St. Luke's Health System jealously kept its patients within its hospitals in Idaho, the Idaho Statesman has reported, a business model that ultimately played into the unraveling of its acquisition of Idaho's largest medical group.
According to previously sealed documents obtained by the newspaper, St. Luke's resorted to marketing tactics such as brochures that strongly suggested that patients may not receive the same level of care if they sought emergency treatment at a non-St. Luke's hospital. It also used technology to track the referrals of its physicians, and generally made it more difficult for them to refer outside of the system.
As a result, when St. Luke's acquired a specialty medical practice or group, referrals outside of its hospitals dropped to a fraction of what they were before the deal was consummated, according to the Statesman.
For example, prior to St. Luke's purchase of Boise Orthopedic Associates, nearly 60 percent of its patient referrals were to hospitals operated by Saint Alphonsus Health. After the deal, that volume dropped to 6 percent. Prior to its purchase by St. Luke's, about a third of Idaho Cardiothoracic and Vascular Associates' referrals were to Saint Alphonsus hospitals. That dropped to zero after the transaction closed. When a group of primary care physicians took jobs at St. Luke's, the proportion of radiology referrals they made to Saint Alphonsus dropped from more than 80 percent to less than 20 percent.
Such business practices played into a lawsuit against St. Luke's to unwind its acquisition of Saltzer Medical Group. Although St. Luke's argued that the referral patterns changed due to business relationships gone sour, U.S. District Court Judge B. Lynn Winmill didn't buy the argument and he ordered the deal dissolved after concluding it would narrow options for patients where Saltzer operates and would lead to higher prices. The ruling was upheld earlier this year on appeal. In the meantime, St. Luke's has since been accused by both state and federal regulators of dragging its feet in divesting itself of Saltzer.
To learn more:
- read the Idaho Statesman article