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St. Luke's Court Update for Nov. 7, 2013

By Ken Dey, News and Community
November 22, 2013

Thursday, Nov. 7: 

Today in court:

Chief U.S. District Judge Lynn Winmill heard closing arguments from both sides Thursday following a month-long trial.

The judge opened Thursday’s proceedings by sharing his observations and thinking.

“This is undoubtedly one of the most difficult cases I have had to wrestle with,” he said, adding that he had come away from the previous four weeks of evidence without “a clear fix in my mind ... This case is difficult.”

He noted the significant impact on the community of the legal action and the decisions to stem from it, and went on to share “some things that are nagging at me.”

“Is the Saltzer/St. Luke’s deal necessary …?” he wondered, at the same time observing that much of what he’d studied around healthcare systems’ evolving structures takes into account the “almost catastrophe situation we’re headed for” in American health care.

He called the St. Luke’s/Saltzer integration at the heart of the court action “a massive economic force in Canyon County,” but noted that health care in America is changing, and suggested that ways to view health systems’ structures might also need to change. Things that five or 10 years ago might have been viewed as anti-competitive might not be today, he noted.

“A second major question … is one of remedy,” Judge Winmill said, that would allow “some form of a transaction to go forward,” and observed that both sides had presented “winner take all” positions during the trial. St. Luke’s previously had offered several steps that could be taken to ensure that the Saltzer integration would not destabilize regional health care.

The judge indicated that he was interested in what the Federal Trade Commission, one of the plaintiffs in the case, had done around Kaiser Permanente in California, given that health system’s prominence in that state and its apparent success in containing healthcare costs. Kaiser’s record seems to indicate that an integrated approach might present a solution to the problems of contemporary health care, Judge Winmill said.

Saint Alphonsus representatives and St. Luke’s physicians, board members, and executives, many of whom were called to testify during the trial, listened in as attorneys went on to present starkly different versions of health care in Idaho. Plaintiffs’ and defendants’ attorneys had presented evidence over a four-week period that ended Oct. 21.

Plaintiffs’ points:

“The fair question before us is, What have we learned after four weeks of trial?” asked Tom Greene, special counsel for the Federal Trade Commission’s Bureau of Competition representing the FTC and the State of Idaho in their case against St. Luke’s and Saltzer Medical Group.

Greene continued by saying the case “is about power and money” and that plaintiffs had presented evidence to support a “strong presumption of anti-competitive effects” in combining the two largest providers of services in the Nampa arena.

“This deal will increase the cost of care for the people of Idaho,” he asserted.

The attorney went on to contrast what he described as “rhetoric vs. reality … from our perspective, it just ain’t so.” He told the judge that St. Luke’s initiatives were programs also being undertaken elsewhere in the country.

“This is the policy of the United States,” he said. “This is our world of health care.”

St. Luke’s efficiencies have yet to be proven, Greene said, and don’t hinge on the Saltzer integration, adding that the integration is neither necessary nor sufficient for St. Luke’s or Saltzer to achieve its aims around use of the electronic health records system, data, and other improvements.

The plaintiffs’ representative recapped points made during the four weeks of the trial around market definition and legal thresholds set by federal anti-trust law around diminished competition, and called defendants’ reasoning around market configuration “a daisy chain” without end.

David Ettinger, representing Saint Alphonsus, questioned St. Luke’s witnesses’ credibility and went on to build on Greene’s arguments around competition and St. Luke’s ongoing efforts to change health care.

Judge Winmill noted his interest in the work of Harvard professor Clayton Christensen and in particular Christensen’s 2009 book, “The Innovator’s Prescription,” about healthcare reform in America. The judge wondered whether some positions might be “old thinking … old markets …

“That sounds like the old-school thinking,” he said, likening thought processes to how Pentagon officials likely divide. “Half the generals are fighting the last war,” he said. “Just an observation.”

Divestiture of Saltzer from St. Luke’s would be the remedy, Eric Wilson, an attorney for the Idaho Attorney General’s Office, told the judge. Wilson went on to question information St. Luke’s and Saltzer presented around Saltzer’s financial condition.

Following defendants’ closing arguments, Wilson reiterated his position and provided precedents to support his recommendation.

Greene later built on his arguments, discussed the FTC’s decision to weigh in on the Idaho matter, and talked about the many different accountable care structures that are emerging across the country as responses to the healthcare crisis. Independent physicians could do what St. Luke’s and Saltzer together are trying to do, he told the judge.

Ettinger likewise built on Saint Al’s position, discussed St. Luke’s witnesses during the trial, and raised questions regarding the Saltzer team’s motivation for joining with St. Luke’s and St. Luke’s quality efforts. Wading through the healthcare issues discussed during the trial puts the court in the position of playing “social engineer,” he told Judge Winmill, suggesting that the policymaking was better left to politicians.

St. Luke’s and Saltzer respond:

The St. Luke’s/Saltzer integration will have pro-competitive effects if allowed to stand, St. Luke’s attorney Jack Bierig told the judge, going on to point out differences between the Idaho arrangement and examples the plaintiffs presented as evidence.

