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October 23, 1997


The opinion of the court was delivered by: SPATT

 SPATT, District Judge.

 According to one hospital chairman, "one of every seven dollars spent in the United States, one trillion dollars, is spent on health care." (Tr. at 1872). *fn1" In the past decade, the soaring cost of health care has inspired new and innovative methods of providing more affordable medical treatment. Included in these new methods are the full panoply of managed care organizations, affiliated hospitals and alternative outpatient facilities. Managed care companies of various types, sell health plans to employers, unions, governmental bodies and individuals, providing their members with a network of physicians, hospitals and other health care providers. Another sign of the times is the proliferation of hospital mergers. Hospitals form together to achieve savings in costs, provide more diverse medical services and increase their bargaining power with the managed care organizations. "Indeed, the need for merger and consolidation has become more pressing in light of the drastic changes imposed upon the cost structure of the health care industry." *fn2"

 Further complicating this fast-evolving health care economic picture is the deregulation of hospital rates by the State of New York, which was effective January 1, 1997. The impact of this deregulation was to greatly intensify the competition between hospitals, physician groups, managed care plans and consumers to negotiate hospital rates and to obtain patients.

 These burgeoning, multifaceted and diverse managed care plans contract with huge numbers of consumers en masse, including large corporate employers and unions. This presents the question of identifying the "consumers" of medical care; namely, are the consumers in this antitrust context the members of various managed care plans, or are the "consumers" the managed care organizations themselves? Also, what is the relevant geographic market of premier hospitals in a heavily populated urban-suburban area, in this case Queens, Nassau and Suffolk Counties, in the shadow of the world-renown hospitals located in Manhattan? These questions are among the many complex issues facing the Court in the resolution of this antitrust litigation.

 In this case, the defendants Long Island Jewish Medical Center ("LIJ") and North Shore Health Systems, Inc. ("North Shore" or "NSHS") have agreed to merge. The United States of America (the "Government" or the "plaintiff") commenced this antitrust action to prevent this merger. The Government alleges that the proposed merger "may tend substantially to lessen competition in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18." The Government seeks the following relief:

1. That the agreement to implement the proposed transaction between North Shore and LIJ Medical Center be adjudged a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 1 of the Sherman Act, 15 U.S.C. § 1;
2. That preliminary and permanent injunctions be issued preventing and restraining the defendants and all persons acting on their behalf from entering into or carrying out any agreement, understanding, or plan, the effect of which would be to allow North Shore and LIJ Medical Center to discuss or agree on terms offered to managed care plans or to negotiate or contract jointly with managed care plans; . . .

 LIJ and NSHS are not-for-profit hospitals. NSHS is made up of nine hospitals, one in Queens County *fn3" , five in Nassau County, two in Suffolk County and one in Staten Island. North Shore Manhasset ("NSM") is the major hospital in the North Shore network. LIJ is located in the most easterly portion of Queens County near its border with Nassau County. NSM is located in Manhasset in the northwesterly portion of Nassau County. The two hospitals are approximately two miles apart. The defendants concede that both hospitals are quality teaching hospitals which provide high-level training programs for their physicians, conduct important research in the biomedical sciences, and deliver primary, secondary and tertiary care. (See Def. Pre-Hearing Mem. of Law at 2). Inpatient acute care services are generally divided into three categories: primary, secondary and tertiary. Primary/secondary services include all non-complex care including obstetrics, tonsillectomies, pneumonia, gallbladder removal and a variety of general surgical procedures. Tertiary care includes the most specialized, complex and expensive procedures, such as heart surgery, complicated orthopedic surgery, advanced cancer treatment, high risk obstetric services, neonatal care, neurosurgery, and burn care. It is also conceded that, prior to the merger agreement, these two major hospitals were active competitors.

 During the hearing conducted by the Court on the plaintiff's motion for a preliminary injunction, the parties agreed that the plenary trial of this action on the merits was to be advanced and consolidated with the hearing. See Fed. R. Civ. P. 65(a)(1); Able v. United States, 44 F.3d 128, 132 (2d Cir. 1995) ("Fortunately, Federal Rule of Civil Procedure 65(a)(2), which allows consolidation of a preliminary injunction hearing with a trial on the merits of a permanent injunction, provides a means of ensuring prompt consideration of the full merits of plaintiff's claims rather than the "likelihood of their success"); K-Mart Corp. v. Davis, 756 F. Supp. 62, 63 (D.P.R. 1991).

