LESSONS FROM FTC, et al v. St. LUKES, et al

Spring 2015 Berkeley ACO WorkshopBerkeley, CAMay 8, 2015

Kenneth W. Kizer, MD, MPHDistinguished Professor, UC Davis School of Medicine and

Betty Irene Moore School of Nursingand

Director, Institute for Population Health Improvement

St. Lukes Health System is one of two major private health systems in southwestern Idaho

Saltzer Medical Group is the largest multispecialty physician practice in Idaho

St. Lukes purchased Saltzer in 2012 (after previously purchasing numerous other physician practices in the area)

FTC, et al v. St. Lukes, et al: Background

St. Lukes asserted that they had achieved quality and cost efficiencies through their prior acquisitions and that acquisition of Saltzer was necessary to achieve their further objectives in this regard, claiming that ownership of Saltzer (i.e., full financial integration) was the clearly superior method to do so and was essential to achieve clinical data interoperability (through a common EHR), promote data analytics, and align physician incentives with the health system’s efficiency goals.

FTC, et al v. St. Lukes, et al: Background

Additionally, they claimed that a core

number of primary care physicians is essential to provide integrated care.

St. Lukes acquisition of Saltzer was challenged in federal district court by the Federal Trade Commission, Idaho’s Attorney General, St. Alphonsus Health System and Treasure Valley Hospital, who asserted the acquisition violated antitrust restrictions because it would give St. Lukes control of about 80% of the Nampa primary care market.

FTC, et al v. St. Lukes, et al: Background

Is employment of physicians the most effective way to: achieve clinical integration and associated cost and

quality advantages?align physician and health system goals?achieve data interoperability?promote data analytics?

Is a core number of primary care physicians necessary to provide integrated care?

Was St. Lukes acquisition of the Saltzer Medical Group anti-competitive?

FTC, et al v. St. Lukes, et al: Key Issues

Published on FierceHealthcare (http://www.fiercehealthcare.com)

Judge: St. Luke's purchase of physician group violates antitrust lawJanuary 27, 2014 | By Ilene MacDonald

A federal judge ruled Friday that St. Luke's Health System in Idaho violated antitrust laws when it purchased the state's largest independent physician's practice--a decision that may influence future hospital-physician buyouts across the country.

FierceHealthcare interviewed attorneys for both sides of the case, which pitted the not-for-profit health system against its main competitor, St. Alphonsus Health System, which is also based in Boise, as well as Treasure Valley Hospital in Boise, the Federal Trade Commission and the Idaho Attorney General.

The plantiffs argued that the acquisition gave St. Luke's an unfair and illegal marketplace advantage by dominating primary medical care in Canyon County. They also said it would drive up healthcare prices in the area.

In the decision, U.S. District Judge B. Lynn Winmill acknowledged that St. Luke's intended to improve patient outcomes when it purchased the Nampa-based Saltzer Medical Group, a practice of 40 physicians, in December 2012. Furthermore, he said that if the partnership remained intact, St. Luke's would indeed improve healthcare delivery in the area. "But there are other ways to achieve the same effect that do not run afoul of the antitrust laws and do not run such a risk of increased costs," he wrote. "For all of these reasons, the Acquisition must be unwound.“

St. Luke's options dwindle as 9th Circuit antitrust appeal failsThe 9th Circuit decision carries implications for the industry nationwide.By ZACH KYLE

St. Luke's Health System's fight to hang on to a big Nampa medical practice likely just ended in defeat.

St. Luke's isn't saying what it will do next on the legal front, but the Boise health system's odds for success are long now that a federal appeals court has upheld U.S. District Judge B. Lynn Winmill's ruling in an antitrust case. Winmill ruled in January 2014, and the 9th U.S. Circuit Court of Appeals agreed, that St. Luke's Health System violated federal antitrust laws by taking over a private practice that would have given it a stranglehold on Nampa's adult primary-care market.Read more here: http://www.idahostatesman.com/2015/02/10/3637794_9th-circuit-upholds-ruling-against.html?rh=1#storylink=cpy

"This case is important because it ensures Idaho's laws will continue to protect and promote competition and a healthy, thriving marketplace, not just in southwestern Idaho but across the state,"

Lawrence WasdenIdaho Attorney General

"The acquisition would have delivered no benefits to consumers that could not be achieved in ways other than the anticompetitive merger,“

Federal Trade Commission

1. Acquisition/ownership/employment is not the only or most effective way to achieve clinical integration and associated cost and quality advantages

FTC, et al v. St. Lukes, et al: Lessons

CLINICAL INTEGRATION: Form vs Function “Integrated patient care” and “integrated delivery system”

are not synonymous; full financial integration is not synonymous with nor necessary for clinical integration

Integrated delivery system (IDS) is a generic term for a variety of organizational structures having varying degrees of administrative, financial and/or clinical integration; there is no standardized definition of what constitutes an IDS

Integrated delivery systems do not necessarily produce integrated care – e.g., VA early 1990s, DOD-Military Treatment Facilities

Achieving clinical integration is dependent on key organizational functionalities, not a particular structure; no single organizational form has been shown to be superior to others for achieving integrated care

CLINICAL INTEGRATION: Core Functionalities A values-based shared vision of healthcare delivery that is

patient centric and population health focused A governance structure that established clear clinical goals

and oversees implementation of policies and procedures for coordinating care across the continuum of servcies

Strong clinical leadership that drives integrated care and engages frontline caregivers

Information management tools (e.g., EHRs, HIEs, data analytics) and other supporting infrastructure

Team-based care Methods of accountability, including a performance

management system that consistently measures and monitors clinical performance

Shared financial risks and rewards for clinical outcomes

2. Assertions of improved efficiency and quality must be more than aspirational or speculativea. Need baseline performance datab. Evidence of improvement must be able to

withstand scrutinyc. Improved functioning must be clearly

linked to the consolidationd. These improvements need to be linked to

a coherent overarching strategy

3. Employment is not required for physicians to gain access to electronic medical record systems or data analytics (population health management) tools

FTC, et al v. St. Lukes, et al: Lessons

4. Asserting that a core number of primary care physicians is essential to provide integrated care is not supported by the evidence

5. Employment of physicians is not necessary to align incentives and transition to value-based payment nor required to achieve clinical integration

FTC, et al v. St. Lukes, et al: Lessons

Published on FierceHealthcare (http://www.fiercehealthcare.com)

Healthcare systems fall short in physician engagement, docs reportJune 9, 2014 | By Julie Bird

Healthcare systems that engage with physicians can improve their recruitment and retention and improve their chances of reaching other high-priority goals…

Doctors who feel engaged are more likely to be satisfied in their work, according to a summary of the findings published online in the American Hospital Association's Hospitals & Health Networks Forum. But "engagement levels over the past three years have grown at a lukewarm pace, at best," according to the symmary by Physician Wellness Services consulting physicians Daniel Whitlock, M.D., M.B.A., and Robert Stark, M.D.

The five most important elements to feeling engaged, according to the survey were:

1. Feeling respected for competency and skills 2. Feeling that opinions and ideas are valued 3. Maintaining a good relationship with peers 4. Achieving a good work/life balance 5. Having a voice in how the doctor's time is structured and used

The problem is many organizations don't know how to

bring physicians into their fold and have

successful outcomes, said

Angood. There is more to integration

than recruitment and getting

physicians to sign a contract, he said.

Peter Angood, MDCEO, ACPE

February 2014

QUESTIONS?