Antitrust lawyers and health-care experts around the country have been following the federal antitrust lawsuit in Boise against St. Lukes Health System. Thats because it may shape the future of hospital acquisitions of physicians practices, like the purchase that landed St. Lukes in court.
St. Lukes bought Saltzer Medical Group last year, hoping to gain a bigger presence in the Nampa market and to augment its growing roster of employed doctors.
St. Lukes and Saltzer executives have testified that they joined because of a shared vision: to stop making their money based on how many billable services they perform and to start earning money for high-quality, efficient care.
The Federal Trade Commission, Idaho Attorney General Lawrence Wasden, the Saint Alphonsus Health System and Treasure Valley Hospital say thats not true. They argue the transaction gave St. Lukes too much control of the primary-care market in Nampa and the power to charge more-than-competitive prices.
The FTC and its co-plaintiffs want U.S. District Judge B. Lynn Winmill to undo the Saltzer deal. Four weeks of testimony ended last Monday. Closing arguments are scheduled Nov. 7.
Theres a lot more at stake beyond the transaction, said Jonathan Lewis, an antitrust lawyer and partner at Baker Hostetler in Washington, D.C.
Lewis and partner Lee H. Simowitz are not involved in the case, but have written about it. They wrote Oct. 10 that comments from FTC commissioners suggest that losing the lawsuit might well cause the FTC to turn its focus to completed hospital-physician deals to build needed experience to win such challenges.
Matt Cantor, an antitrust lawyer for New York City-based Constantine Cannon who is not involved in the St. Lukes case, said it is a bit unusual.
The FTC has been quite aggressive in the health care sphere ... because there is such a concern in the United States about health care costs increasing, Cantor said. But generally, the FTC has focused on cases where you have two hospital systems that are coming together and, by virtue of their combined presence, will allow them to wield a substantial market share.
When a hospital system buys a group of doctors, its harder to show obvious competitive problems, he said.
St. Lukes is one of the first doctor-buyout challenges to go to trial in recent years. The FTC has settled complaints about other hospital buyouts among them, a cardiology group in Nevada and outpatient medical clinics in Virginia before trial.
If the FTC wins, you know, its just another notch in their belt for the last few years, Cantor said. If the FTC was to lose this case, youd wonder whether or not that would impact (the FTCs) momentum ... whether they would think they want to be a little more careful before they take on a particular provider merger, to be sure they have a rock-solid case.
Before and during the St. Lukes trial, FTC commissioners have spoken in public speeches and forums about wanting to do a retrospective study of hospital-physician mergers. Antitrust lawyers say that talk reminds them of when the FTC geared up for more focused attacks on hospital mergers more than a decade ago. The FTC studied a handful of hospital-and-hospital mergers the agency had failed to block. That study, looking at pricing and quality of care after courts allowed the mergers to be consummated, showed strong evidence that the agencies had been right to challenge those hospital deals, FTC chairwoman Edith Ramirez said in June at a law symposium in Washington, D.C.
Armed with its study, the FTC built a winning streak that now includes three successfully litigated merger challenges and a growing tally of hospital deals abandoned after the FTC threatened a challenge, Ramirez said.
Now, hospital-physician mergers of the St. Lukes-Saltzer variety have become more commonplace. Doctors are motivated to sell, frustrated by new rules under the Affordable Care Act, overwhelmed by the cost of electronic medical records systems and looking for income security. Health systems including St. Lukes and Saint Alphonsus are under more pressure to work efficiently and keep patients healthier.
Those are all factors at play in the St. Lukes trial. Witnesses have argued the acquisition is the only way St. Lukes and Saltzer can make the kind of efficiency and pay-for-value changes the federal government asked for in the Affordable Care Act.
The FTC says thats not true, arguing there are other ways to deliver on the Affordable Care Acts goals.
It has in St. Lukes a case that is both winnable and important, Cantor said. But I dont think this is necessarily as easy a case as the hospital mergers the FTC has challenged in the past.
Audrey Dutton: 377-6448, Twitter: @IDS_Audrey