Hospitals on alert after FTC's St. Luke's intervention

The Federal Trade Commission's (FTC) intervention in a deal between a hospital and medical group in Idaho may give other providers pause as they pursue consolidations, the Washington Post reported.

The FTC sued to block the acquisition of the Saltzer Medical Group in Nampa, Idaho by St. Luke's Health Center in Boise, and a federal judge agreed earlier this year to dissolve the transaction, claiming it would lead to anti-competitive practices such as much higher prices. Both St. Luke's and Saltzer filed a motion last month to suspend the dissolution of the deal while they appeal to a higher court, arguing that the partnership would offer integrated care through a variety of settings. The parties also claim the deal was intended to allow the providers to compete more effectively in the Idaho market.

Sector observers say that the FTC's intervention sends a mixed message, as mergers and acquisitions between hospitals and doctors grow and government regulators have generally encouraged such deals as they tend to create cost efficiencies.

"The Affordable Care Act is pushing consolidation and working together, but the Federal Trade Commission and the Justice Department seem to be saying, 'Wait a second, there are antitrust laws here,' " Robert Field, a law and health policy professor at Drexel University in Philadelphia, told the Post. "The federal government has a schizophrenic attitude toward provider consolidation."

As a result, some hospitals may be more cautious in pursuing such deals. "The boundaries for antitrust enforcement have always been a bit vague," Steve Messinger of ECG Management Consultants told the Post. "This confuses the industry because for the longest time it thought integrating physicians was fundamentally a sound business strategy."

However, Deborah Feinstein, director of the FTC's bureau for competition, indicated that while there is only a small number of deals that concern the agency, it is eyeing several pending transactions. "We have seen, over the last couple of years, hospital-doctor combinations that are troubling to us. And we are looking at it," she said.

Such deals also garner the attention of state regulators, with California's attorney general examining whether they drive up prices.

To learn more:
- read the Washington Post article

 

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