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Cold eye on provider acquisitions


Burgeoning hospital systems seeking to expand further in their regions may have a long row to hoe as courts and regulators raise  serious anti-trust issues.

A dramatic example of this came this week when the  Ninth Circuit today of Appeals upheld a  U.S. District Court ruling that found St. Luke’s Health System in Idaho broke antitrust laws when it bought the state’s largest independent physicians’ practice.

St. Luke’s foes  had argued that the 2012 merger of St. Luke’s and the Nampa-based Saltzer Medical Group,  with 40 physicians, violated the Clayton Act, which bars mergers that may substantially lessen competition or create a monopoly.

St. Luke’s had argued that the acquisition would improve patient outcomes and healthcare delivery in its area. But the Federal Trade Commission, the Idaho attorney general and the system’s competitors — St. Alphonsus Health System and Treasure Valley Hospital — asserted that that the deal  gave St. Luke’s an unfair advantage by letting it dominating primary medical care in Canyon County and, in so doing drive up the area’s healthcare prices./

The appeals court agreed.

The ”Clayton Act does not excuse mergers that lessen competition or create monopolies simply because the merged entity can improve its operations,” the ruling said.

David A. Ettinger, of Honigman Miller Schwartz and Cohn LLP, which represents St. Alphonsus, told FierceHealthcare that the ruling has broad implications for hospitals and physician groups across America as the former continue to gobble up the latter.

In essence, he said, “healthcare markets can be local. If one party has a high-market share, it can indicate serious antitrust problems when higher prices can be achieved. The mere claim that you are going to get the efficiencies as a result of a transaction doesn’t trump these concerns.”


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