Saint Alphonsus Medical Center - Nampa et al. v. St. Luke's Health System Ltd.
In a closely watched matter of national significance, U.S. District Judge B. Lynn Winmill ruled that St. Luke's Health System's acquisition of Saltzer Medical Group -- the largest independent, physician-owned, multispecialty group in Idaho -- was anticompetitive and ordered St. Luke's to unwind the acquisition. Analysis Group and academic affiliate Professor Deborah Haas-Wilson of Smith College were retained by attorneys representing plaintiff Saint Alphonsus Health System to evaluate the likely competitive effects of the acquisition. The lawsuit, which was a companion case to one brought by the Idaho Office of the Attorney General and the Federal Trade Commission, alleged that the acquisition would substantially lessen competition for health care services, in violation of federal and state antitrust law.
Under the direction of Professor Haas-Wilson, Tasneem Chipty led an Analysis Group team that included Vice President Kristen Comeaux and Manager Daniel Andersen in undertaking complex, multidimensional analyses of claims data to tackle issues of market definition and market power and to assess the impact of prior St. Luke's acquisitions on physician referral practices. Citing Professor Haas-Wilson's trial testimony, Judge Winmill noted that after each of five different physician practice acquisitions by St. Luke's, the acquired physicians moved their referrals to St. Luke's. Judge Winmill concluded, "[a]fter the Acquisition, it is virtually certain that this trend will continue and Saltzer referrals to St. Luke's will increase."
This was the first case challenging a health system's acquisition of a physician group to go to trial since the Affordable Care Act became law. In his decision, Judge Winmill wrote that "[t]he Acquisition was intended by St. Luke's and Saltzer primarily to improve patient outcomes … But there are other ways to achieve the same effect that do not run afoul of the antitrust laws and do not run such a risk of increased costs. For all of these reasons, the acquisition must be unwound."
The ruling has already attracted the attention of industry participants and antitrust practitioners. Dr. Chipty -- an antitrust expert and advisor to state and federal governments, including the Massachusetts Health Policy Commission, and to private parties involved in merger reviews -- said, "[i]n this era of rising health care costs, the St. Luke's case is an important example of the oversight health care transactions are likely to receive by private, state, and federal agencies." Dr. Chipty explained, "[n]ow more than ever, merging parties will need to demonstrate the presence of sufficient competition in all aspects of health care that may be affected by the transaction in order to allay antitrust concerns."
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