In April 1998, when the State of New York challenged a "virtual merger," we noted that hospitals should be cautious about the antitrust implications of loose, unintegrated affiliations with competitors. (See "State Challenges 'Virtual Merger' of Hospitals," Jones Day Health Care Commentaries, April 1998). We now know that at least one court agrees. On April 10, 2000, a federal district court agreed with the State of New York that a joint venture between two competing hospitals to operate and manage the sponsoring hospitals was per se illegal under the antitrust laws as a "naked" price fixing and market allocation agreement.
Background
The Poughkeepsie case, as it has come to be called, State of New York v. Saint Francis Hospital, Vassar Brothers Hospital and Mid-Hudson Health, 98 Civ. 0939 (WCC) (S.D.N.Y. April 10, 2000), arose out of a challenge to the activities of two hospitals in Poughkeepsie, New York, in connection with the formation of Mid-Hudson Health, a not-for-profit
