On January 24, 2014, Idaho Federal District Court Judge B. Lynn Winmill ruled in Boise that the buyout of Saltzer Medical Group by St. Lukes Health System violated federal antitrust laws. The news of the decision was reported by the Idaho Statesman in its story headlined Judge says St. Lukes buyout violates antitrust law, must be undone. Here is a link to the judge’s Memorandum Decision and Order.
This decision, if it stands, may have significant effects on future hospital buyouts of groups of physicians in Idaho.
Notably, Judge Winmill observed that while the buyout was apparently a sincere effort by St. Lukes to improve the delivery of health care in the Treasure Valley, “… 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.”
In other words, instead of bending the law and allowing the illegal acquisition because he believed the outcome could be beneficial, Judge Winmill said that the same beneficial outcomes could be achieved without violating the antitrust laws.
Imagine that! A judge in Idaho that follows the law. What a concept!
ADDENDUM on 01-27-2014 at 6:55 AM: Antitrust cases are about as exciting as watching grass grow, but antitrust law affects the costs of goods and services to all of us. Here is a link to a US Department of Justice consumer booklet entitled Antitrust Enforcement and the Consumer. For another general overview of the federal antitrust laws, see the Federal Trade Commission’s Guide to Antitrust Laws. Idaho’s state antitrust laws are found generally in Idaho Code, Title 48 — Monopolies and Trade Practices.
It is likely that health providers in our area including Rockwood Health Systems, Providence Washington, Kootenai Health, and Northwest Specialty Hospital will be paying very close attention to Judge Winmill’s decision and any subsequent appeal.
ADDENDUM on 01-29-2014 at 7:52 AM: Federal District Court Judge B. Lynn Winmill has issued an order unsealing his Findings of Fact and Conclusions of Law in this case. The Idaho Statesman has reported on the content in a news article this morning headlined Newly released St. Lukes court documents show merger would have created higher salaries, costs.
Interesting decision, Bill, and I do take some hope from this Judge’s decision. Thanks for letting us know about it. How do you think this decision will impact the implementation of Obamacare in Idaho, if at all?
Comment by mary — January 24, 2014 @ 4:23 pm
I wonder how this will affect the publicly owned Kootenai hospital.
Comment by Susie Snedaker — January 24, 2014 @ 4:30 pm
Mary and Susie,
It looks like the issue in this case was the acquisition of the physicians’ practices by St. Lukes amounted to reduction in competition. That Judge Winmill said it could have been accomplished lawfully if they had used other unidentified practices suggests that the acquisitions aren’t inherently illegal.
Comment by Bill — January 24, 2014 @ 6:47 pm
My point exactly, Bill. Obamacare proposes to reduce market competition by controlling the rates charged by hospitals and care givers. Isn’t that, in essence, the same thing?
Comment by mary — January 24, 2014 @ 10:16 pm
Mary,
While an outcome or result of Obamacare may be the same, the difference is that Obamacare is federal law and not a corporation.
As I understand the lawsuit, the plaintiff’s alleged that the acquisition of Saltzer Medical Group by St. Lukes Health System violated the Clayton Act, Chapter 7. That Act (at 15 U.S. Code § 18) says in part:
Because one or more parties allege that Judge Winmill’s Findings of Fact and Conclusions of Law contain trade secrets which should not be made public, Judge Winmill has sealed them until the parties have an opportunity to analyze them and file written objections by January 27, 2014. It seems pretty clear that his Findings of Fact and Conclusions of Law will be released in some form, and they will further explain the reasoning behind his decision.
There is also a possibility that St. Lukes may appeal this decision.
Opponents of Obamacare may find something in the trial documents and subsequent appeal that would be useful in overcoming Obamacare’s undesirable effects legislatively, but this case was based on federal law which applies to one corporation acquiring the stock or share capital of another.
I imagine that there are some people in our area who have been following the St. Lukes case in Boise and looking at similar acquisitions of physicians’ practices by other corporate health care providers in Spokane (e.g., Providence) and Coeur d’Alene (e.g., Kootenai Health).
I note in passing that neither the Coeur d’Alene Press nor The Spokesman-Review have given this lawsuit much coverage.
Comment by Bill — January 25, 2014 @ 4:35 am
Yes, Bill, I’m sure you are technically and legally correct. My observation was simply that the overall impact of Obamacare will be to “substantially lessen competition” in healthcare commerce, and will “tend to create a monopoly”. Supposedly what the law you quote has been trying to preclude.
Comment by mary — January 27, 2014 @ 9:34 pm
Mary,
In his public Memorandum Decision and Order, Judge Winmill suggested that there was a way to do what St. Lukes wanted to do, but the way they chose ran afoul of the law. That’s why we need to wait until the Judge unseals his Findings of Fact and Law — if he does. That may help explain what the unlawful behavior was and how it could have been done lawfully.
Comment by Bill — January 27, 2014 @ 9:43 pm