 The trial was held from August 11, 1997 to August 27, 1997, a period of thirteen trial days with closing arguments on September 26, 1997. At the trial eighteen witnesses testified and more than 300 exhibits were introduced. Because this decision is rendered on an expedited basis, there is no need to decide the preliminary injunction phase. Rather, the Court will render a decision on the case in chief, namely, the Government's request for a permanent injunction, based on a violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.


 This opinion and order includes the Court's findings of fact and conclusions of law as required by Fed. R. Civ. P. 52(a) and 65(d). See Rosen v. Siegel, 106 F.3d 28, 32 (2d Cir. 1997); Colonial Exchange L.P. v. Continental Cas. Co., 923 F.2d 257 (2d Cir. 1991).

 A. The Hospitals

 Long Island Jewish Medical Center is a not-for-profit voluntary hospital sponsored by the Federation of Jewish Philanthropies. This medical center consists of three institutions: LIJ, a 450 bed acute care adult facility; Schneider's Children Hospital, a 150 bed acute care facility; and Hillside Hospital, a psychiatric wing consisting of 220 beds. Dr. David Dantzker is its President and Chief Executive Officer. Dr. Dantzker and others at the hospital have described its network as an "anchor site" and as a "premier" hospital.

 LIJ is also an academic teaching hospital primarily affiliated with the Albert Einstein School of Medicine, with missions of medical education and research. It is committed to treat all patients "who walk through the door, regardless of their ability to pay or the source of the reimbursement." The profile of the patient population at LIJ as categorized by the types of payer is as follows: 30 percent Medicare, 20 percent Medicaid, 20 percent classic indemnity insurance carriers, and 30 percent various types of managed care insurance carriers.

 Fifty percent of the LIJ patient population resides in Queens, thirty percent in Nassau, and the balance in Suffolk, Manhattan and Westchester. The primary competitors of LIJ in the psychiatric field are the Nassau County Medical Center and the Elmhurst Hospital in Queens. In pediatrics, LIJ competes "with almost every hospital on Long Island that has an in-patient pediatric service," which includes most of the hospitals, such as Winthrop University Hospital ("Winthrop") in Nassau, New York Hospital of Queens ("New York Hospital Queens"), Good Samaritan Hospital in Suffolk, and, in addition, the Manhattan hospitals.

 North Shore Manhasset opened in 1953. John Gallagher is the President and CEO. He joined the hospital's administrative staff in 1962, when the hospital had 169 beds. Since then, the hospital's capacity has increased to 705 beds. According to Gallagher, NSM has four goals: (1) to render the highest quality of care; (2) to become a leading teaching center for Long Island; (3) to continue its commitment to research, and (4) to aid the poor through community service and outreach programs. NSM is an academic teaching hospital affiliated with New York University School of Medicine.

 The charitable mission of the hospital has been evident since its inception: its clinics opened the very same day as the hospital. Prior to the introduction of Medicaid in 1966, NSM's attending physicians were committed to treating the poor without charge. In addition, the hospital administers 150 to 200 outreach programs, in which NSM personnel go into the community to address health problems and advise on preventive medicine. By state formula, in 1996, NSM and NSHS spent 33 million dollars and 80 million dollars, respectively, on indigent charity care, representing approximately 7 percent of their gross revenues.

 The Board of Trustees of the NSHS is composed of just under 70 members and approximately 250 associate members. The non-denominational trustees come from all walks of life, including business and religious leaders. None of the trustees of either hospital receive any compensation for their work.

 In terms of the services provided, an important consideration in this case, approximately 80 to 85 percent of the services provided by NSM and LIJ are primary/secondary services, which also are provided at all the community hospitals in Queens and Nassau. The remaining services are for tertiary care.

 B. The Historical Context: The Rise of Managed Care Organizations and Hospital Mergers

 In this country, in the 1980s and early 1990s, a health care crisis was in the offing. The costs of medical care were skyrocketing. Many people could not afford medical care or insurance. According to Dr. Stuart Altman, a former Government economist specializing in health care, almost every major metropolitan area addressed this problem by encouraging a greater percentage of its population to become insured under "Managed Care Organizations" ("MCOs") (Tr. at 1977-78). An "MCO" is an organized system of health care which, for a defined group of people, provides insurance, payments, and health care services in varying degrees. The MCOs caused remarkable changes wherever they were introduced, largely due to the vast number of patients they covered, enabling the plans to pressure the physicians and hospitals to provide quality care at reasonable prices. In addition, the MCOs developed and promoted alternatives for what is often the most expensive medical cost: inpatient hospital care.

