Idaho antitrust case could have wide implications

BOISE, Idaho — A federal antitrust lawsuit involving two of Idaho’s biggest health care providers could have national ramifications on hospital acquisitions of physicians’ practices.

Antitrust lawyer Jonathan Lewis at Baker Hostetler in Washington, D.C., who isn’t involved in the case, told the Idaho Statesman in an article published Sunday that the outcome of the Idaho case could cause the Federal Trade Commission to start examining hospital-physician deals that have already been completed.

“There’s a lot more at stake beyond the transaction,” Lewis said.

In the Idaho case, St. Luke’s Health System contends that its acquisition last year of Saltzer Medical Group will drive down health care costs and improve health care.

Saint Alphonsus Health System, the Federal Trade Commission and the Idaho attorney general sued St. Luke’s a year ago. They contend St. Luke’s buyout of Saltzer was an unfair market grab.

Testimony ended last week, with closing arguments set for Nov. 7.

Another antitrust lawyer, Matt Cantor at Constantine Cannon in New York, said he’s not involved in the case but is watching it. He noted that when a hospital system buys a group of doctors, it’s typically more difficult to prove competitive problems than when hospitals merge.

The FTC, he said, was being “quite aggressive in the health care sphere … because there is such a concern in the United States about health care costs increasing.” But “generally, the FTC has focused on cases where you have two hospital systems that are coming together and, by virtue of their combined presence, will allow them to wield a substantial market share.”

U.S. District Judge B. Lynn Winmill is expected to make a ruling in late December in the Idaho case.

“If the FTC wins, you know, it’s just another notch in their belt for the last few years,” Cantor said. “If the FTC was to lose this case, you’d wonder whether or not that would impact (the FTC’s) momentum … whether they would think they want to be a little more careful before they take on a particular provider merger, to be sure they have a rock-solid case.”

Before and during the Idaho trial, some FTC commissioners have made public statements about wanting to do a “retrospective” study of hospital-physician mergers.

Part of that comes from a previous study by the FTC on a handful of mergers of hospitals that the agency didn’t block. Edith Ramirez, FTC chairwoman, said in June at a law symposium in Washington, D.C., that the study found that pricing and quality of care after the mergers showed “strong evidence that the agencies had been right to challenge those hospital deals.”

Ramirez said the study allowed the FTC to build “a winning streak that now includes three successfully litigated merger challenges and a growing tally of hospital deals abandoned after the FTC threatened a challenge.”

Witnesses testifying in the Idaho case have said St. Luke’s acquisition is the only way for it to become efficient enough to meet goals set by the Affordable Care Act. The FTC contends those goals can be met through other strategies.

Cantor said the Idaho case is one the FTC can win, but it will have a more difficult time than in hospital merger cases.

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