Edwards Wildman Client Advisory - FTC Sues to Undo St. Luke's Health System Acquisition of Specialty Physician Practice


    On March 12, 2013, the Federal Trade Commission joined with the Idaho Attorney General in filing a complaint in federal district court seeking to undo the December 31, 2012 acquisition of Saltzer Medical Group P.A., Idaho’s largest independent multi-specialty physician practice, by St. Luke’s Health System, a not-for profit hospital which is headquartered in Boise, Idaho.

    The FTC complaint alleges that the acquisition will violate Section 7 of the Clayton Act and Section 48-106 of the Idaho Competition Act by creating a “single dominant provider of adult care physicians in Nampa”, Idaho with a market share of nearly 60%. The FTC also alleges the merger will also serve to stifle competition in the Nampa market by an alternative physician network which is unaffiliated with St. Luke’s in which Saltzer was participating.

    By virtue of the transaction St. Luke’s assumed authority to negotiate health plan rates for Saltzer and to establish charges and rates for Saltzer patients. According to the FTC local employers with employees living in Nampa will now be dissuaded from utilizing any healthcare provider networks who are not affiliated with St. Luke’s demands for higher rates.

    This transaction is already the object of a provide antitrust suit brought by St. Alphonous and Treasure Valley Hospital Limited Partnership, competitors of St. Luke’s, which is scheduled for trial on July 29, 2013, after the district court denied their motion for a preliminary injunction. The FTC will seek to have the complaints consolidated for discovery and trial.

    It is noteworthy that the FTC has acted in this case after local private parties had brought suit and after the transaction had closed (running contrary to the FTC’s typical aversion to “unscrambling eggs”), particularly so since the FTC complaint was authorized in a 4-0 vote of the equally divided Commission. Interest in this area by federal and state antitrust regulators is likely to continue and we will be following the developments and issuing updates as the circumstances warrant.

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