 Dr. Altman noted that until recently, New York State did not experience the dynamic changes occurring in the rest of the country. (Tr. at 1977-78). MCOs had not penetrated the New York area, due, in large measure, to the fact such plans were prohibited from negotiating with hospital providers over rates, which were set by the State. As a result, while in other metropolitan areas, for primary and secondary hospital care, MCOs encouraged their patients to visit one of the available outpatient options, New York patients often were relegated to inpatient hospital care for lack of any alternatives. According to Dr. Altman, the result was that New York had the most hospital dependent health care system in the United States. The Court finds Dr. Altman a most credible witness.

 In addition to greater frequency of inpatient hospitalization, the average hospital stays in New York were significantly longer than in almost every other major metropolitan area. This combination of higher admissions rates, greater use of the hospitals, and lengthier stays created "nine beds per capita in New York." Even this large volume of hospital beds was insufficient to serve New York's hospital-dependent patient population: occupancy rates in the New York hospitals at times exceeded 100 percent. Occasionally, patients were housed in hallways to accommodate this overflow.

 In the late 1980s, the New York State Legislature enacted legislation, which, for the first time, allowed one form of the MCO, the Health Maintenance Organization ("HMO"), the most restrictive form of managed care, to negotiate rates with hospital providers. Other types of MCOs remained subject to regulation, forced to pay the higher, state-negotiated rates and had little economic incentive to compete in New York State. At that time, the HMOs were a small percentage of the hospitals' total business, estimated to be about 5 percent of the payers, and so this legislative change had little impact.

 Finally, on January 1, 1997, the State of New York deregulated hospital rates. The results have been remarkable, to say the least. After deregulation, all MCOs, now free to negotiate prices, greatly accelerated their penetration of the New York marketplace. All kinds of managed care blossomed, as demonstrated by the hospitals' increasing participation in managed care. In fact, this trend was already underway prior to deregulation. For example, an April 30, 1996 LIJ report stated that "to date LIJ has active agreements with over 35 managed care entities. In confirmation of the effectiveness of its strategy of managed care contracting, inpatient discharges for managed care members for the first three months of 1996 has surpassed by 35% such activity for all of 1995." (Pl. Ex. 175)(emphasis in original); (Pl. Ex. 232, November 26, 1996 Report of LIJ Vice President of Finance) (noting an "increasing shift away from commercial insurers and indemnity payers toward managed care."). However, after deregulation, the role of MCOs in New York leaped forward. According to Dr. Michael A. Stocker, President and Chief Executive Officer of Empire Blue Cross and Blue Shield ("Empire"), managed care now constitutes 24 or 25 percent of the health care system in the New York metropolitan area. Dr. Stocker predicted that managed health care would "double in five years . . . [and] go to 50 percent penetration." (Tr. at 1183). Of the 4.4 million people Empire insures, about 700,000 are presently in managed care and it is Empire's plan to increase this figure.

 Dr. Altman testified that this emergence and expansion of MCOs has been beneficial, and offered some solutions to the complex health care problems in the New York metropolitan area. Significantly, the MCOs "negotiate hard for rates" and have succeeded in reducing hospital prices "substantially lower than they were in 1996 and before." (See Testimony of Howard Gold, Senior Vice President of NSHS, Tr. at 1454). Dr. Altman predicted that rates in New York will continue to decline as a result of MCOs because "patients [are] prized possessions." (Tr. at 1984-85). As Gold stated, "the [MCOs] have the patients." Gold testified that if the MCO does not obtain the right hospital rates, it will "direct patients away from our hospitals, and we would lose business." In effect, the MCO says to the hospital, "Give us the right price and you can see the patients." (Tr. at 1465). Unsurprisingly, in many cases, the MCO has the upper hand in negotiations as to price with the hospitals.

 In addition to contracting for reduced hospital rates, the MCOs have contributed to another departure in New York health care: they have partially diverted the patient population from hospital dependency by offering alternative outpatient treatments and by mandating shorter hospital stays. Now, probably for the first time in the area's recent history, there is a surplus of hospital beds.

