agreement not to solicit another company’s employees, even though no court in history has ever definitively found such an agreement unlawful under any mode of analysis,” according to the proposed reply brief. “Not only is this kind of agreement not illegal per se, but subjecting a practice to per se condemnation for the first time in a criminal prosecution would violate bedrock guarantees of due process.” [emphasis in original]

In January, a federal grand jury charged SCA and its related entities, which own and operate outpatient medical care centers, with entering and engaging in conspiracies with other healthcare companies to suppress competition between them for the services of senior-level employees. 

In an email statement to Becker’s Hospital Review, SCA said at the time of the charges: “This matter involves alleged conduct seven years before UnitedHealth Group acquired SCA and does not involve any SCA ambulatory surgery centers, their joint owners, physician partners, current leadership or any other UnitedHealth Group companies. SCA disagrees with the government’s position, and will vigorously defend itself against these unjustified allegations.”

The charges are the first from the department’s antitrust division in its ongoing investigation into employee allocation agreements. Violators of the Sherman Act can face a maximum $100 million fine, or twice the gain derived from the crime or twice the loss suffered by victims if the amount is greater than the maximum. 

Kansas Heart Hospital accuses former CFO, COO of stealing funds

Binghamton Embezzlement Lawyer | Embezzlement Charges in NY

The Kansas Heart Hospital in Wichita filed a lawsuit against two former executives, claiming they stole money from the facility and improperly used CARES Act funds, according to ABC affiliate KAKE and court documents.  

The lawsuit, filed April 29 in the U.S. District Court in Kansas, accuses the hospital’s former COO Joyce Heismeyer and former CFO Steve Smith of stealing funds between 2015 and 2020. During that time, Kansas Heart Hospital lost more than $31 million, according to the lawsuit.

Ms. Heismeyer and Mr. Smith abruptly stepped down from their roles in fall 2020. The hospital claims the former executives set up large severance payments for themselves before their departures, which prompted an internal investigation.

In its complaint, Kansas Heart Hospital alleges that Ms. Heismeyer and Mr. Smith conspired with the hospital’s former president, Gregory Duick, MD, to divert more than $6 million in hospital funds for undisclosed bonuses and benefits during the five-year period. Additionally, the hospital claims all three sent millions in hospital dollars to an investment account that Dr. Duick owned. 

Kansas Heart Hospital also claims the three caused it to lose out on $4.4 million in CARES Act payments. The funds were returned to avoid a federal audit, the lawsuit alleges, but the former executives said the funds were returned because the hospital hadn’t treated any COVID-19 patients.

Dr. Duick also retired from his role in fall 2020. He is named in the lawsuit but is not a defendant, and did not immediately return KAKE‘s request for comment.

In a statement to KAKE, an attorney for Ms. Heismeyer and Mr. Smith said, “Joyce and Steve vehemently deny the allegations and will aggressively defend themselves and expect to clear their names in court.” Additionally, the statement said, “We are disappointed by the Kansas Heart Hospital’s plan to sue and tarnish the reputations of two long time employees.”

5 hospitals seeking to regain independence, split from systems

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Several hospitals are looking to split from the health system they belong to, regain independence or partner with a different healthcare organization.

Below are five instances reported since Jan. 1, beginning with the most recent:

1. 2 hospitals to part ways with U of Kansas Health System
HaysMed, a single-hospital system in Hays, Kan., and Pawnee Valley Community Hospital in Larned, Kan., will depart from the University of Kansas Health System in Kansas City.  University of Kansas Health System and the two hospitals said they decided that working independently “best supports the long-term health and wellness of our communities.”

2. North Carolina system to sever ties with Atrium
Carolinas HealthCare System Blue Ridge, a two-campus system in Morganton, N.C., plans to cut ties with Charlotte, N.C.-based Atrium Health. The hospital system said its board of directors approved a nonbinding letter of intent to instead become part of the Chapel Hill, N.C.-based UNC Health network through a management services agreement. 

3. California hospital seeks split from Providence: 6 things to know
Hoag Memorial Hospital Presbyterian in Newport Beach, Calif., is seeking to end its affiliation with Providence, a Catholic health system based in Renton, Wash. Hoag filed a lawsuit last year to split from the 51-hospital system.

4. Boone Hospital Center splits from BJC HealthCare April 1
Columbia, Mo.-based Boone Hospital Center became independent April 1, separating from St. Louis-based BJC HealthCare.

5. Washington hospital splits from Virginia Mason
Virginia Mason Memorial in Yakima, Wash., has transitioned back to an independent hospital and reverted to its old name. The board of Virginia Mason Memorial voted in late October to end its affiliation with Seattle-based Virginia Mason Health System. The hospital said it split from Virginia Mason because of the system’s merger with Tacoma, Wash.-based CHI Franciscan. 

