We are in the middle of series of posts exploring the recent obstruction of trade case in Boise, Idaho against St. Luke's Health System.
Click here for part one of this series.
Click here for part two of this series.
Click here for part three of this series.
Click here for part four of this series.
With the plaintiffs having established a prima facie case (one of the few things that I remember from my college debate team days, and I feel so smart when I say it) that the acquisition of the Saltzer Medical Group was anticompetitive, the question turned to how St. Luke’s would defend its actions.
They made two basic arguments, both right out of the front page of the hospital system playbook.
First, St. Luke’s argued that healthcare costs too much because of the fee-for-service payment system. With that, the judge seemed to agree. Therefore, they needed to build an integrated delivery system with a bunch of employed physicians in order to care for people in a seamless way, on a proactive basis, with coordinated care, moving toward population management, and yada yada yada.
You know exactly what they said.
‘We are pursuing the grand vision,’ was the claim. ‘Trust us, at some point, this will all magically kick in. Quality will improve. Access will increase. Cost will drop. Yes, yes, in the meantime we have these pesky cost increases that look a lot like a monopolist simply using its leverage to get better pricing. But that is just the cost of getting to the Promised Land.’
I paraphrased slightly.
Second, even Epic makes an appearance in the defense. They are everywhere. Yes, part of the argument for acquiring 80% of the primary care physicians in Nampa (and asking people to overlook those anticompetitive facts) was hinged on St. Luke’s $40 million Epic implementation. You have to really concentrate hard to see that connection, but Epic executives have to be thrilled because the testimony of the St. Luke’s folks is better than anything the Epic marketing department could ever write. Epic not only solves every problem in healthcare, but it also makes a killer omelet.
Unfortunately for the argument, there is nothing about Epic that says it can’t be offered to independent physicians. In fact, St. Luke’s had a program to allow independent physicians to have access to their installation of Epic. So all of those great benefits, fresh breakfast included, could be shared without the physicians having to be employed.
Ironically, this was called the ‘Efficiency Defense.’
As you know by now, in his ‘Findings of Fact and Conclusions of Law’ Judge B. Lynn Winmill rejected the defense and has ordered St. Luke’s to divest the Saltzer Medical Group. In another piece of delicious irony, the original deal between the clinic and the hospital states that in the case of divesture, the docs get to keep $9 million of the $16 million paid. That should help cover the legal bills.
So kids, what did we learn this week?
Lots, but let me sum it up with one of Judge Winmill’s final statements:
However, the Findings of Fact demonstrate that while employing physicians is one way to put together a unified and committed team of physicians, it is not the only way. The same efficiencies have been demonstrated with groups of independent physicians.
As we have been saying here from the beginning, there is, in fact, a sustainable path to continued independence for physicians if you are willing to take it. Now we can quote an esteemed federal judge to back us up.