 The decreasing frequency and length of inpatient stays, coupled with the MCOs' negotiation of reduced rates, has put great financial pressure on the hospitals. This fiscal strain comes at a time when Medicare and Medicaid payments to hospitals are decreasing. In the past, these programs were generous payers to the hospital but, in Dr. Altman's words, "all that is changing." The recent "balanced budget bill" contains a $ 116 billion dollar cut in Medicare payments, with health care providers bearing the brunt of it. Over the next six years, Medicare payments to the hospitals will be trimmed by 44 billion dollars. Teaching hospitals will be hardest hit by these budget cuts because they have been the major benefactors of the Medicare program and they will suffer a 20 percent cutback in training payments over the next five years. In addition, all hospital rates for Medicare are frozen, without regard to inflation. LIJ and NSM have not been spared: according to one witness, over the next five years, LIJ will lose more than $ 88 million dollars and NSM will lose 87 million dollars in Medicare and Medicaid payments.

 In a market with a shrinking hospital population, an abundance of empty hospital beds and negotiated reduced rates, hospitals have been compelled to consolidate, merge or affiliate, in order to increase the quality and scope of their services and, most importantly, to decrease costs. Examples include the merger of Beth Israel Medical Center with St. Luke's-Roosevelt Hospital Center (itself the product of a merger), and New York Hospital with Columbia-Presbyterian Medical Center. One such consolidation mechanism is referred to as an integrated delivery system ("IDS"). Saul Katz, Chairman of the Board of NSHS described the purpose of the North Shore IDS as promoting efficiency and stability while combining education, primary, secondary and tertiary care, and the integration of physicians with nursing and home care. Katz characterized the trend toward integrated delivery systems as a "revolution" which cuts costs and increases quality (Tr. at 1879), measures which he believes have been successful at NSHS.

 Dr. Stocker, the CEO of Empire, describes an IDS as follows:

A It is an organized group of doctors and hospitals who present in its best form a coherent network of what we call primary care physicians, physicians who see patients on first contact, secondary level care which is usually considered community hospitals, and tertiary care, which is university hospitals, and they present that as an option for people to buy in the marketplace.
So, in the end it is an organized subset of the universe of all the doctors and hospitals in the marketplace.
Q And what is the advantage of this organized subset, if any?
* * *
A It definitely drives down prices, in the end it drives down their costs.
Q How does it drive down their prices and costs, Doctor?
A . . . In other words, they have excess capacity, and since their marginal cost is quite small, they are willing to discount for services. But after they go down beyond their marginal cost, when they get to 25 percent of their total business they have to decrease their cost, not just their prices, but their cost. At that point, you have a more and more efficient delivery system. They decrease their cost so they can get more patients, more business.

 (Tr. at 1175-77) (emphasis supplied). The theory of the IDS was set forth in a NSM memorandum dated November 11, 1996, as follows:

Competition between for-profit health plans like Oxford and U.S. Healthcare is defining the market and exerting enormous downward pressure on fees for physicians and hospitals. Our ability to set our own fees has been largely lost. Only by developing the ability to act in unison to control costs and manage risk can we provide a buttress against this downward pressure on fees.

 (Pl. Ex. 119) (emphasis supplied).

 Consistent with the trend toward affiliation, North Shore developed an IDS named the North Shore Health Systems by bringing a number of hospitals in with the parent hospital on a broad geographic basis to share services, eliminate duplication and facilitate pool purchases. The NSHS consists of nine hospitals with central purchasing and standardized products, which has resulted in reduced costs. According to one consultant in the medical field, as of November, 1995, NSHS is the largest IDS in New York with 2,450 hospitals beds, 3,500 physicians on its staff and 1.2 billion dollars in revenue. (See Pl. Ex. 47). Another example of an IDS is Winthrop's affiliation with South Nassau Communities Hospital and its developing relationship with five Catholic hospitals in Nassau and Suffolk Counties. Also, Stony Brook University Hospital ("Stony Brook") is attempting to develop a network called the Suffolk Coalition which will likely be comprised of three hospitals in the Peconic Bay area. In addition, New York Hospital in Manhattan purchased four hospitals in Queens extending its health care service to patients in Queens, Nassau and Suffolk, where they live and work. There is also competition among the hospitals to affiliate with or purchase physicians' groups. Winthrop and Mt. Sinai Hospitals have acquired such physicians' groups.