Orange County Hospital Seeks Divorce From Large Catholic Health System

In early 2013, Hoag Memorial Hospital Presbyterian in Orange County, California, joined with St. Joseph Health, a local Catholic hospital chain, amid enthusiastic promises that their affiliation would broaden access to care and improve the health of residents across the community.

Eight years later, Hoag says this vision of achieving “population health” is dead, and it wants out. It is embroiled in a legal battle for independence from Providence, a Catholic health system with 51 hospitals across seven states, which absorbed St. Joseph in 2016, bringing Hoag along with it.

In a lawsuit filed in Orange County Superior Court last May, Hoag argues that remaining a “captive affiliate” of the nation’s 10th-largest health system, headquartered nearly 1,200 miles away in Washington state, constrains its ability to meet the needs of the local population.

Hoag doctors say that Providence’s drive to standardize treatment decisions across its chain — largely through a shared Epic electronic records system — often conflicts with their own judgment of best medical practices. And they recoil against restrictions on reproductive care they say Providence illegally imposes on them through its adherence to the Catholic health directives established by the United States Conference of Catholic Bishops.

“Their large widespread system is very different than the laser focus Hoag has on taking care of its community,” said Hoag CEO Robert Braithwaite. “When Hoag needed speed and agility, we got inadequate responses or policies that were just wrong for us. We found ourselves frustrated with a big health system that had a generic approach to health care.”

Providence insists it wants to stay with Hoag, a financial powerhouse — even as the two sides engage in secret settlement talks that could end the marriage.

“We believe we are better together,” said Erik Wexler, president of Providence South, which includes the group’s operations in California, Texas and New Mexico. “The best way to do that is to collaborate.” He cited joint investments in Hoag Orthopedic Institute and in Be Well OC, a kind of mental health collaborative, as fruits of the affiliation.

“If we are separate,” Wexler added, “there is a chance we may begin to cannibalize each other and drive the cost of care up.”

Research over the past several years, however, has shown that it is the consolidation of hospitals into fewer and larger groups, with greater bargaining clout, that tends to raise medical prices — often with little improvement in the quality of care.

“Mergers are a self-centered pursuit of stability by hospitals and hospital systems that hope to get so big that they can survive the anarchy of U.S. health care,” said Alan Sager, a professor at Boston University’s School of Public Health.

Wexler argued that price increases linked to consolidation are less of a worry in Orange County, geographically small but densely populated with 3.2 million residents and 28 acute care hospitals. Given the proximity of so many hospitals, Wexler said, counterproductive duplication of medical services is more of a concern.

Unlike many local community hospitals that seek larger partners to survive, Hoag, one of Orange County’s premier medical institutions, is financially robust and perfectly able to stand on its own. It has the advantage of operating in one of Orange County’s most affluent areas, with two acute care hospitals and an orthopedic specialty hospital in Newport Beach and Irvine. It is the beneficiary of numerous wealthy donors, including bond market billionaire Bill Gross and thriller novelist Dean Koontz.

In 2020, Hoag’s net assets, essentially its net worth, stood at about $3.3 billion — nearly 20% of the total for all Providence-affiliated facilities, even though Hoag has only three of the group’s 51 hospitals. Hoag generated operating income of $38 million last year, while Providence posted a $306 million operating loss.

But Providence is hardly a financial weakling. It is sitting on a mountain of unrestricted cash and investments worth $15.3 billion as of Dec. 31. And despite its hefty reserves, it received $1.1 billion in coronavirus relief grants last year under the federal CARES Act, and millions more from the Federal Emergency Management Agency.

Providence does not own Hoag, since no money changed hands and their assets were not commingled. But Providence is able to keep Hoag from walking away because it has a majority on the governing body that was set up to oversee the original affiliation with St. Joseph.

Hoag executives also express frustration at what they describe as efforts by Providence to interfere with their financial, labor and supply decisions.

Providence, in turn, worries that “if Hoag disaffiliates with Providence, it has the potential to impact our credit rating,” Wexler said.

Despite its insistence on the value of the affiliation, Providence officials are said to be willing to end the affiliation in exchange for payment of an undisclosed amount that Hoag considers unwarranted. Wexler and Hoag executives declined to comment on their discussions. A trial start date has not been set, but on April 26 the court will hear a motion from Hoag to expedite it.

While its financial fortitude distinguishes it from many other community hospitals tied to larger partners, Hoag’s experience with Providence is hardly uncommon amid widespread consolidation in the hospital industry and the growing influence of Catholic health care in the U.S.

“The bigger your parent organization becomes, the smaller your voice is within the system, and that’s part of what Hoag has been complaining about,” said Lois Uttley, director of the women’s health program at Community Catalyst, a Boston-based patient advocacy group that monitors hospital mergers.

