
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, April 28, 1990                   TAG: 9004300215
SECTION: EDITORIAL                    PAGE: A11   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

A GREEN LIGHT FOR HOSPITAL MERGER

FOR ANYONE who thinks medical costs are about to plunge, we have a bridge in Brooklyn we'd like to sell you. The graying of America and the wonderful but expensive advance of technology are among the forces driving up the price of health care.

Still, a U.S. Justice Department decision announced this week is good news for consumers in Roanoke and Southwest Virginia. It means that health-care costs are apt to rise more slowly than they otherwise might.

Justice's antitrust attorneys are packing their briefcases and going home. They won't carry their fight against merger of Roanoke's non-profit Memorial and Community hospitals all the way to the U.S. Supreme Court.

Though the hospitals prevailed in U.S. District Court and in a federal appeals court, a lawsuit that never should have been brought still has cost the hospitals - and thus Roanoke health-care consumers - hundreds of thousands of dollars in legal and related costs. Justice's decision to bow out will spare the hospitals additional legal expenses, and allow them to proceed with the merger without worrying that just maybe the Supreme Court will vacate or reverse the rulings of the lower courts.

That possibility, while perhaps unlikely, was not entirely out of the question. So far, for example, Justice has succeeded in Rockford, Ill., in what it failed to do in Roanoke. At last word, the non-profit hospitals in Rockford had not decided whether to appeal their merger case to the Supreme Court.

Because antitrust litigation can get very technical, involving such factual issues as defining the relevant market, the Roanoke and Rockford results may not be as contradictory as they seem. There may be enough differences in detail to rationalize the different outcomes.

Still, it's clear - from their interest in alleged college "price-fixing" as well as in hospital mergers - that Justice's antitrust warriors are attracted to the idea of going after non-profit enterprises. It might behoove them to pay just a fraction of that attention to the fruits of merger mania in the for-profit sector of the economy.

And it's clear, too, that Justice's warriors know little about hospital economics. Before they descend on another unlucky community with guns ablaze, they should consider this fact: In the hospital business, competition tends to drive prices up rather than down.

The reasons for this paradox are complex. But the bottom line is that going to the hospital isn't like buying a refrigerator. People in need of hospital care generally aren't of a mind to engage in cost-comparison shopping. They look for succor, not sticker price; comfort, not cut rates; modern equipment, not markdowns.

Partly as a result, hospital construction has boomed at a time when a third of America's 947,000 community-hospital beds are empty.

In Roanoke, no longer must each hospital be driven by the survival instinct to try to provide a full array of medical services. The first step will be consolidation of maternity and children's services at Community; other consolidations are to follow that promise additional savings by the elimination of duplicating facilities.

Hospital merger, in short, is one way to slow the medical-cost spiral . . . if Justice will let you do it.

by CNB