Federal, state governments will sue St. Luke's over Saltzer buyout

adutton@idahostatesman.comMarch 12, 2013 

The federal government and Idaho's attorney general have decided to sue St. Luke's Health System for anticompetitive behavior, the Boise health system and Federal Trade Commission said Tuesday.

"We are firm believers in the marketplace as the best way [to create] the lowest prices, best services and most innovation," said Brett DeLange, who leads the Idaho attorney general's consumer protection operations. "A lot of really good health care improvements that can be done today. It doesn't take a monopoly to do them."

The FTC and Attorney General Lawrence Wasden's office have been investigating the hospital system for possible federal and state antitrust violations. The investigations focused on the hospital's acquisition of Saltzer Medical Group in Nampa — a deal that a federal judge allowed to close at the end of last year, while the FTC and Attorney General investigations were pending. Their joint lawsuit is being filed in federal court, the FTC said.

The lawsuit is sealed, but Wasden's office will request that it be opened for public view, DeLange said.

"St. Luke’s acquisition of Saltzer Medical Group has created a dominant single provider of adult primary care physician services in Nampa, with a nearly 60 percent share of the market,” said Richard Feinstein, director of the FTC's Bureau of Competition. "The result of the acquisition will be higher prices for the services that those physicians provide, with costs ultimately passed on to Nampa employers and their employees."

David Pate, CEO of St. Luke's, responded to the lawsuit, saying it had become clear to him that "the FTC and AG don't well understand hospital-physician relationships and do not have a good understanding of accountable care."

The Saltzer deal transferred to St. Luke's the power Saltzer had to negotiate with health insurers and set prices, and it gave St. Luke's a five-year contract with Saltzer physicians, the FTC said.

The FTC has stepped up its enforcement of antitrust laws in the health care industry in recent years. Its recent investigations have led to no actions for deals "unlikely to unreasonably restrain trade" and a settlement with a Reno, Nev., system that acquired cardiology practices. The U.S. Supreme Court last month ruled in favor of an FTC complaint from 2011 that a Georgia hospital merger was anticompetitive and could raise prices charged to insurance plans.

"St. Luke’s entered into the relationship with Saltzer to increase quality, manage unnecessary utilization and ultimately reduce costs, not to raise prices," St. Luke's said. It said the system is "extremely disappointed" by the federal-state lawsuit.

St. Luke's competitors Saint Alphonsus Health System and Treasure Valley Hospital also have sued St. Luke's over the Saltzer deal. The lawsuit is headed for a full trial this summer and may be consolidated with the FTC and Attorney General complaints.

A spokeswoman for Saint Alphonsus said that health system, based in Boise and part of the multistate Trinity Health organization, "is pleased that the FTC and [Wasden] are taking this enforcement action."

St. Luke's is now the largest private employer in Idaho, with hospitals in Boise, Meridian, Twin Falls, Jerome, McCall and Ketchum. It is expected to acquire Elmore County Medical Center this year. The hospital employs more than 10,000 people, including hundreds of physicians.

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