Was It All a Sham?

In May 2015, the Tennessee Legislature passed an amendment to the Hospital Cooperation Act of 1993 that allowed Mountain States Health Alliance and Wellmont Health System to merge and receive state-action immunity against antitrust violations under a Certificate of Public Advantage (COPA).

Since the COPA was executed on January 31, 2018, there have been many reductions and downgrades to critical services in the region. And while many of those are newsworthy and have received some degree of scrutiny, there is a component of this “merger” that has gone virtually unquestioned… until now.

East Tennessee State University (ETSU) has partnered with both of these health systems throughout the years as an medical-academic institution that also employs 100 or so physicians in the area who practice at the hospitals in the region. So when Mountain States and Wellmont included ETSU in their 2016 COPA application as an academic and research partner necessary to improve the population health in the region, it didn’t raise any eyebrows.

In fact, while it was unusual, no one questioned the inclusion of the President of ETSU as one of the ex-officio non-voting members of the new Health System’s (Ballad Health) Board of Directors in the Terms of Certification for the COPA.

Before we dig any deeper, it’s important to note that the amended COPA law only grants immunity from state and federal antitrusts laws to the hospitals who are granted a COPA. It does not cover a third party or actions taken prior to the granting of the COPA and execution of active state supervision.

Snapshot of SB994 Bill Summary #2

With this understanding of the law, we can take a look at the relationship and actions of ETSU and Ballad Health (formerly Mountain States Health Allliance and Wellmont Health System).

In their April 2016 response, the Tennessee Department of Health requested additional information regarding several components of the COPA application including specification of the Independent Physicians Groups in the region. July 25, 2016, MSHA and Wellmont responded listing ETSU Physicians and Associates as one its top three competing independent physicians groups employing 100 or more physicians.

ETSU Physicians and Associates is one of the assumed names for the Medical Education Assistance Corporation (MEAC) which is a non-profit corporation established to support ETSU’s medical education-related activities. As such, it is subject to the ETSU Board of Trustees and in fact, could be dissolved at a time of their choosing.

Why does this matter?

Because in 2017, a draft Memorandum of Understanding (MOU) was created between ETSU and Mountain States Health Alliance in the event that the merger was not approved and the COPA not granted. A similar MOU was drafted between ETSU and Wellmont as well.

In the ETSU Board of Trustee Minutes dated June 9 2017, the draft MOU between ETSU and Mountain States states:

“WHEREAS, the Medical Education Assistance Corporation (“MEAC”) is a private non-profit corporation established to support ETSU’s medical education-related objectives, and the parties intend Mountain States’ contractual relationship with MEAC to be subject to this MOU in the same manner as ETSU.”

Within the MOU, there are several points of concern:

1. Section IV #1– “As set out more fully in the attached Exhibits, Mountain States will appoint appropriate professional personnel of ETSU (upon consultation with the President of ETSU) as voting members of Mountain States’ relevant board and professional committees and organizations, who will, participate as full members on such committees and organizations. Examples of such committees and organizations include, but are not limited to, Mountain States’ finance, social responsibility, quality and workforce board committees, and Mountain States’ professional committees…”
2. Section IV #2 — “To the extent any ETSU personnel serve on a committee of the Board of Directors of Mountain States, or on any operating committee or organization, each such individual will be required to perform with a duty of care, loyalty and obedience to Mountain States, and shall acknowledge compliance with such duties is mandatory for continued service. Similarly, to the extent any Mountain States personnel serve on a committee or organization associated with ETSU, each such individual will ensure they act in the best interest of ETSU in carrying out their responsibility as a member of such committee.”
3. Section IV #3 — “As set out more fully in the attached Exhibits, future hires of Mountain States and ETSU may hold joint positions between Mountain States and ETSU, with collaboration on employee performance assessments and evaluations, as appropriate.”

Screenshot of MOU in ETSU BOT June 9,2017 Minutes

Of these three points, the second jumps out as a possible antitrust concern. MEAC (ETSU Physicians & Assoc) has been listed on the COPA application as an “Independent Physicians Group” and yet, this draft MOU states that any of its personnel, including physicians, that serves on any board or committee of Mountain States must act with a “duty of care, loyalty, and obedience” to Mountain States.

