Third Circuit Holds that Hospital's Primary Service Area Not Equivalent to Relevant Geographic Market

The Third Circuit, in a case involving physician hospital privileges, held that a hospital's primary service area does not establish the relevant geographic market for antitrust purposes.

The plaintiff was a Pennsylvania ophthalmologist whose hospital privileges were revoked after he breached several conditions of his appointment. The plaintiff filed suit, claiming that the hospital violated the Sherman Act in a number of ways, including imposing a restraint of trade by prohibiting him from providing information to patients and thus foreclosing him from competing in the market for physician ophthalmic services. Judgment in favor of Lewistown Hospital on all claims was entered after a bench trial.

On appeal, the plaintiff claimed, among other things, that the District Court erred in concluding that the relevant geographic market for general outpatient cataract surgery was all hospitals and surgical centers performing outpatient cataract surgery within a 30 mile radius of Lewistown, rather than a two-county area proposed by the plaintiff. According to the plaintiff, Lewistown Hospital's primary service area was the relevant geographic market, given Lewistown's isolated location between mountain ranges.

The Third Circuit rejected plaintiff's argument, holding that a primary service area does not equate to the relevant geographic market. According to the court, defining the relevant geographic market by a hospital's primary service area is too limiting, and ignores patients' greater willingness to travel for more important medical procedures. Evidence presented at trial demonstrated that two-thirds of patients living within eight miles of Lewistown Hospital received cataract surgery elsewhere, and that approximately 21% of Lewistown Hospital's patients lived closer to other facilities. The plaintiff's proposed two-county market, comprising Lewistown's primary service area, thus excluded a number of competitors and could not be the relevant geographic market for antitrust purposes.

A copy of the opinion is attached.

For additional information about this Antitrust Development, please contact Toby G. Singer, leader of the Health Care Antitrust Practice.

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