Mercy Medical Center calls them bribes.
But in court on Tuesday, Aultman Health Foundation President and Chief Executive Edward Roth defended confidential payments made to nine insurance brokers.
Roth said those payments were part of a business strategy to save area businesses money by sharing the results of Aultman Hospital’s cost-cutting measures since the 1980s.
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”We want to pass that low cost onto the community,” Roth said.
Without AultCare, he said, ”I think you would see the premium costs for businesses increase.”
Aultman’s attorneys began presenting their case on Tuesday in Stark County Common Pleas Court after 12 days of testimony by witnesses called by Mercy.
Mercy is accusing its cross-town rival of using unfair business practices to steal patients and, as a result, steal as much as $100 million or more worth of business.
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Aultman has denied the claims, saying Mercy’s own business missteps caused it to lose patients and money.
Much of the case centers on confidential extra payments Aultman gave to nine brokers who switched clients to AultCare.
During four hours of questioning by Aultman attorney Allen Schulman, Roth testified that Aultman developed the admittedly ”unique” incentive program in 1997 as a way to get insurance brokers to show AultCare insurance plans to potential customers.
Aultman Hospital contracts only with its sister insurance company, AultCare, so it can pass along its lower charges to area businesses that buy insurance, Roth said. Mercy contracts with many of the dozens of other insurers in the local market.
Most employers in the region rely on brokers to help them select health insurance coverage for employees.
While rival Mercy has maintained the payments to brokers were secret bribes, Roth testified they were only unusual in the industry because they were ”front-loaded” instead of paid indefinitely to brokers.
Under the program, participating brokers got $100 to $200 in two payments over a two-year period for every person who switched to AultCare, Roth said.
During cross-examination by Mercy attorney Daniel R. Warren, Roth confirmed that brokers got the larger amount for convincing clients to switch from five of its major competitors, including Akron-based SummaCare.
At the time the broker incentive program started, Aultman was facing serious threats, Roth testified.
In 1996, the Sisters of Charity Health System sold half ownership in Mercy to Columbia HCA, the former national hospital chain.
Other hospitals and businesses also were buying physician practices, he said. Hospitals rely on doctors to refer patients for services.
Aultman opted to enter a deal with one of Stark County’s largest physician groups — North Canton Medical Foundation — to pay $25,000 per primary-care doctor per year to contract exclusively with AultCare, Roth said.
The deal, which lasted about 10 years, also gave Aultman the first right of refusal to buy the practice if it went up for sale.
Former North Canton Medical Foundation Chief Executive Al Glenn previously testified that the group’s 22 to 25 primary-care physicians referred anywhere from $1 million to $2.5 million in business to Aultman Hospital annually.
Glenn said that he tried unsuccessfully to persuade the practice’s board not to renew the contract in 2002.
But Roth said the agreement continued until 2007 and Glenn never raised concerns.
In fact, he said, Glenn earned the nickname ”$100,000 Al” because he was always looking for opportunities to increase revenue.
Cheryl Powell is a health reporter for The Akron Beacon Journal, the daily newspaper in Akron and a syndication partner of MedCity News.
