Hospitals, government raise antitrust merger concerns

Saint Alphonsus, Treasure Valley Hospital file suit against St. Luke's Health System's acquisition of Saltzer Medical Group
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A turf war between Idaho hospitals is heating up. Saint Alphonsus and Treasure Valley Hospital yesterday filed a federal antitrust lawsuit, claiming St. Luke's Health System's acquisition of a medical group would create a monopoly that would raise prices, stifle competition and cause layoffs at other facilities.

If St. Luke's proceeds with its takeover of physician-owned Saltzer Medical Group, competition in Idaho and eastern Oregon "will be seriously and irreparably injured," according to the complaint.

Saint Alphonsus warned that it will suffer a "crippling financial blow" from the acquisition because it depends on admissions from Saltzer doctors. The St. Luke's- Saltzer deal will force Treasure Valley Hospital to lay off 10 percent of its workforce, as well as cancel or delay planned improvements, including more operating rooms and a new CT scanner, the hospitals said in the suit.

St. Luke's acquisition spree during the past few years has spurred antitrust investigations by the Federal Trade Commission and the Idaho Attorney General, the NWCN reported. However, the nonprofit system said it still plans to close the deal by the end of the year.

Worried that some mergers would stifle competition and hike up prices, the government has been ramping up efforts to block healthcare mergers. In fact, the Federal Trade Commission challenged 17 of the 1,450 merger transactions reported in fiscal year 2011, with two involving hospitals.

Meanwhile, healthcare consolidation in California has been under increased scrutiny, with the state attorney general looking into whether hospital-physician partnerships are driving up prices in a way that violates antitrust laws. The California Hospital Association said consolidation efforts between hospitals and other providers are necessary to reach health reform's goal of coordinated care, FierceHealthcare previously reported.

The question of whether hospital mergers are anticompetitive will go all the way up to the U.S. Supreme Court later this month. The high court set a Nov. 26 date to hear arguments on the Phoebe Putney Health merger case in Georgia.

Despite the benefits of consolidation to coordinate and streamline care, such increased scrutiny could make hospitals wary of making deals.

For more:
- here's the complaint (.pdf)
- read the NWCN article

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