Healthcare Business News

Regional News/West: Judge OKs St. Luke's deal in Idaho

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

By Joe Carlson
Posted: January 5, 2013 - 12:01 am ET

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.

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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 part-owners in the nine-bed surgical facility Treasure Valley Hospital, which is a co-plaintiff 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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