Guest post by David Balto, an antitrust attorney who previously served as the policy director for the Federal Trade Commission, and James Kovacs, associate attorney at the Law Offices of David Balto
In its recent decision in an Idaho healthcare provider acquisition matter--Saint Alphonsus Medical Center-Nampa Inc. v. St. Luke's Health System Ltd.--the Ninth Circuit proclaimed that it is not the court's "job to determine the optimal future shape of the country's healthcare system." But in affirming a district court decision that enjoins an acquisition with clear procompetitive benefits, the Ninth Circuit did exactly that: It created a potentially insurmountable barrier to the type of healthcare realignment that is essential to improve quality and reduce costs.
Without question, the American healthcare system is undergoing a fundamental change. As part of this transformational change, the Affordable Care Act (ACA) and other public and private initiatives encourage providers to move healthcare away from fragmented services toward more integrated, value-based and patient-outcome-oriented healthcare. The ACA pushes providers to adopt such changes via numerous provisions within the law, including the reduction in certain reimbursements and penalties for lower quality. Additionally, the ACA has created a structure for more integrated entities known as accountable care organizations, through which Medicare rewards doctors, hospitals and other providers for working together to deliver high-quality, organized care, according to the Centers for Medicare & Medicaid Services.
To adjust to these changes, successful healthcare organizations in a post-ACA world must increasingly coordinate care among different providers. The most successful entities at coordinating care are unified systems of providers. For example, Intermountain, a large integrated delivery system in Utah, has used integration to improve coordination of care that led to quality improvements and millions in savings. To increase integration of services leading to better provider coordination, many provider systems require acquisitions or the employment of physicians in order to meet the demands of the ACA, and the public to reform the system.