FTC, Idaho AG file antitrust suit

The Federal Trade Commission, together with the Idaho Attorney General, filed a complaint in federal district court seeking to block St. Luke’s Health System’s acquisition of Idaho's largest independent, multispecialty physician practice group, Saltzer Medical Group. According to the joint complaint, the combination of St. Luke’s and Saltzer would give it the market power to demand higher rates for healthcare services provided by primary care physicians (PCPs) in Nampa, Idaho and surrounding areas, ultimately leading to higher costs for healthcare consumers.

“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, in a statement. “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.”    

St. Luke’s is a not-for-profit health system with headquarters in Boise, Idaho. It owns and operates six hospitals.

Despite the action, the healthcare providers are not backing down. David Pate, MD, JD, president and CEO of St. Luke's, wrote in a blog post that he felt the decision to challenge the health systems' acquisition was peculiar because no regulator has actually found that St. Luke's or Saltzer has done anything wrong.

“The FTC can still file a complaint because you are in a position where you might be able to violate the law in the future,” Pate wrote on his blog. “We are extremely disappointed by the FTC's and AG's decision to file suit. It became clear recently that the FTC and AG don't well understand hospital-physician relationships and do not have a good understanding of accountable care.”

Before being acquired by St. Luke’s, Saltzer was a for-profit, physician-owned, multispecialty group in Nampa. With approximately 44 physicians, Saltzer was the largest and oldest independent multispecialty doctors’ group in Idaho. Its specialties include family practice, internal medicine and pediatrics. 
 
Effective Dec. 31, 2012, St. Luke’s acquired all of Saltzer’s personal property and equipment. The deal transferred to St. Luke’s the power to negotiate health plan contracts on Saltzer’s behalf and to establish rates and charges for services provided by Saltzer physicians. Saltzer, on behalf of its physicians, has also entered into a five-year professional services agreement with St. Luke’s.

The commission voted 4-0 to join the State of Idaho in filing the complaint. It will be filed under seal in the U.S. District Court for the District of Idaho.

Two of St. Luke’s competitors, St. Alphonsus and Treasure Valley Hospital Limited Partnership, have already filed a private action in federal district court in Boise, seeking to block St. Luke’s acquisition of Saltzer. The district court has scheduled the private plaintiffs’ action for trial beginning on July 29, 2013, after denying their request for a preliminary injunction. The FTC’s joint complaint with the Idaho Attorney General will be filed in the same court, and the staff has been authorized to ask the district court to consolidate the two actions for discovery and trial.