“Compounding the problem is the fact that the system in this case is Catholic-run, because then, in addition to having an out-of-town system headquarters calling the shots, you also have to contend with governance from Catholic bishops,” Uttley said. “So you have two bosses, in a sense.”

Hoag is not the only hospital seeking to flee this dynamic. Last year, for example, Virginia Mason Memorial hospital in Yakima, Washington, said it would separate from its parent, Seattle-based Virginia Mason Health System, to avoid a pending merger with CHI Franciscan, part of the Catholic hospital giant CommonSpirit Health.

Mergers and acquisitions have led to the increasing dominance of mega hospital chains in U.S. health care over the past several years. From 2013 to 2018, the revenue of the 10 largest health systems grew 82%, compared with 45% for all other hospital groups, according to a recent study by Deloitte, the consulting and auditing firm.

Researchers expect the trend to accelerate as large health systems swallow smaller facilities economically weakened by the pandemic, and a growing trend toward outpatient care reduces demand for hospital beds.

Four of the 10 largest U.S. hospital systems are Catholic, including Chicago-based CommonSpirit Health, St. Louis-based Ascension, Livonia, Michigan-based Trinity Health and Providence. study by Community Catalyst found that 1 in 6 acute care hospital beds are in Catholic facilities, and that 52 hospitals operating under Catholic restrictions were the sole acute care facilities in their regions last year, up from 30 in 2013.

“We need to make this a national conversation,” said Dr. Jeffrey Illeck, a Hoag OB-GYN.

He was among a group of Hoag OB-GYNs who signed a letter to then-California Attorney General Xavier Becerra in October, alleging that Providence frequently declined to authorize contraceptive treatments, such as intrauterine devices and tubal ligations — in breach of the conditions imposed by Becerra’s predecessor, Kamala Harris, when she approved the original affiliation with St. Joseph in 2013.

In March, two weeks before he was confirmed as secretary of the U.S. Department of Health and Human Services, Becerra launched an investigation into those concerns.

Wexler said he is confident the attorney general’s probe will provide “clarity that Providence has done nothing wrong.”

A particularly bitter disagreement between the two sides concerns a rupture last year within St. Joseph Heritage Healthcare, a physician group belonging to Providence that included both St. Joseph and Hoag doctors. In November, the group notified thousands of patients that their Hoag specialists were no longer part of the network and that they needed to choose new doctors.

Wexler said that was the inevitable result of a decision by the Hoag physicians to negotiate separate HMO contracts, an assertion Braithwaite contested. The move disrupted patient care just as the winter covid surge was gaining momentum, he said.

Perhaps the biggest frustration for most Hoag administrators and physicians is Providence’s desire to standardize care across all 51 hospitals through their shared Epic electronic records system.

Hoag doctors say Providence controls the contents of the Epic system and that the care protocols in it, often driven by cost considerations, frequently collide with their own clinical decisions. Any changes must be debated among all the hospitals in the system and adopted by consensus — a laborious undertaking.

Dr. Richard Haskell, a cardiologist at Hoag, recalled a dispute over intravenous Tylenol, which Hoag’s orthopedists prefer because they say it works well and furthered a concerted effort to reduce opioid addiction. Providence took IV Tylenol off its list of accepted drugs, and the Hoag orthopedists “were very upset,” Haskell said.

They eventually got it back on that list, but with the condition that they could order it only one dose at a time. That meant nurses had to call the doctor every four hours for a new order. “Doctors probably felt, ‘Screw it, I don’t want to get woken up every four hours,’ so they probably just gave them narcotics,’” Haskell said.

He said that before agreeing to adopt Providence’s Epic system, Hoag had received written assurances it could make changes that included its preferred treatment choices for various conditions. But it quickly became clear that was not going to happen, he said.

“We couldn’t make any changes at all, so we were stuck with their system,” Haskell said. “I don’t want to be in a system bogged down by bureaucracy that requires 51 hospitals to vote on it.”

Wexler said Hoag understood exactly what it had signed up for. “They knew full well that there would be a collaborative approach across all of Providence, including Hoag, to make decisions on what standardizations would happen across the entire system,” he said. “It is not easy if one hospital wants to create its own specific pathway.”

Despite Hoag’s concerns about lesser standards of care, Braithwaite could not cite an example of an adverse outcome that had resulted from it. And Hoag’s strong reputation seems untarnished, as reflected in the high rankings and awards it continues to garner — and tout on its website.

Still, the affiliation’s days seem numbered. Hoag is no longer on the Providence website or in its marketing materials, and in many cases — such as the St. Joseph Heritage schism — the two groups are already going their separate ways.

“They are certainly acting like we are competitors, and I assume that means they know the disaffiliation is imminent,” Braithwaite said.

Wexler, while reiterating that Providence wants to maintain the current arrangement, was nonetheless able to imagine a different outcome: “What we would do post-affiliation,” he said, “is to continue to look for opportunities to collaborate.”