St. Luke's defends Saltzer buyout in court, opponents lay out attack plan

New data show St. Luke's would control almost 80 percent of Nampa primary care, FTC says.

adutton@idahostatesman.comSeptember 23, 2013 

The legal teams for St. Luke's Health System, federal and state regulators and Saint Alphonsus Health System said Monday that, for the next month, they all will try to convince a federal judge that their goals are to give Idahoans the best health care and the most competition between businesses that is allowed under the law.

The lawsuit stems from a St. Luke's buyout of Nampa-based Saltzer Medical Group that gave St. Luke's a foothold in Canyon County health care. The Federal Trade Commission and Idaho Attorney General argue that the buyout was an illegal market-grab, giving the health system a nearly 80 percent share of primary care in Nampa. Saint Alphonsus and a smaller surgical hospital say the buyout does serious damage to their businesses and will result in lost revenues as the St. Luke's-employed Saltzer physicians stop sending patients to St. Luke's competitors.

"When they buy a doctor group, they basically are buying a referral system," said Tom Greene, the lead attorney for the FTC.

Greene told Judge B. Lynn Winmill that St. Luke's offered Saltzer doctors a "double-digit boost in their pay" and that it planned to earn that money back through a "pay more and charge more deal," leading to higher premiums.

During their opening statements, Greene and other attorneys for the state, Saint Alphonsus and Treasure Valley Hospital ran through PowerPoint slides, brightly colored charts and sworn witness statements they hope will convince Winmill that St. Luke's should not keep Saltzer because it will mean fewer choices for consumers, harm to competing businesses and higher prices for health care.

Not so, said St. Luke's attorney Jack Bierig, a partner at Chicago-based Sidley Austin. Bierig listed numerous ways the Saltzer deal would help St. Luke's launch a new health-insurance product, help low-income and uninsured patients get preventive care and result in other benefits. If Winmill orders St. Luke's to give up Saltzer because it's possible the buyout will foreclose competition and raise prices, the ironic outcome could be harm to consumers, Bierig said.

St. Luke's attorney Christine Neuhoff added in an interview Monday that its ownership of Saltzer would add competition — not by adding a new player to the mix in the Treasure Valley, but by adding a new type of product, a health insurance plan that puts more financial risk on St. Luke's to work efficiently and not perform wasteful operations or tests.

"It's something that has not been previously available here," Neuhoff said. "If we offer that product, and patients want it, employers want it, our competitors will have to adjust."

St. Luke's opponents point to the Magic Valley market — where St. Luke's employs most physicians and prices increased significantly — as proof that it charges more when it buys competitors. Bierig said that "prices increased for a variety of legitimate reasons," not because St. Luke's uses its size as a way to demand higher prices from insurers.

Winmill asked very few questions, but he pressed Bierig on how likely it is that St. Luke's will actually lower prices and make great strides in health care that it couldn't make without owning Saltzer.

There's no guarantee that will happen, Bierig said. But "the antitrust [law] should not nip our efforts in the bud," he said. "This is so not pie in the sky. This is not even pie. This is reality, right here on planet Earth."

For part of the six-hour court session, the courtroom doors were closed to the public in order to protect trade secrets that could be revealed as the sides make their cases. The court is likely to be closed for much of Tuesday for the same reason.

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