Competition. Price. Risk. Those are the key words of a court battle between Idaho’s two largest medical systems. The outcome will likely determine the future of health care in Canyon County.
Boise-based St. Luke’s Health System said Tuesday that it should be allowed to add Saltzer Medical Group of Nampa to its fast-growing tree of hospitals and doctor’s offices around Idaho and eastern Oregon.
St. Luke’s main competitor, Saint Alphonsus Health System, and the smaller Treasure Valley Hospital in Boise sued three weeks ago to block that acquisition, arguing that it would give St. Luke’s control over two-thirds of the primary-care market in the Nampa area. That would drive up prices on medical care and harm Saint Alphonsus and Treasure Valley Hospital by cutting their flow of patients.
The legal fight comes as antitrust investigations by the Idaho Attorney General's Office and the Federal Trade Commission are under way.
Saint Alphonsus said that when doctors join St. Luke’s, their admissions and referrals to Saint Alphonsus dry up. Saint Alphonsus estimated that it would have to lay off employees at its Nampa hospital if the acquisition happens.
St. Luke’s denied the accusations about referrals, saying they won’t stand up to scrutiny. It cited a statement by a former Saint Alphonsus doctor — now with St. Luke’s — who said he’d been told to refer to within the Saint Alphonsus network and, when he didn’t, to fill out a form justifying out-of-system referrals.
Saint Alphonsus has said it has a system to track referrals but doesn’t use that system to pressure doctors.
St. Luke’s said its goal of bringing a better system to rapidly growing Canyon County “is perceived as a threat by market participants who are comfortable with the status quo.”
If the Saltzer buyout is allowed to proceed as planned this year, it would help competition in the Canyon County health care market, not hurt it, St. Luke’s said.
St. Luke’s added that if Saltzer isn’t acquired, it probably won’t survive. That’s because many Saltzer surgeons left in the past several weeks to join Saint Alphonsus instead of sticking around while St. Luke’s acquires Saltzer. Their departures left Saltzer with $2 million in overhead expenses that the rest of its practices, comprising a few dozen physicians, must attempt to absorb immediately, St. Luke’s said.
Saint Alphonsus used the Magic Valley as an example of what would happen if St. Luke’s acquires Saltzer. St. Luke’s controls all the pediatrics, urology and neurology, and 70 percent of all the doctors in the Magic Valley, where it owns two hospitals, the lawsuit said. As a result, St. Luke’s has been able to charge higher prices and demand higher payments from at least one health insurance plan, the lawsuit said.
But St. Luke’s argued Tuesday that its acquisition plans would be in a stronger position to change what it sees as high-cost arrangements with health insurers. “St. Luke’s is working to offer a competitive alternative to the traditional fee-for-service insurance model that incentivizes overutilization,” St. Luke's reply to the lawsuit said. “St. Luke’s is moving to a model by which it will assume utilization risk and thus be able to facilitate significantly lower insurance premiums.”
But that model would require a large base of patients and doctors — and the Saltzer deal would be “critical” to the transition, it said.
Audrey Dutton: 377-6448, Twitter: @IDS_Audrey