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FTC, Idaho sue St. Luke's Health System

Rebecca Boone, Associated Press

BOISE, Idaho (AP) -- The Federal Trade Commission and Idaho Attorney General's office is suing St. Luke's Health System because they contend St. Luke's purchase of a Nampa health care group violates state and federal anti-competition laws.

Deputy Attorney General Brett DeLange said the lawsuit will be filed in Boise's U.S. District Court Tuesday afternoon. The state contends St. Luke's purchase of Saltzer Medical Group unfairly gives St. Luke's the market power to raise health care rates for the region.

St. Luke's Health System, a not-for-profit company based in Boise that owns and operates six hospitals in Idaho, bought the 44-physician Saltzer Medical Group in December. St. Luke's officials maintain that the purchase will improve patient care and ensure better health outcomes as well as help contain medical costs.

But the purchase has been the subject of legal controversy for months. St. Alphonsus Health System, a competing medical group that operates four Catholic hospitals in Idaho and Oregon, sued St. Luke's over the planned acquisition in federal court in November, along with Treasure Valley Hospital, which is also based in Boise. St. Alphonsus and Treasure Valley Hospital both asked U.S. District Judge B. Lynn Winmill to put a stop to the purchase while the lawsuit seeking to halt the deal moved through the court, but Winmill declined, saying the acquisition could always be unwound later if St. Alphonsus prevails.

Also last year the Idaho Attorney General's office asked St. Luke's to hold off on purchasing Saltzer Medical Group while the state and federal investigation into possible antitrust violations moved forward, but St. Luke's declined to wait.

St. Luke's spokesman Ken Dey sent out a prepared statement Tuesday saying the hospital was disappointed by the FTC's and attorney general's decision to file suit.

"The FTC and AG are apparently concerned that St. Luke's relationship with Saltzer could allow us to use our combined market power to raise prices. Significantly, however, the FTC and AG are not saying St. Luke's has done this or even would do this," Dey wrote in the statement. "They merely allege that a price increase could be possible at some point in the future."

Dey wrote that his company believes that relationships in which physicians and hospitals work as a team help reduce fragmentation of the health care delivery system and improves patient care.

"We are hopeful that, once all evidence is in, the court will conclude that the affiliation with Saltzer is in the best interests of patients and payers alike," Dey wrote.

But a prepared statement from the FTC contends that St. Luke's deal to purchase Saltzer gives St. Luke's nearly a 60 percent share of the medical services market in the region, and that it gives St. Luke's the power to establish rates and charges for Saltzer physicians and to negotiate health plan contracts on Saltzer's behalf.

Health insurance plans serving Nampa residents have been able to resist some of St. Luke's demands for higher rates so far, the FTC statement contends, because until now patients have been able to choose from St. Alphonsus, Saltzer or St. Luke's providers.

Attorneys for the state and FTC will ask the federal court to consolidate their lawsuit with the lawsuit brought by St. Alphonsus and Treasure Valley Hospital.