The Ruling and the Rearview Mirror

On Friday, we received the long-awaited opinion in our antitrust lawsuit. 

This case is being watched across the country by legal experts and leaders in the healthcare industry because many health systems have pursued strategies similar to St. Luke’s. 

More than 9,000 people visited the blog Friday and through the weekend to learn about the decision and offer their support and encouragement, and I heard from others through my Twitter account (@drpatestlukes) and other social media. There was lots of interest expressed through our St. Luke’s social media sites, and I received many private notes of support as well. 

The vast majority of feedback has been very sympathetic and very supportive of our efforts, and strongly encourages us to appeal the decision. Of course, there have been some negative comments, and that is to be expected. 

I want to share with you some of the comments and notes I have received. This note, from one of our St. Luke’s Health System board members, is especially meaningful:

“While disappointed in the decision, I am even more convinced that we have the correct vision and strategy. I view this as a speed bump on the road to the Triple Aim goals we have.

In my experience in the technology industry, in my 30 years at HP, entrenched competitors, the courts, and the federal government too often look in the rearview mirror when making policy and defending the status quo. We will find a way, as most successful tech firms have, of keeping our vision looking forward.

As a mentor and friend at HP, Ray Smelek, often said, ‘There is a reason the windshield is bigger than the rearview mirror.’ Let’s keep looking and moving forward together.”

I have received many notes of encouragement and support that indicate the same sentiment – that this challenge has only solidified and galvanized our commitment to our vision and strategy of transformation.

Here is a message I received from a physician executive who has been working for years to achieve many of the same things we are striving to achieve in a very different, much larger market, with a nationally recognized health system:

“David, I admire and respect your response to the court’s decision and your resolve to persist in your commitment to those served by St. Luke’s. The economics of health care are making the advent of population health management inevitable, and fortunately, it is the right thing to do anyway.

Managing the health of a population of people is something that cannot be done by a hospital system acting alone, nor by various groups of independent physicians, irrespective of the quality of the work done by each. It can only be done by a large organization comprised of facilities, infrastructure, technology, people, and healthcare providers acting together in a common commitment to keep people healthy and happy with their health plans, doctors, other providers, and hospitals.

That is accountable care; it is the right vision and it clearly remains the vision of you and your organization. Best wishes. I am rooting for you!”

Here is part of a note I received from a colleague who is the president and chief executive officer of a large health system who has been through a somewhat similar challenge:

“David, I saw the news today and wanted to drop a note of encouragement. This is not the end, only the beginning.

… The precedent this outcome sets is bad for an industry that MUST consolidate to survive.  Having been in your shoes … keep the faith, celebrate all of the good work your team has done so far.”

The judge’s opinion clearly commended us for our efforts to fix a broken healthcare delivery system.  Here are two excerpts:

  • Fixing health care “will require a major shift away from our fragmented delivery system and toward a more integrated system. … St. Luke’s saw this major shift coming some time ago. And they are to be complimented on their foresight and vision.”
  • “The Acquisition was intended by St. Luke’s and Saltzer primarily to improve patient outcomes.  The Court is convinced that it would have that effect if left intact, and St. Luke’s is to be applauded for its efforts to improve the delivery of health care in the Treasure Valley.”

St. Luke’s will remain strong. The welfare of our friends and colleagues with the Saltzer Medical Group, their physicians, employees, families, and patients, weighs heavily on my mind.

I am disappointed, and the board and I will seriously consider appealing this decision. We are doing the right things for the right reasons. Our board members know it and support us. The Saltzer group knows it and has been grateful for our commitment. 

I want to thank St. Luke’s many supporters in the community and around the country, and those who took the time and made the effort to write in.

 There are two other groups of people that I want to thank. One is the leadership team of St. Luke’s Health System that is leading the transformation of health care and working hard every day to develop the competencies and capabilities for St. Luke’s to be able to be accountable for the outcomes of care and the costs of that care for the populations we serve.  These leaders have remained committed and dedicated to this work even in the midst of this lawsuit. 

I also want to give a special thanks to the outstanding legal team that represented us, including St. Luke’s attorneys led by Christy Neuhoff, our local counsel Walt Sinclair, and our Sidley Austin attorneys, led by Jack Bierig. 

The work we are doing is far from over and remains vitally important for the people of Idaho.  They are depending on us to improve their health, provide better care, and lower healthcare costs. 

We knew transformation would not be easy. We also knew we would need to persevere. As one of our board members stated, this is a speed bump on the road to our Triple Aim goals. It is a road worth travelling, and St. Luke’s could not have better traveling companions than those whose support has been so meaningful, particularly over the past few days. Thank you!

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10 Responses to “The Ruling and the Rearview Mirror on “The Ruling and the Rearview Mirror”

  • Dr. Pate,

    I’m sure you have seen the article in The Statesman that points out many of the reasons why the judge ruled in his manner. I am interested in your thoughts on the article and if you feel that it was very one-sided.

    For example, this statement: “After the acquisition, if St. Luke’s were to bill for (routine services such as lab tests or X-rays) at the higher ‘hospital-based’ rates, (Blue Cross of Idaho) estimates that costs … would increase by 30 to 35 percent.”

    Thanks for your thoughts.

