Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Health care consolidation on trial in Idaho, (Sep 23, 2013)

By Jeffrey May, J.D.

The federal district court in Boise, Idaho, heard opening statements today in a consolidated case brought by the FTC, the State of Idaho, and complaining hospitals, challenging an Idaho-based, not-for-profit health system’s proposed acquisition of the largest physician practice in the state (St. Alphonsus Medical Center—Nampa, Inc. v. St. Luke’s Health System, Ltd., Case 1:12-cv-00560-CWD; FTC v. St. Luke’s Health System, Ltd., Case No. 1:12-cv-00560-BLW-REB, FTC File No. 121 0069).

Last year, Boise-based St. Alphonsus Health System, Inc. and its hospitals, as well as Treasure Valley Hospital (TVH)—a nine-bed physician-owned, short-term care, non-emergency hospital in Boise, filed a complaint over St. Luke’s Health System, Ltd.’s proposed acquisition of Saltzer Medical Group based in Nampa, Idaho. The acquisition was consummated after the federal district court denied a request for a preliminary injunction in December 2012.

In March 2013, the FTC and the State of Idaho filed another complaint, seeking divestiture or rescission of the transaction. The government alleges that the combined entity will have market power in the Nampa region to demand higher rates for health care services provided by primary care physicians.

As the trial date approached the litigants disputed the relevance of St. Luke’s prior acquisitions outside of Nampa to the current dispute. In a bench memorandum, the plaintiffs contended that the court should “consider the merging parties’ prior conduct and analogous events, in different markets, to inform [its] analysis of whether a transaction violates the antitrust laws.”

According to the plaintiffs, St. Luke’s series of physician acquisitions in the Magic Valley area will provide useful context for predicting the effects of St. Luke’s acquisition of Saltzer. “Evidence concerning St. Luke’s acquisition of surgery practice groups will likewise help the Court here by shedding light on St. Luke’s direction of referrals away from non-St. Luke’s facilities following its physician acquisitions, as well as its actions directed at competing physician networks,” the plaintiffs suggest.

St. Luke’s has responded, arguing that the transactions and pricing outside of Nampa—including St. Luke’s acquisition of the Magic Valley Regional Medical Center (MVRMC) in the Magic Valley and its acquisition of various specialty physician practices in the Treasure Valley area—are not relevant to the current case. The defendant moved to exclude the evidence from the current trial.

Attorneys: Keely E. Duke (Duke Scanlan & Hall, PLLC) and David Ettinger (Honigman Miller Schwartz and Cohn) for Saint Alphonsus Medical Center-Nampa, Inc. J. Thomas Greene for FTC. J. Walter Sinclair (Stoel Rives, LLP) and Jack R. Bierig (Sidley Austin, LLP) for St. Luke’s Health System, Ltd. Brian K. Julian (Anderson, Julian & Hull, LLP) for Saltzer Medical Group P.A.

Companies: St. Luke’s Health System, Ltd.; Saltzer Medical Group P.A.

News: Antitrust FederalTradeCommissionNews