FTC, St. Luke's prepare for battle

The health system is now being sued by the state, the federal government and two competitors.

adutton@idahostatesman.comMarch 13, 2013 

For nearly a year, lawyers for the Federal Trade Commission and Idaho Attorney General Lawrence Wasden's office have been digging through records related to St. Luke's Health System's takeover of Nampa's Saltzer Medical Group.

Economists with the FTC analyzed data to figure out whether the buyout violates antitrust laws. Wasden's office sent letters seeking information from Saltzer and St. Luke's, undertaking what Wasden's consumer-protection chief called "a very intense" investigation.

The FTC and Wasden said Tuesday that they have concluded the buyout was anticompetitive and would - not could - raise the cost of health care in Canyon County. St. Luke's said the takeover was needed to bring down costs in the long run through efficiencies.

The FTC and Wasden sued St. Luke's in federal court. They hope to consolidate their lawsuit with a similar one brought by Boise's Saint Alphonsus Health System and Boise's smaller Treasure Valley Hospital, both of which are part of national health-care businesses.

The new lawsuit is sealed because it contains undisclosed information that came up during the investigations. It could be unsealed soon, according to the FTC and Wasden's office.

STATE ENFORCERS

Brett DeLange, who leads the state attorney general's Consumer Protection Division, said Wasden concluded that taking St. Luke's to court was the "only recourse."

U.S. District Judge B. Lynn Winmill had approved the Saltzer deal with several conditions, but reserved a final decision on whether the deal should be unwound until after a trial in the Saint Alphonsus lawsuit this summer. That's where Wasden and FTC hope to make their own case.

"We are firm believers in the marketplace as the best way (to create) the lowest prices, best services and most innovation," DeLange said. "A lot of really good health care improvements that can be done today, it doesn't take a monopoly to do them."

FEDERAL ENFORCERS

The FTC has been examining gigabytes' worth of data since last year, according to Tom Greene, special litigation counsel.

St. Luke's is now the largest private employer in Idaho, with hospitals in Boise, Meridian, Twin Falls, Jerome, McCall and Ketchum. It also is expected to acquire Elmore County Medical Center this year.

The system employs more than 10,000 people, including hundreds of physicians.

But it was the Nampa deal, involving about four dozen doctors, that investigators found troublesome.

Greene said doctors in Idaho already are very expensive - not just relative to the average Idahoan's income, but even compared with doctors in New York City.

"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."

THE HOSPITALS REACT

St. Luke's said it is "extremely disappointed" by the latest lawsuit. But CEO David Pate said the lawsuit is "no deterrent to right solutions."

"The FTC and AG don't well understand hospital-physician relationships and do not have a good understanding of accountable care," Pate wrote on his blog.

The FTC has stepped up its enforcement of antitrust laws in the health care industry in recent years. Its investigations don't always result in lawsuits.

It recently settled with a Reno, Nev., system over buyouts of 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 has said the Saltzer deal is critical to its plan to lower prices.

"Intervention by the FTC and the AG seems directly contrary to the goals of health care reform to ... improve outcomes and reduce costs," Pate wrote. "In fact, fragmentation of the health care delivery system has been repeatedly identified as an inefficient manner to provide health care and a contributor to unnecessary duplication and waste."

St. Luke's has deliberately held off on making big investments in Saltzer, such as changing the signs and making facilities improvements, said spokesman Ken Dey. That is so the deal can be undone easily if the court decides it must be.

Saint Alphonsus and Treasure Valley Hospital officials said they welcome the latest lawsuit.

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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