 According to Dr. Altman, the Manhattan hospitals have not been spared the financial strain which has motivated the metropolitan-area hospitals to merge and affiliate in order to remain competitive. If anything, the pressures are felt more keenly by the Manhattan hospitals which -- in addition to bearing the MCOs' negotiation of reduced rates, and Medicaid and Medicare's slashing of payments -- have suffered because of their history of enormous spending and consequent bonded indebtedness. As a result, the Manhattan hospitals have aggressively sought patients to fill their beds by "colonizing" Long Island: affiliating, consolidating and reaching out to Long Island institutions. New York Hospital purchased Booth Memorial Hospital in Queens, now known as New York Hospital Queens. Memorial Sloan-Kettering Cancer Center ("Sloan-Kettering") is establishing local oncology units. Mt. Sinai Medical Center is buying up physician practices on Long Island.

 The growth of managed care, negotiated reduced hospital rates, reduction in Medicare and Medicaid payments, shrinking hospital populations and developing affiliations between hospitals has fostered a competition between institutions that has been characterized as "frantic," as demonstrated by the "tremendous amount" of hospital advertisements in the media (Tr. at 1341; see, e.g., Def. Exhs. CB, CD, CG, CV, ABP).

 C. Competition Among Local Hospitals

 Initially, the Court recognizes that North Shore Manhasset and Long Island Jewish are two of the premier hospitals on Long Island. As Robert Wheeler, CEO of northeast operations of United Health Care ("United"), the third largest health care insurer in the United States, covering 25 million persons and 1.1 million New Yorkers, testified, NSM and LIJ are "must have" hospitals. NSM serves as the "premier hub of the North Shore System" and is "vital for [United's] customer base." (Tr. at 89-91). Further, according to Wheeler, the only other Long Island hospital with the same "cachet" as NSM is LIJ. *fn4" Indeed, Wheeler went so far as to state that if United had to drop NSM and LIJ, it could not "build a marketable network on Long Island." (Tr. at 95, 98). Consistent with this testimony, Gerard Moran, the Acting Vice President of Labor Relations for the Long Island Rail Road, who is responsible for negotiating health care benefits, stated that accessibility to hospitals is an important consideration in bargaining with the union, which was interested in the "three major hospitals on Long Island . . . North Shore, Long Island Jewish and Stony Brook." Connie Poirier, Vice President for Contracting and Network Development and Operations for Empire, testified that LIJ and NSM are the two top "anchor" hospitals in Long Island.

 Richard Wildzunas is the Senior Vice President of MagnaCare, an MCO which operates as both a Preferred Provider Organization ("PPO") (a less restrictive form of managed care than an MCO) and an HMO, and procures 80 percent of its business from self-insured trust funds and 20 percent through insurance carriers. He negotiates the contracts with the hospitals. According to Wildzunas, LIJ and NSM are comparable premier tertiary care hospitals. At trial he testified that in order to operate in Long Island, "you have to have one of these facilities in [your] network." Wildzunas testified that although Winthrop offers the same services and quality of services as NSM and LIJ, it is not comparable to those hospitals because it does not have the same reputation as LIJ or NSM. However, he conceded that the reputation of Winthrop is "close" to LIJ and NSM. Roslyn Yasser is the administrator of the District Council 37 Health and Security Plan and Trust. She negotiates health care packages for approximately 300,000 active workers and 100,000 retirees over the age of 65 and their families. Yasser testified that NSM and LIJ have excellent reputations and are well-utilized. In Yasser's view, there are no other comparable hospitals in Nassau and Queens. She "could not conceive [an] . . . arrangement without those two hospitals."

 Prior to the proposed merger, NSM and LIJ were fierce competitors. According to Wheeler, this competition "helped . . . Managed Care Organizations, sort of keep all parties on their toes." (Tr. at 98-99). Poirier, Empire's chief negotiator, testified that LIJ is an MCO's only alternative to NSM and vice-versa. (Tr. at 284). Similarly, Mario Vangeli, the hospital relations manager for Cigna Healthcare of New York ("Cigna"), which has a small share of the Queens-Nassau market, testified that if neither LIJ nor NSM were in his network, "Cigna would probably lose its current clients and not be able to market to a whole other population in the area." However, Vangeli testified that Winthrop is a large teaching hospital that he perceives "to have a certain respect in the community" and offers the same tertiary care services as LIJ and NSM. In addition, Vangeli conceded that the Cigna enrollees' admissions to Winthrop exceeded such admissions to both LIJ and NSM. In fact, in 1996, the hospital in Queens and Nassau with the most Cigna admissions was Winthrop. Further, he considers Winthrop to be a "center of excellence" along with LIJ, NSM and Stony Brook. Also, during negotiations with NSM as to cardiac rates, Cigna diverted patients from NSM to Lenox Hill and possibly Winthrop. After that move, NSM agreed to a discount for cardiathoracic surgery.

