Federal Court Orders Idaho Health System To Divest Acquired Physician Practice: Finds Acquisition Likely To Increase Prices In Violation Of Section 7 Clayton Act

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A federal judge has ordered Idaho’s St. Luke’s Health System to divest Saltzer Medical Group, which it acquired in 2012. In an opinion issued in consolidated cases filed by the Federal Trade Commission and other Idaho health systems, Chief Judge B. Lynn Winmill concluded that the affiliation violated Section 7 of the Clayton Act and the Idaho Competition Act.

The court’s opinion acknowledged a “rough consensus” among experts that clinical integration is a key solution to lowering costs and increasing quality in health care. The court further praised the St. Luke’s system for its “foresight and vision” in its move to acquire physician practices to achieve this needed integration.

Nevertheless, the court concluded that because a single entity would employ 80% of primary care physicians in Nampa, Idaho, the acquisition likely would result in increased health care costs. While the court has not yet issued its detailed findings of fact supporting its conclusion, the court’s opinion did note that it believed that the combined entity would be able to demand higher reimbursement rates from health plans and raise rates for ancillary services to the higher hospital-billing rates. Further analysis of the decision will not be possible until the court releases its findings of fact and conclusions of law.

In a prepared statement, FTC Chairwoman Edith Ramirez trumpeted the court’s decision as “an important victory that will benefit both competition and consumers in Nampa, Idaho, and surrounding areas” and noted that “ensuring vigorous competition between [healthcare] providers is, and will continue to be, a top Commission priority.”