Acquisitions by Idaho's St. Luke's Health System under antitrust review

adutton@idahostatesman.comMarch 16, 2012 

The Idaho attorney general’s office and the Federal Trade Commission are investigating the acquisitions of medical practices for possible violations of federal law and the Idaho Competition Act.

The health system is in talks that could lead to the purchase of another local practice, the Saltzer Medical Group, based in Nampa.

The Boise-based health system has acquired a number of medical practices in the Treasure Valley and southern Idaho, making it one of Idaho’s largest employers.

Saint Alphonsus Health System, the other big hospital system in Idaho, has also been acquiring physician practices, but it is not being investigated, spokeswoman Elizabeth Duncan said.

A wave of physicians has moved into the two hospital systems since the federal health care reform law was enacted in March 2010. At St. Luke’s, the physician staff grew by about 50 percent between June 2010 and July 2011 to nearly 300 doctors. Saint Alphonsus added 19 doctors between September 2010 and June 2011.

The trend is nationwide. The push toward electronic records systems is a frequently cited reason for physicians joining larger systems. For small practices, training, compliance and equipment hurdles can be overwhelming.

One result is increasing concentration of market power.

Both federal antitrust laws and the Idaho Competition Act promote free marketplaces to protect consumers from higher costs, lower quality and fewer choices. The state law prohibits acquisitions that substantially lessen competition or create monopolies.

Idaho Attorney General Lawrence Wasden disclosed the investigations last month in a letter to St. Luke’s. The Idaho Statesman obtained a copy of the letter from Wasden’s office Friday through a public records request.

Wasden wrote that St. Luke’s “is presently involved in the purchase of the Saltzer Medical Group. This acquisition, if consummated, directly affects our current antitrust review.”

The letter asked St. Luke’s to wait on a purchase of Saltzer, which also has offices in Caldwell, Meridian and Boise.

Spokesman Ken Dey said St. Luke’s has “been exploring” going further than just partnering with Saltzer. “We’re still in discussion ... this (investigation) could be 90 days, this could be years,” Dey said.

The letter didn’t indicate how broad the review will be or how many acquisitions it might examine. St. Luke’s hasn’t yet been asked to hand over documents or provide any other information, Dey said.

“Quite frankly, we’re not all that surprised by it,” he said. That’s because mergers-and-acquisitions reviews are “fairly common in other businesses” and have become more common in the increasingly consolidated health care industry, he said.

“We have no doubt we’ve done everything right, so we’re going to cooperate fully with everything they need,” Dey said. “We haven't done (acquisitions) for market share. This has nothing to do ... with becoming a monopoly.”

The letter from Wasden said that selling off some holdings could be among the “various remedies” to address anti-competitive acquisitions.

Wasden said he hoped to resolve any concerns that arise “amicably and informally without the need for litigation and court participation.”

But having another large purchase in the mix “complicates matters and would result in additional cost and expense for all parties involved,” he said.

A call to Saltzer Medical Group was not immediately returned.

Audrey Dutton: 377-6448

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