Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Joint motion would provide process for St. Luke’s divestiture of Saltzer, (Dec 7, 2015)

By Linda O’Brien, J.D., LL.M.

In an action challenging the combination of St. Luke’s Health System, Ltd.—the largest health care system in Idaho—and Saltzer Medical Group—the state's largest independent, multi-specialty physician practice, the parties have agreed on a process for the divestiture of Saltzer in a manner that would restore the medical group as an independent, viable competitor, according to a joint motion filed in the federal district court in Boise, Idaho (Saint Alphonsus Medical Center – Nampa, Inc. v. St. Luke’s Health System, Ltd., December 3, 2015).

Background. St. Luke’s is an Idaho not-for-profit health system that operates six hospitals, while Saltzer was Idaho’s largest independent, multi-specialty physician practice group. In December 2012, St. Luke’s acquired all of Saltzer’s personal property and equipment. Two of St. Luke’s competitors, St. Alphonsus and Treasure Valley Hospital Limited Partnership, filed suit and sought to block the transaction.

Following the private suit, the FTC and the Idaho Attorney General filed a complaint, seeking to halt St. Luke’s acquisition of Saltzer on the ground that the combined entity would have market power in the relevant market region to demand higher rates for health care services provided by primary care physicians. The cases were consolidated for discovery and trial. In January 2014, the court found that the acquisition violated the Clayton Act and Idaho Competition Act and ordered St. Luke’s to divest itself of Saltzer’s physicians and assets. In July 2015, the plaintiffs’ motion to compel expedited discovery into St. Luke’s divestiture plan was granted.

Proposed order. According to the parties’ proposed order to maintain assets, St. Luke’s and Saltzer will completely maintain the economic viability and marketability of Saltzer’s assets and business and will not take action that may risk the loss of competitive potential, viability, or marketability of those assets and business. Until the divestiture is complete, Saltzer may operate as an independent medical group with control over its assets and business.

Pursuant to the proposed order, the divestiture process will be undertaken by a court-appointed divestiture trustee. Additionally, it is appropriate for a monitor to be appointed to assure that Saltzer remains an independent, viable entity for the time during which the divestiture can be implemented. The parties have agreed upon the selection of James Moloney as the divestiture trustee and Richard Shermer as the monitor.

Attorneys: J. Thomas Greene for the Federal Trade Commission. Brett DeLange, Office of the Attorney General, for the State of Idaho. David A. Ettinger (Honigman Miller Schwartz and Cohn LLP) and Keely E. Duke (Duke Scanlan & Hall, PLLC) for Saint Alphonsus Medical Center - Nampa Inc. Raymond D. Powers (Powers Tolman Farley, PLLC) for Treasure Valley Hospital Ltd. Partnership. J. Walter Sinclair (Holland & Hart LLP), and Jack R. Bierig (Sidley Austin LLP) for St. Luke's Health System, Ltd., and St. Luke's Regional Medical Center, Ltd. Brian K. Julian (Anderson Julian & Hull) and Pat Deady (Hogan Marren Babbo & Rose, Ltd.) for Saltzer Medical Group.

Companies: Saint Alphonsus Medical Center—Nampa, Inc.; Treasure Valley Hospital Limited Partnership; St. Luke’s Health System, Ltd.; Saltzer Medical Group, P.A.

News: AcquisitionsMergers Antitrust IdahoNews