In what world does a corporation allow its employees to serve on a board or committee of its competitor that requires ‘loyalty and obedience”? Can you imagine this happening between Apple and Microsoft?

With this draft being drawn in 2017, before the COPA was granted, one may question about the accuracy and intent behind information provided to the Tennessee Department of Health.

Did Mountain States intentionally misrepresent the nature of their relationship with ETSU as an academic and research partner?

Did the parties plan to use the antitrust immunity provided under the COPA to further extend their monopoly share of the market?

While we cannot know the answers to these questions or certain, additional ETSU Board and Committee minutes provide some context from which one might draw their own conclusion.

Two additional points are crucial when considering this information:

1. The September 18, 2017 Terms of Certification now list the President of ETSU as an ex-officio voting member of the New Health System’s (Ballad Health) Board of Directors.
2. The Ballad Health and ETSU boards now share three voting members: David Golden, Brian Noland (ETSU President), and Scott Niswonger.

A federal lawsuit was filed in the spring of 2019 regarding the shared board members under the Interlocking Directorate statute. The parties were determined to not have standing so the case was dismissed, but not on the merits of the case.

Now, a look at those ETSU Board and Committee minutes.

ETSU February 23, 2018 Board of Trustee Minutes:

1. Page 3 — “Chair Niswonger also talked about the impending merger between Mountain States Health Alliance and Wellmont Health System, noting that there has been considerable action among individuals in the room to ensure the realization of the merger.”
2. Page 12 — “Merger: In terms of the merger, Dr. Noland thanked several trustees, including Chair Niswonger and trustees Latimer and Golden, for their work in supporting the university as we worked with Mountain States and Wellmont to keep the merger moving along.”

Note: While Linda Latimer is not on the Ballad Health Board of Directors, she is a physician and her husband, banker Bill Greene, was a significant player in pushing the merger of Mountain States and Wellmont.

ETSU April 27, 2018 Board of Trustee Minutes:

1. Page 24 — “She (Linda Latimer) said Ballad Health has to give $175 million to research over the next 10 years but noted that other institutions are acting swiftly in hopes of getting some of those funds. She concurred that there is a need to hire someone who puts ETSU first in relation to the merger and also noted that three of the 11 Ballad Health board members are also on the ETSU Board of Trustees. She said the region needs real innovation, adding that the university has less than a year to create a presentation on five areas of research and it is up to ETSU to bring ideas that will make Ballad Health money.”
2. Page 25 — “Several trustees also noted the significance of hiring the right person for the new MEAC CEO position.”

Comments by Linda Latimer acknowledging the shared board members directly highlights the Interlocking Directorate antitrust concerns.

ETSU September 21. 2018 Board of Trustee Minutes –

Page 32 — “Trustee Golden brought to the attention of the president questions regarding reimbursements with Ballad Health that include ETSU and billing code inconsistencies. He suggested that university staff contact Ballad to gather further information as it becomes available.”

Without additional information, there is no way to know for sure, but these questions regarding “billing code inconsistencies” could indicate an effort to align or fix pricing between Ballad and ETSU.

You may be thinking that all of this information doesn’t look good, but it’s irrelevant because the MOUs created in 2017 were just draft documents. And you would be correct, except that March 2019, those draft MOUs became an executed MOU between ETSU and Ballad Health.

September 20, 2019 Academic, Research, and Student Success Committee Minutes include the executed MOU. The two elements that are of extreme importance are:

1. Page 127 of entire minutes, Page 2 of MOU: “WHEREAS, the Medical Education Assistance Corporation (“MEAC”) is a private non- profit corporation established to support ETSU’s medical education-related objectives, and the parties intend Ballad’s contractual relationship with MEAC, or any successor to MEAC, to be subject to this MOU in the same manner as ETSU;”
2. Page 130 of the entire minutes, Page 5 of MOU: “To the extent any ETSU personnel serve on a committee of the Board of Directors of Ballad, or on any operating committee or organization, each such individual will be required to perfo1m [sic] with a duty of care, loyalty and obedience to Ballad, and shall acknowledge compliance with such duties is mandatory for continued service.”

