Judge orders Idaho hospital to sell medical group

The long saga of St. Luke's Health System and Saltzer Medical Group appears to be ending with a court-ordered sale.

U.S. District Judge B. Lynn Winmill has ordered St. Luke's to sell the roughly 40-doctor Saltzer within 12 months through a trustee-brokered transaction, the Idaho Statesman reported. The court has ordered Cain Bros.to find the best price and terms of sale for Saltzer's assets, "subject to St. Luke's absolute and unconditional obligation to divest expeditiously and at no minimum price." Moreover, the buyer should be "the...most likely to maintain Saltzer as a viable, independent, competitive entity" and not necessarily willing to pay the highest price.

The order of a sale comes after the U.S. Justice Department intervened once St. Luke's finalized the acquisition in late 2012 and declared that the deal was anti-competitive. Winmill ordered the divestment early last year. He noted in his ruling that while St. Luke's needed to improve its healthcare delivery system, the Saltzer purchase would have given it a virtual monopoly over primary care services in Canyon County and likely would have led to increased prices.

St. Luke's appealed the verdict, and Winmill allowed the acquisition to remain in place during the appeals process. However, its argument that the merger would allow the hospital to lower prices and provide efficiencies did not prevail. The U.S. 9th Circuit Court of Appeals rejected its arguments, siding not only with the Justice Department but the U.S. Federal Trade Commission, the Idaho attorney general and the St. Luke's competitors--St. Alphonsus Health System and Treasure Valley Hospital.

Earlier this year, St. Luke's was accused by regulators of dragging its feet on the divestment order. Overall, the failed merger may have cost St. Luke's as much as $40 million, as well as bitterly dividing employees and management of both entities over the value of the deal in the first place. Several of Saltzer's top surgeons also left the organization after the deal went through, cutting the medical group's annual revenues by as much as half.

To learn more:
- read the Idaho Statesman article