Competition for medical services in Bellingham restored: AG Ferguson files antitrust consent decree against Bellingham Anesthesia Associates
In his antitrust consent decree filed today in Whatcom County Superior Court, Attorney General Bob Ferguson will require Bellingham Anesthesia Associates (BAA) to stop requiring local health care providers to sign three-year non-compete contracts, effectively ending the Bellingham medical group’s decades-long monopoly over the local health care market in Whatcom and Skagit counties.
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The legally enforceable agreement states that BAA’s monopolistic conduct violates the Washington Consumer Protection Act. If approved by the court, the decree will resolve a lawsuit originally filed by Ferguson against BAA’s anticompetitive behavior by providing remedy for harms inflicted through $110,000 owed in costs and fees.
The original lawsuit asserts that the use of such restrictive contracts “to develop and preserve its business” was unjustified and unreasonable, as many doctors who signed the non-compete agreements had no access to any of the company’s proprietary information.
Furthermore, the lawsuit explains how former physicians ousted from the market by BAA’s non-compete contracts were then unable to practice anesthesia services for years at a time. The lawsuit goes on to assert that in addition to financial loss, this has resulted in their medical skills declining.
In a news release on the consent decree, Ferguson states how BAA’s exclusive contracts resulted in limited affordable options available for local patients. By holding a 90% market share for anesthesia services in the area, BAA could keep prices high, as local patients and health care providers have had no choice other than a doctor from BAA.
“Bellingham Anesthesia Associates’ illegal actions decreased competition and prevented lower cost options. The firm did this at the expense of patients. Today’s agreement holds it accountable and ensures Whatcom and Skagit counties will have better options for local medical needs.”
As a result of the monopoly, medical providers from outside the area have no financially viable path to establish a competing practice in the area, according to the news release by the Office of the Attorney General. BAA has also prevented employees who leave the association from establishing competing practices.
Nurse anesthetists have also been effectively prevented from entering the market due to BAA’s unlawful contracts, which, as the news release states, “would have given medical providers an equally capable but far more affordable option”.
Once approved by the court, the consent decree will limit BAA’s current and future employees’ non-compete time from 3 years to 9 months, or 1 year for shareholders. BAA will be allowed to keep exclusive contracts with medical centers that need anesthesia services on constant standby. However, BAA will be required to cancel exclusive contracts with medical centers who do not need standby coverage.
The $110,000 in costs and fees owed by BAA as per the decree will be used to cover investigation costs and fund future consumer protection actions.
The Attorney General has engaged in other accounts of antitrust work to protect health care access, such as the antitrust lawsuit against CHI Franciscan in 2019. This lawsuit, which the health system paid $2.5 million to resolve, restored competition for medical services in Kitsap County. The money from this lawsuit was distributed to local health organizations.