A Different Form of Competition

Josh Wright —  4 February 2009

A DC area blog reader sends the following update on Inova’s successful attempts to forestall entry in Northern Virginia:

The Loudoun County Board of Supervisors voted yesterday to reject a proposal by HCA Virginia to build a hospital in Loudoun, capping more than five years of fierce debate over how best to meet the rising demand for medical care.  After an intense campaign by Inova Health System to prevent a competitor from taking root in Loudoun, the board voted 5 to 4 against the proposal to build a 164-bed acute-care facility, the Broadlands Regional Medical Center.  The decision was the latest development in a long-running battle between nonprofit Inova, the largest hospital system in Northern Virginia, and the for-profit hospital network HCA, which first won authorization for the hospital from the state health commissioner in 2004. A similar proposal was rejected by the previous Board of Supervisors in 2005….

Inova fought the HCA proposal vigorously. It mounted six legal challenges to the state health commissioner’s award, twice seeking the intervention of the state Supreme Court, to no avail. It conducted an ad campaign via newspapers and direct mail and gave at least $20,000 to an HCA opposition group.  At one point, Inova threatened to withdraw plans to expand its Lansdowne campus, including an offer of $17.5 million for road improvements in Waters’s district.

2 responses to A Different Form of Competition


    Good article, thanks



    This is support for something your colleague Tim Muris articulated so well while FTC Chairman at the Fordham conference back in 2003.
    Attempting to protect competition by focusing solely on private restraints is like trying to stop the flow of water at a fork in a stream by blocking only one of the channels. Unless you block both channels, you are not likely to even slow, much less stop, the flow. Eventually, all the water will flow toward the unblocked channel.

    The same is true of antitrust enforcement. If you create a system in which private price fixing results in a jail sentence, but accomplishing the same objective through government regulation is always legal, you have not completely addressed the competitive problem. You have simply dictated the form that it will take. Let me restate the point in the form of a competition policy theorem: as a competition system achieves success in attacking private restraints, it increases the efforts that firms will devote to obtaining public restraints.
    This insight remains brilliant.