ETSU and Ballad Health have now executed a plan that they apparently drafted in 2017 to put MEAC, one of Ballad’s largest competitors, subject to Ballad Health in the same manner as ETSU.

The MOU was signed March 12, 2019 by ETSU President, Brian Noland and Ballad Health CEO/President, Alan Levine.

Screenshot of MOU Signature Page

To add to what appears to be a smoking gun in relation to antitrust violations not protected by the COPA law, there are additional ETSU Board of Trustees and Committee minutes that add ammunition.

ETSU November 15, 2019 Board of Trustee Minutes —

Pg. 55 — “Following discussion regarding Ballad Health and ETSU residency programs and the competition for Ballad residencies between students from ETSU and other institutions, President Noland suggested — if possible — a joint meeting of the Ballad and ETSU boards. Committee members concurred.”

Screenshot of ETSU BOT Nov. 15, 2019 Minutes

This appears to be an intentional effort to use the joint members of both Boards to ensure ETSU is awarded Ballad Health residency slots over other academic institutions.

ETSU November 15, 2019 Academic, Research, and Student Success Committee Minutes –

1. Page 3 Item VII — “This year, nine areas of concern were noted out of 93 elements, and Dr. Block said he anticipates that eight of those will be judged as in compliance with monitoring. Among those eight are one related to the College’s interactions with Ballad, which the LCME wishes to monitor due to a new Memorandum of Understanding being in place;…”

Note: The Liason Committee on Medical Education was concerned about the MOU between ETSU and Ballad Health and their interactions together.

2. Page 5 Item IX — “President Noland also pointed out that during the Coordinating Council meeting, it was stated that Ballad was “educationally agnostic,” meaning that it works with and provides training opportunities for multiple institutions, but he noted that Dr. Block had said that the COPA “doesn’t allow (them) to be agnostic” and that ETSU is Ballad’s primary educational partner. Dr. Linville added that while Ballad does have training opportunities for students from other institutions, Ballad cannot reach its goals without being an academic health sciences center, and ETSU is the vehicle to make that happen. Chair Latimer also indicated that Ballad’s stated support for ETSU was a deciding factor in passage of the COPA. A list of the contracts is being prepared that will indicate the current status of each.”

ETSU February 21,2020 Academic, Research, and Student Success Committee Minutes –

1. Page 6 — “In discussion, committee members expressed strong support of the academic medical center vision and the need to have cost-effective contracts between ETSU and Ballad for certain specialties. President Brian Noland said it is important for ETSU to have first access and rights of first refusal for clinical placements and rotations throughout the Ballad system as the university looks to grow opportunities for students in health sciences programs. Dr. Block noted that Ballad officials have expressed concern that this would result in pushback from Lincoln Memorial University. Trustees pointed out that LMU was not present during the COPA discussions prior to the Ballad merger and that ETSU, which was instrumental in the merger, is the regional institution to partner with Ballad. Dr. Linville said having ETSU Board of Trustees members present at the Coordinating Council meetings is helpful, and asked for trustees’ help in selling the vision of the academic medical center.”

And lastly, February 19, 2021 Academic, Research, and Student Success Committee Minutes –

1. Page 8–9 — “Whereas historically, agreements between Ballad Health’s legacy organizations (Mountain States Health Alliance and Wellmont) and ETSU were transactional, the entities now are recognizing the importance of strategizing together, focusing on the academic mission of the university, Ballad’s health care delivery system, and the quality improvement both are striving to achieve. He said Board members would play an important role in helping to frame and develop the relationship with Ballad Health into a strategic partnership.”
2. Page 9 — “President Noland stressed the importance of exploring a deeper integration of ETSU Health operations with those of Ballad Health.”

It’s quite a lot to take in.

It was a lot to research and put together.

And it’s incredibly important.

Did these two health systems, community and business leaders, politicians, and a state-funded academic institution collaborate to use the government and its laws to subvert antitrust laws?

That’s a question for the Federal Trade Commission and possibly the Department of Education.

Maybe they’ll answer it soon.