Health care planning is granted antitrust immunity

When Charter Medical Corporation applied for a certificate-of-need in the Raleigh, NC, area, Rex Hospital opposed the application on the grounds that medical services could be provided more cost-effectively by following a community health care plan that it had been working on for more than a year with the regional Health Planning Council and another hospital. Rex and the other planners contended that granting the application would result in needless duplication of area health facilities. The application was granted nonetheless, and eventually the case ended up in federal court. Two trials ensued. The second jury decision, which found in favor of Rex Hospital, holds two important implications for health care trustees and administrators. First, a limited but crucial antitrust immunity exists for hospitals that engage in good-faith planning to restrain costs and avoid unnecessary duplication of health care resources. Second, community hospitals can join together in opposing CON applications even if their intent is to eliminate competition; their conduct, however, must not be designed to deny a fair hearing to the other party.