Six pages was all it took to disappoint two of Idaho’s largest health care organizations.
U.S. District Judge B. Lynn Winmill on Thursday ordered St. Luke’s Health System to release Saltzer Medical Group in Nampa from its ownership immediately. The health system plans to appeal that order — click here to see St. Luke's full statement — and says that even if it loses that appeal, it will keep working with Saltzer.
In January, Winmill had ordered St. Luke’s to undo its 2012 buyout of Saltzer after he determined that the health system’s multimillion-dollar acquisition of the Nampa physicians group violated antitrust laws by giving it almost 80 percent of the primary care market in Canyon County.
St. Luke’s later asked Winmill to delay that order while it appealed the ruling. St. Luke’s filed its appeal June 12 to the 9th U.S. Circuit Court of Appeals. The appeal could take until 2016 or later to resolve.
When it asked Winmill to stay his order, St. Luke’s argued that it has a strong case for its appeal. It said releasing Saltzer now would put the physicians group “in financial peril,” in part because several surgeons left to join the competing Saint Alphonsus system, and it said that competitors, including Saint Alphonsus, wouldn’t be harmed if St. Luke’s kept Saltzer.
Winmill rejected those arguments Thursday. He said St. Luke’s might not encourage or force doctors to refer within its own system, but that referrals to other providers tend to slide after St. Luke’s buys a practice. He said St. Luke’s continued ownership of Saltzer could harm its competitors as a result.
And he said Saltzer’s financial peril was self-inflicted, noting that the Saltzer surgeons left the practice as a result of the merger.
“Perhaps most importantly, a stay would lock into place the anticompetitive bargaining advantage that St. Luke’s could continue to use to its advantage,” Winmill wrote. “There are a myriad of ways to use this advantage other than price increases, and it could cause substantial injury to consumers.”
Saltzer’s president, Dr. John Kaiser, told the Statesman that the order was “extremely disappointing” and that the practice is evaluating its next steps.
St. Luke’s says the order from Winmill doesn’t say what “immediate” means.
“All efforts will be made to complete the divestiture process in a thoughtful and orderly manner to limit the disruption to employees and patients,” St. Luke’s said in a statement.
The hospital said its acquisition of Saltzer, up till now, has allowed the formerly for-profit Saltzer to take in more Medicaid, Medicare and otherwise low-paying customers. If its plea to the appeals court fails, St. Luke’s said it would remain “committed to working collaboratively with Saltzer to deliver high-quality, low-cost care to the patients we serve.”
Before the deal, Saltzer had 47 physicians. Its website now lists 43 medical or osteopathic doctors.
St. Luke's responds
St. Luke's spokesman Ken Dey said that since this statement was sent out, the health system decided it will appeal the judge's latest order. The release below said it "may."
Here is the full statement from St. Luke's, responding to Winmill's order:
St. Luke's Health System is extremely disappointed by the ruling from U.S. District Court Judge B. Lynn Winmill denying a stay of his previous decision ordering full divestiture of its integration with Saltzer Medical Group.
St. Luke's is currently considering the judge's order and may seek a stay from the appellate court. The order does not give a timeline as to when St. Luke's must complete its divestiture of Saltzer Medical Group. All efforts will be made to complete the divestiture process in a thoughtful and orderly manner to limit the disruption to employees and patients.
On June 12, St. Luke's filed an appeal with the Ninth Circuit Court of Appeals seeking reversal of Judge Winmill's Jan. 24 ruling ordering divestiture of Saltzer.
St. Luke's is committed to reducing health care costs while providing better coordination of care, increased access for all patients and better outcomes.
In its appeal, St. Luke's contends that Judge Winmill erred in concluding that St. Luke's acquisition of Saltzer Medical Group would cause substantial anti-competitive effects, while dismissing the substantial proc-competitive benefits the District Court believed would have resulted if the acquisition were to stand.
Since St. Luke's acquisition of Saltzer Medical Group, residents of Canyon County have had greater access to care. Saltzer's affiliation with St. Luke's, Idaho's only locally-owned not-for-profit hospital, has allowed Saltzer to provide services to more low-income and Medicaid and Medicare patients, than they were able to provide as private physician group because of the low reimbursements provided for the federal and state programs.
That point was recognized by America's Essential Hospitals, an organization that filed a brief with the Ninth Circuit on Thursday, June 19 in support of reversing the District Court's decision in this case.
The organization said if Judge Winmill's ruling is allowed to stand it would have a "chilling effect" by deterring hospitals from pursing tighter integrations with physician groups as a strategy to improve access to high-quality care for vulnerable populations.
The organization concluded that "courts should take access for vulnerable populations into account when deciding antitrust cases, or access to care for millions of vulnerable Americans will be threatened and inequities in care for vulnerable populations will be exacerbated."
St. Luke's remains optimistic that the Ninth Circuit will recognize the value of the affiliation with Saltzer and overturn the District Court's ruling.
But in the event that doesn't occur, St. Luke's remains committed to working collaboratively with Saltzer to deliver high quality, low-cost care to the patients we serve.