    Llyr Christensen

  • Thank you, Dr. Pate, for keeping us updated on this important issue.
    I would be interested in hearing your thoughts about Audrey Dutton’s article in The Statesman.

  • Great article. I will continue to pray for all the great work St. Luke’s does for the community.

  • I would like to know your thoughts on how to respond when community members are focusing on the 30 percent raises offered to the Saltzer Group physicians in the merger. I have also been asked if the 30 percent was in addition to a purchase amount paid to the physician group.

    My attempts to respond positively were to focus on the changing reimbursement system that is necessary to reach accountable care and focus on staying healthy, rather than episodic, procedure-oriented reimbursement methodology.

    Thank you.

  • Dr Pate,

    This weekend in your letter to the editor of The Statesman, you made the comment, “One of the more overlooked aspects of the legal action was the way very old federal laws, developed for manufacturing and industries in population-dense parts of the country, conflict with newer laws designed to encourage the sorts of things St. Luke’s is trying to do.”

    I am interested to know why you think St Luke’s should be allowed an “exemption” from anti-trust laws when many other health systems across the country have had to adjust their plans/acquisitions (i.e., Renown in Reno) to meet the FTC’s requirements.

    Additionally, why do you keep making statements that imply that anyone who was not in support of St. Luke’s purchase of Saltzer either is “committed to maintaining the status quo” or just doesn’t understand the “good” that St. Luke’s is trying to do by creating a dominant health system in SE Idaho? Most people I know who have been opposed to this purchase have based their opposition on concern that healthcare consumers will suffer higher prices due to St. Luke’s increasingly dominant position in the market. Obviously, the State of Idaho, the FTC, and Judge Winmill all agreed.

    In summary, I think you and the St. Luke’s board need to step back, take a deep breath, reevaluate your goals and priorities, and then move forward accepting the constraints that the State of Idaho, the FTC, and Judge Winmill have put in place to protect the healthcare consumers of Idaho. Any further legal efforts directed at appealing this decision only show that you and the boards of St. Luke’s have gone so far down this rabbit hole that you have lost perspective on reality, and any more money spent on this failed legal effort can only be described as throwing good money after bad.

    Sincerely,
    James Stevens

  • Hi, Llyr.

    I think the information that has been circulated has been selective and not particularly balanced. In response, we have posted accurate information on our News blog. Here’s the link: http://drpate.stlukesblogs.org/2014/02/03/facts-about-the-recent-trial-and-decision/

    Be sure to read it and help us educate people about what’s really true. I’ll also have additional information in upcoming blog reports.

    Thanks for your question and for following the blog!

  • Hi, James.

    I think there continue to be good questions to ask. These are particularly interesting areas to me:

    1. The FTC’s original complaint showed that the two health systems in our area had roughly equal percentages of primary care physicians in Nampa, which others viewed as the relevant market. Why would competitors who sought to acquire Saltzer have thought it was legal for them but not for St. Luke’s to acquire Saltzer, given that view of the market?

    2. The two health systems in our area both employ hundreds of physicians. At the same time, there is a belief in some quarters that what needs to be done can be done through relationships with independent physicians. There needs to be some thoughtful discussion around the realistic structures that are needed to successfully make the changes health care needs to make.

    St. Luke’s has been very transparent. We have shared our successes publicly, indicated where we think we need to do better, outlined a clear strategy, and shared it with the world to see. I do wish others were so inclined.

    Thanks for your question and for following the blog!

  • Thanks so much, Melissa. I pray every night for wisdom and direction, and I trust that despite the court setback, things will work out well for us as we continue to improve health care and fix what we can. Thanks to you and the many who pray for St. Luke’s and the work we are doing!

  • Hi, Claire.

    We’re trying hard to clarify on that particular issue and in the case of other misinformation that we’ve seen. Please check out our resources at http://drpate.stlukesblogs.org/2014/02/03/facts-about-the-recent-trial-and-decision/ and learn all you can to help us inform friends and family members.

    Thanks for your question and for following the blog!

  • Hi, Mr. Stevens.

    I don’t want to be misunderstood. I am not suggesting that St. Luke’s should be exempted from the antitrust laws. My concern is applying the laws in a rigid manner and in a manner unintended by those who wrote the regulations or guidance for how the laws should be applied.

    For example, David Balto is a former policy director of the FTC and was actively involved in the 1996 FTC/DOJ Statements of Antitrust Enforcement Policy in Health Care, which were pertinent to our case. He testified before Congress while our trial was in progress and cited our case as an example of some of the problems with current antitrust policy and enforcement.

    Other past and current FTC commissioners also have come forward with the same and similar observations. The issues include the fact that rigid application of HHIs and market shares to rural areas, such as Nampa, are problematic.

    If one were to accept that Nampa is the market, then others’ attempts to acquire Saltzer would have been every bit as illegal as our transaction.

    You are providing very wise advice about stepping back, taking a deep breath, and evaluating our goals and priorities. I think that is good advice, and we are taking it. The good news is that we are remaining focused on moving forward and how we deliver the transformation we have been pursuing. We envision the day when we can come back to all of our communities with the objective evidence of better health of our communities, better quality and outcomes of care, and lower healthcare costs. We are not far off from these things, and at the end of the day, this is what really matters, not whether we win or lose in court.

    Thanks for your perspective and your sage advice. I appreciate your interest.

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