 Dr. Dantzker, LIJ's President and CEO, stated in a February 1995 memorandum that an MCO "will contract with either us or with North Shore Hospital, but not with both." (Pl. Ex. 4). Indeed, in December 1995, LIJ sent a letter to the Federal Trade Commission and the Department of Justice complaining that the NSHS acquisitions on Long Island would lessen competition in the health care field. (Pl. Ex. 6). In the March 26, 1996 minutes of the LIJ Board of Trustees meeting, Dr. Dantzker predicted the development of two Queens-Long Island health care networks, one "coalescing around North Shore and the other around the Medical Center." (Pl. Ex. 11). Similarly, NSM's Strategic Plan for 1997-1998, prepared on October 11, 1996, prior to the merger discussions, states that NSM "competes primarily with other tertiary care centers, such as LIJ and Winthrop." (Pl. Ex. 22).

 A major contested issue in this case is whether other hospitals are able to provide similar services to LIJ/NSM in the relevant markets. According to Wheeler, there are several other full service hospitals in the area, such as Winthrop in Nassau, which, although it provides excellent service (Winthrop was ranked as one of the "100 Best Hospitals" in the United States by U.S. News & World Report), lacks the reputation of NSM or LIJ necessary to build a network. Wheeler testified that attempting to form a network around Winthrop would "disrupt those preferences with our physicians and with our patients[,]" thereby causing United to "lose customers." Both Wheeler and Wildzunas testified that a network built around Manhattan hospitals would be untenable because people generally prefer to be hospitalized where they live. Poirier reached a similar conclusion, namely, that a Manhattan hospital would be an inappropriate anchor, recognizing that "we [Empire] owe our members to receive acute care in their backyard, where their families can visit them, where they feel comfortable, where their physicians practice medicine." (Tr. at 285-86). Wildzunas further stated that Stony Brook would not be a suitable alternative because of its distant location in Suffolk County.

 Poirier testified that Winthrop is not a premier hospital because it is "not known as a teaching facility . . . which is clearly reflected in the graduate education medical dollars. . . . They [the other Long Island hospitals] do not have the history and prestige that the North Shore Manhasset and LIJ names carry." (Tr. at 280-83). Wildzunas, senior negotiator for MagnaCare, similarly stated that although Winthrop offers the same services as NSM and LIJ, it lacks the same reputation, although he conceded that the reputations are "close." Both Wildzunas and Poirier testified that St. Francis Hospital is not comparable because it is a "specialty hospital, not a full service tertiary hospital with the full benefits of a teaching facility." In addition, both contract negotiators stated that New York Hospital Queens and Nassau County Medical Center also lack NSM's and LIJ's reputation, and as a result, could not be considered anchor hospitals.

 When asked whether a developing affiliation between Winthrop and the local network of Catholic hospitals (comprised of St. Francis, Mercy, Good Samaritan, St. Charles and Mather hospitals, referred to as "CHNLI"), might be comparable to NSHS or LIJ, Poirier responded in a colorful fashion:

First of all a patch work quilt of hospitals with different levels of clinical skills, you cannot treat or provide the full continuum of care to all patients, LIJ and North Shore on their campuses are full service facilities. So if a member with a brain trauma is at Manhasset, and they have a cardiac problem, there is the full breadth and depth of clinical services available to that patient under that roof. If you patch work quilted several acute care facilities with different clinical specialties, you would have to put that member in an ambulance and travel around the county to provide the full continuum of care. I consider that not only lack of quality, but irresponsible.

 (Tr. at 286).

