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Unwinding the unwinding

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This summer in Idaho is featuring some unfortunate health headlines ranging from the plague among rodents to e. coli on the beach (at Lucky Peak park near Boise).

But the really messy story is neither of these: It concerns the Saltzer Medical Group and its relationship with St. Luke’s hospitals, and the slippery state of how modern medicine deals with big money.

The story goes back a few years and iterations. Saltzer is a consortium of physicians at Nampa – the state’s second-largest city, remember – which had a large base of customers who regularly needed hospital facilities. St. Luke’s Health System, the largest hospital organization in Idaho and based at Boise – with major facilities scattered around the metro area – bought Saltzer in 2012, in a friendly takeover. Part of the justification was that if the organizations worked more tightly together, they might be able to hold down costs.

Attorney General Lawrence Wasden warned that the deal might be illegal, violating federal anti-competitiveness laws. St. Luke’s and Saltzer said the merger could be readily “unwound” if need be. That’s now being put to the test. Two levels of federal courts ordered the merger reversed, agreeing with the state (and several St. Luke’s competitors) that the mashup was anti-competitive. Now, in speaking of the un-wind, St. Luke’s attorneys were quoted as saying that what “seemed like a simple, straightforward process … has proven not to be so.”

Is everyone properly shocked . . . ?

For one thing, Saltzer isn’t now what it was: A group of what was 50 or so doctors is down in number by about a quarter, some of those departing evidently wary of getting snared in legal issues. Several specialties important to the overall group now have no practitioners. The group reached an agreement with St. Luke’s to provide those services, which has made things even more complex.

And there have been efforts afoot to sell off part or all of Saltzer to some other party.

How does all of that comport with the court’s order to, more or less, return St. Luke’s and Saltzer to where they were before their merger?

No one really knows.

There’s some talk about a court-appointed master who would have some direct authority over the situation. This might work, in theory, somewhat comparably to a trustee in a bankruptcy case. But this may be a lot more difficult for such an official to handle than would be a bankrupcty; in this case, the businesses are alive and fully functioning. Part of what has happened involved physicians quitting one employer and moving to another, or setting up independent shop. How could a master force someone to, say, continue working at Saltzer if they didn’t want to? (Not that such an effort would likely be made anyway.) Both Saltzer and St. Luke’s are active – in St. Luke’s case, you might almost say hyperactive – businesses, doing many things and making many decisions every day. Planting a special master in the middle of that could be nightmarish for everyone involved, prospectively including patients.

The legal-financial complex U.S. medicine is in may be headed for a series of smashups. Look at St Luke’s and Saltzer as a harbinger of things to come.

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