I have written (here’s one from more than 2 years ago) about this sort of issue before.   While I have mixed emotions, I don’t want insurance companies to purchase (or otherwise acquire) physician practices.  I am not sure I want hospitals systems to acquire docs, either, but it seems that the courts are coming around to my point of view, too.

On 10 February 2015, the US Court of Appeals (9^th Circuit) affirmed what a district judge had ordered.  That decision means that St. Luke’s Health System of Idaho was, indeed, breaking state and federal laws when it acquired a physician practice.  The court relied directly on the Clayton Act (the anti-trust provisions of our laws)- which section 7 denotes that mergers cannot be allowed that tend to create a monopoly or decreases competition.

St. Luke’s purchased the Salzer Medical Group to expand its control and influence in the Idaho region.  Not much different than what the Allegheny and Pittsburgh Hospital systems have been doing (as discussed in the first hyperlink listed above).

But, this acquisition put the St. Alphonsus Health System and Treasure Valley Hospital at a severe disadvantage. They claimed it would decrease competition- which really means consumers- you, me, and our employers- would end up paying more for health care.  So, they sued for relief in 2012.

The District Court held that St. Luke’s claims that health care quality would improve may or may not be true- but those claims were not enough to validate the purchase.  St. Luke’s would have to demonstrate that competition in the region would not suffer.

St. Lukes’ kept stressing accountable care- one of the tenets of Obamacare (PPACA is the official acronym), like this (the purchase and merger) was the only way to achieve that goal.  But accountable care organizations (ACO) are supposed to be voluntary associations, whose components (doctors, hospitals, and other health care organizations) work in concert to yield high quality care to their patients. And, when they achieve such results- at lower costs- they get to share in the savings afforded the overall government health care costs (typically Medicare and Medicaid).

The acquisition, as described by Judge B. Lynn Winmill, said that Saltzer’s acquisition would make St. Luke’s the biggest player in the neighborhood.  80% of the primary care physicians in Nampa (20 miles west of Boise, and the second biggest city in the state with about ½ Boise’s population) would be under the control of the merged entity.  That gives it control when negotiating with insurance plans and to charge higher rates for ancillary services (x-rays, etc.)

And, that is exactly what the US Court of Appeals had to say.  They averred in their decision that St. Luke’s “…did not demonstrate that efficiencies resulting from the merger would have a positive effect on competition…”

Now, what that means for other mergers is up for discussion, no?

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