St. Luke's/Saltzer deal cost millions, fractured organizations

Idaho health system spent more defending deal than acquiring physician group
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St. Luke's Health System's purchase of Saltzer Medical Group, Idaho's largest physician group, which a court ruled violated federal antitrust laws, may cost the health system upwards of $40 million, according to the Idaho Statesman. Moreover, internal communications reveal that the acquisition bitterly divided employees and leaders at both the health system and the physician group before it was struck down last January.

In addition to the costs, the acquisition severely damaged Saltzer's business and created a deep rift within the physician group's organizational culture, according to the Statesman, even before the lawsuit, the first of its kind post-Affordable Care Act. Several of Saltzer's top surgeons left the group rather than become St. Luke's employees, cutting the group's $45 million annual revenue in half, and email records released to the Statesman showed a split into factions at Saltzer, between those opposed to the deal and those in favor. "I guess I'm seeing firsthand what greed can do to individuals," former Saltzer Chief Financial Officer Nancy Powell wrote in a 2011 email.

The acquisition divided St. Luke's staff as well, with Thomas Huntington, M.D., a member of the regional board of directors, arguing in an email that employing physicians within a health system was only beneficial to profit margins rather than achieving better costs, and another cardiologist within the system protested that many of Saltzer's physicians were poor fits culturally and clinically.

St. Luke's invested about $16.5 million into the acquisition, according to the Statesman, but according to recent court filings, court costs may come to more than $25 million. St. Luke's lost an appeal of the ruling striking down the acquisition in February, and shortly afterward a federal court refused to rehear the case. Meanwhile, over the summer, the Federal Trade Commission, one of the plaintiffs in the initial suit, accused the health system of dragging its feet on the process of unwinding the acquisition, FierceHealthcare previously reported.

To learn more:
- read the Statesman article
- download the documents

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