Judge OKS St. Luke’s deal in Idaho

Ac­qui­si­tion of state’s largest doc prac­tice be­ing probed by state, fed­eral agen­cies

Modern Healthcare - - REGIONAL NEWS - Joe Carl­son

St. Luke’s Health Sys­tem in Idaho quickly com­pleted its con­tentious ac­qui­si­tion of the state’s largest physi­cian prac­tice af­ter a judge de­clined to block the move pend­ing the out­come of a com­peti­tor’s le­gal chal­lenge.

B. Lynn Win­mill, chief judge in U.S. District Court in Boise, de­nied a re­quest from the Boise-based sys­tem’s main ri­val in the Nampa area, St. Alphon­sus Health Sys­tem, to is­sue a tem­po­rary in­junc­tion block­ing the sale of Nampa’s Saltzer Med­i­cal Group un­til a trial can be held on pri­vate an­titrust al­le­ga­tions in July. The deal also is un­der ac­tive in­ves­ti­ga­tion by the Idaho at­tor­ney gen­eral’s of­fice and the Fed­eral Trade Com­mis­sion.

Af­ter the Dec. 19 rul­ing, St. Luke’s com­pleted the con­tracts to ac­quire the as­sets of the prac­tice and its 289 non­physi­cian em­ploy­ees ef­fec­tive Jan. 1, ac­cord­ing to sys­tem spokesman Ken­neth Dey. The 42 physi­cians will work un­der ser­vice con­tracts and will not be di­rectly em­ployed by St. Luke’s. A pur­chase price is not be­ing dis­closed.

Sales of doc­tors’ prac­tices to hos­pi­tals have ac­cel­er­ated in re­cent years across the coun­try, and fed­eral and state an­titrust of­fi­cials have de­voted more at­ten­tion to the deals in re­sponse.

The St. Luke’s case in par­tic­u­lar has drawn na­tional at­ten­tion, as it comes on the heels of years of ac­qui­si­tion ac­tiv­ity that has strength­ened St. Luke’s role as the dom­i­nant health sys­tem in Idaho and the state’s largest non­govern­ment em­ployer. St. Luke’s owns four hos­pi­tals and man­ages three, ac­cord­ing to the Amer­i­can Hospi­tal As­so­ci­a­tion.

Win­mill noted in his rul­ing that the de­ci­sion not to stop the sale was based on an as­sump­tion that Saltzer doc­tors would not stop re­fer­ring pa­tients to St. Alphon­sus once they start work­ing for St. Luke’s.

“If his as­sump­tions prove wrong be­fore trial, St. Al’s could re­turn to court and seek to un­wind what had oc­curred up to that point,” said St. Alphon­sus at­tor­ney David Et­tinger of Honig­man Miller Schwartz and Cohn. “The de­ci­sion pro­vides very im­por­tant pro­tec­tion for St. Al’s, and we are very pleased with the rul­ing.”

The state at­tor­ney gen­eral’s of­fice had asked St. Luke’s not to com­plete the trans­ac­tion un­til it can wrap up its lengthy in­ves­ti­ga­tion, and ac­cord­ing to court records, the FTC has sped up its in­ves­ti­ga­tion in the hope of com­plet­ing it be­fore the trans­ac­tion is com­plete. At dead­line for this story, nei­ther had acted to chal­lenge the deal.

“We were pleased that the judge asked for a speedy trial,” Dey said af­ter the rul­ing. “We’re op­ti­mistic about the out­come of the trial—that it will be in our fa­vor.”

Dey noted that seven spe­cial­ists who for­merly worked for Saltzer have de­cided to work for St. Alphon­sus in­stead. Et­tinger, mean­while, said sev­eral of them are par­town­ers in the nine-bed sur­gi­cal fa­cil­ity Trea­sure Val­ley Hospi­tal, which is a coplain­tiff with St. Alphon­sus in the law­suit against St. Luke’s.

For ex­am­ple, Dr. Clark Robin­son said in a sworn state­ment that he left the prac­tice be­cause he was un­happy that St. Luke’s in­sisted he drop his own­er­ship in Trea­sure Val­ley or take a pay cut. Robin­son’s state­ment says he has al­ready seen a drop in re­fer­rals from Saltzer doc­tors be­cause his op­po­si­tion to the deal with St. Luke’s was well-known.

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