FOR IMMEDIATE RELEASE                                          AT
TUESDAY, FEBRUARY 11, 1997                         (202) 616-2771
                                               TDD (202) 514-1888

       JUSTICE DEPARTMENT WILL NOT CHALLENGE JOINT VENTURE
              OF MARIN COUNTY, CALIFORNIA HOSPITALS

     WASHINGTON, D.C. -- Two northern California hospitals that
provide mental health services will be allowed to consolidate
their inpatient services to lower the cost of that care while
preserving competition between them, under a proposal reviewed by
the Department of Justice.

     The Department's Antitrust Division said today that under
all of the circumstances involved in the proposal, the joint
venture is not likely to be anticompetitive.  Each hospital will
independently price and sell the services to payers and will
implement safeguards against the sharing of competitively
sensitive information, the Department said.  

     The two Marin County hospitals--Marin General Hospital and
Ross Hospital--are competitors in providing inpatient and other
psychiatric care to adults.  Each hospital also provides
additional services that the other does not.  The hospitals want
to lower the cost of the adult mental health services they both
provide by consolidating their delivery at a single facility,
thus eliminating duplicative costs and spreading fixed costs over
a larger population.  The consolidation will permit the hospitals
to offer competitive rates for the care of Medicaid patients and
indigent patients covered by a Marin County program.
  
     Marin General is a general acute care hospital, providing a
full range of services but not providing the chemical dependency
programs and the inpatient psychiatric services for children and
adolescents that Ross provides.

     The Department's position was stated in a business review
letter from Joel I. Klein, Acting Assistant Attorney General in
charge of the Antitrust Division to counsel for the hospitals.

     The letter explains that the proposed consolidation will not
result in price fixing or similar illegal conduct.  The joint
pricing of services for Medicaid patients and indigent patients
covered by the County program will not eliminate competition
since the hospitals are not actual or potential competitors for
that business.  Because of Medicaid rules, Ross is not eligible
to provide services for those programs.

     The Department also concluded that when possible
procompetitive benefits are weighed against potential
anticompetitive harm the consolidation of services is not likely
to have a net anticompetitive effect.  While the joint venture
includes the only two adult inpatient mental health care
facilities in Marin County, the venture explicitly preserves the
potential for price competition between the hospitals.  It also 
includes protections against the unnecessary sharing of
confidential business information and provides incentives for the
hospitals to provide care efficiently and to monitor the shared
costs directly controlled by each other.

     The Department said that the hospitals will continue to
compete in the sale of the consolidated services and will not,
with one exception, jointly determine the price for the
consolidated services.  The hospitals will jointly determine the
price for Medicaid patients and indigent patients covered under
the County's program.

     Klein said that other factors weighing substantially in
favor of the proposed venture were potential efficiencies from
the venture and the enhanced ability of the hospitals to compete
for both Medicaid patients and the indigent patients covered by
the County program.

     Under the Department's business review procedure, an
organization may submit a proposed action to the Antitrust
Division and receive a statement whether the Division will
challenge the action under the antitrust laws. 

     A file containing the business review request and the
Department's response may be examined in the Legal Procedure Unit
of the Antitrust Division, Room 215 North, Liberty Place,
Department of Justice, Washington, D.C. 20530.  After a 30-day
waiting period, the documents supporting the business review will
be added to the file.
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97-063