 However, Dr. Stocker, who, as the President of Empire, is Poirier's superior, and is the spokesman authorized to address the public on the company's behalf, believes that Winthrop provides the same services as LIJ and NSM and therefore, is a viable alternative to those hospitals. (Tr. at 1331-32). Further, Dr. Stocker testified that Winthrop and LIJ share a similar reputation, although he concedes that NSM has the most "cachet." Consistent with this opinion, Anthony Watson, Chairman and Chief Executive Officer of the Health Insurance Plan of Greater New York ("HIP"), with 310,000 members in Queens, Nassau and Suffolk, testified that Montefiore Hospital "is the only hospital in a dominant position [as it] controls and dominates the Bronx and lower Westchester as no other hospital in this region does." However, as a member of the Board of Trustees of NSHS, Watson is an interested witness. Nevertheless, as the CEO of one of the major MCOs in the New York metropolitan area, it is Watson's opinion that by merging, LIJ and NSHS are "doing exactly what they should do . . . [to] enable them to deliver a better health care product . . . [and] a much more cost effective system." (Tr. at 819).

 In terms of vital statistics, NSM has 705 beds while LIJ and Winthrop have 591 beds each. In average daily population census, NSM is number one, LIJ number two and Winthrop number three. This ranking also holds true with respect to the number of attending physicians at each hospital. This latter statistic is particularly important because a hospital with a larger number of attending physicians is more likely to have a greater number of patients admitted. With regard to the number of residents, LIJ has the most, with NSM second and Winthrop a close third. In addition, in a statistical analysis of where admitted patients reside (categorized by zip code), NSM had the most patients from a diverse geographical area, with LIJ second and Winthrop third.

 With respect to other sources of competition, Dr. Dantzker and Gallagher, the President and CEOs of LIJ and NSM respectively, and Katz, Chairman of the Board of Trustees for NSHS, gave undisputed testimony regarding the increased "colonization" of Long Island by Manhattan hospitals. As an example of this trend, Gallagher traced the extensive expansion of Mt. Sinai by affiliating with St. John's Smithtown in Suffolk, St. John's Hospital in Far Rockaway, Queens General, Elmhurst General, Long Beach Hospital and a number of nursing homes in Nassau and Suffolk. (See Def. Ex. CA, Appendix Fig. A). Further, Dr. Dantzker described this significant factor relating to market share and competition, namely, the rapid, growing infiltration of Manhattan hospitals into Queens, Nassau and Suffolk:

Q Do Manhattan hospitals take affirmative steps to attract Queens, Nassau and Suffolk residents?
A Absolutely. I would believe that it is already quite a hot market and it is heating up rapidly. Manhattan hospitals are clearly looking at Queens, Long Island, as an area of what we call colonization.
Q And in what ways do they go about this?
A There are a number of ways they have.
The most well recognized ways for them to develop affiliated relationships, or to purchase hospitals out on Long Island and Queens, this is the approach taken by New York Hospital in their purchase of both Flushing Hospital and New York Hospital of Queens, and by Mount Sinai. I am sure everybody has seen the Mount Sinai map of the world with its arrows and flags scattered throughout Queens and Long Island and its affiliated relationships with multiple hospitals in Queens and multiple hospitals in Nassau and Suffolk.
It is also done by the purchase or opening of medical groups. You already heard about Mount Sinai buying the North Shore Medical Group in -- I am blocked on the Town.
Q Huntington?
They also recently opened an ambulatory center in Hewlett, Long Island, which is in the southern parts of Nassau County. It is also done by courting and establishing relationships with physicians on Long Island, such as what was done, for example by Lenox Hill who established good and close relationships for the series of cardiologists out on the east end of Suffolk County, and now send all their cardiac surgical patients into Lenox Hill.
Speaking of them, they [Lenox Hill] already have opened up an ambulatory center essentially across the street from Long Island Jewish Medical Center to do orthopedics and sports medicine and a number of other areas.
There is an affiliation between Colombian [sic] Presbyterian Hospital and St. Francis.
There are a number of ways the Manhattan hospitals have used to colonize from a medical standpoint, Queens and Long Island.

 (Tr. at 872-74) (emphasis supplied).

 Further, Sloan-Kettering recently announced a program with St. Francis and Mercy Hospital to bring its highly sophisticated and advanced cancer care program from Manhattan to Nassau County. This would diversify the health care furnished at St. Francis, which has been predominantly cardiac related. Mt. Sinai is opening a facility for primary care and specialist consultation services in Hewlett, which is in the southern portion of Long Island. Further, as stated above, Winthrop/South Nassau is actively pursuing an affiliation with the ...

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