“The evidence is overwhelming” in support of allowing the St. Luke’s/Saltzer integration to stand, he told Judge Winmill, describing the healthy competition that exists between and among St. Luke’s, Saint Alphonsus, and a variety of healthcare networks throughout the region.

Plaintiffs have not sufficiently met their burden of proof in arguing an anti-competitive effect and did not properly define a market for healthcare services, Bierig said, going on to give examples of current court thinking and considerations around mergers and acquisitions.

The intention of the St. Luke’s/Saltzer integration was to ensure that both organizations are able to transform and improve health delivery practices and had nothing to do with prices, he said, noting that Saltzer initiated the integration discussion with St. Luke’s based on this motivation. When Saint Alphonsus unsuccessfully pursued Saltzer, it presented many of the same arguments, Bierig noted.

There is no evidence that St. Luke’s and Saltzer intended to raise prices by integrating, he said.

“This is a case of the dog that did not bark,” Bierig said, noting that it is illogical to think that St. Luke’s and Saltzer would raise prices to the point that their patients would go elsewhere and that patients are very price-sensitive and have no problem going elsewhere for care. St. Luke’s business practices previously and in other locations have had a competitive effect and resulted in better controls on some price increases, he told the judge.

St. Luke’s, the locally owned and locally governed health system, wants to lower prices for the people who own and use the system and could not logically have any interest otherwise, Bierig said, going on to say that plaintiffs’ arguments regarding competition are equally hollow.

If patients prefer St. Luke’s services, “that’s competition,” he said, reiterating that St. Luke’s and Saltzer physicians have referred patients to those hospitals that patients request and desire.

Bierig said that the St. Luke’s/Saltzer integration already is benefiting the region’s residents, through community outreach; services for patients regardless of their ability to pay; evidence-based medicine, electronic health records, and other health information technology only available at the scale the integrated system makes possible; and the ongoing shift to a value-based reimbursement model and away from the historical volume-based approach. Witnesses provided many specific examples of these improvements, he said.

“The answer to the question that the court posed (regarding whether the integration is necessary) is, emphatically, yes,” Bierig said, going on to remind the judge that Saint Alphonsus had sought much the same relationship with Saltzer that Saltzer pursued with St. Luke’s. Kaiser Permanente’s success in California along these same lines has meant both quality improvements and prominence in the market, he noted.

Patients will decide whether what St. Luke’s is doing to transform health care is right, Bierig told Judge Winmill.

“The determination of the best road is a function of the market,” he said, calling divestiture a “singularly inappropriate” possible ruling.

“This is not a result that this court should mandate,” Bierig said.

Brian Julian, Saltzer’s attorney, invoked the precept of medical ethics that counsels “first, do no harm,” and how the principle could be applied to the legal dispute, and discussed the many ways Saltzer physicians have been able to take care of patients that were not possible before the integration, examples they had provided during the trial.

“If Saltzer is forced to go out of business because of divestiture, who benefits?” he asked.

What’s next:

Judge Winmill will issue his decision. That could come by year’s end, and the judge has previously indicated his interest in resolving the case quickly for the good of the community. On Thursday, he said he’d hope to issue a ruling within a few weeks.

The case was unusual for him, he said, in that it was not yet clear to him how he would structure a ruling, and he will want to ensure a ruling that will hold up.

“It truly is a daunting challenge, Judge Winmill said, commending again the level “of first-rate lawyering” brought to the courtroom.

Appeals to the Ninth Circuit Court of Appeals could follow.

Latest News and Court Filings:

To see the latest news coverage, and to read the latest court documents click here,


Monday, Oct. 21:

Today in court:

On Monday, Chief U.S. District Judge Lynn Winmill listened as plaintiffs’ witnesses discussed Saint Alphonsus’ various efforts along the lines of St. Luke’s clinical integration and quality initiatives, explained by St. Luke’s representatives over the previous two weeks.

Information Saint Al’s representatives wanted to present Monday came late in the process, and Judge Winmill agreed to take additional defendants’ testimony by video deposition or rebuttal in court near the end of the month. All arguments were to have concluded Monday.

“The days of trial by ambush went out,” Judge Winmill said, explaining why he planned to limit plaintiffs’ additional testimony Monday.

“We’re going to focus on only what’s in the report.”

Both sides will present closing arguments in early November.

Who testified:

David Dranove, a professor of management and strategy at Northwestern University’s Kellogg School of Management, who returned to speak again in person.

Dranove, whose research focuses on the healthcare industry and healthcare economics, was called as an expert by the plaintiffs to discuss competition and contracting in health care. The Federal Trade Commission and the State of Idaho had asked him to conduct an economic analysis in conjunction with the case.

On Monday, he reiterated his earlier conclusions around the St. Luke’s/Saltzer integration, again discussed health insurance dynamics and market characteristics, and said that competition promotes value in health care as it does in other areas of activity.

On cross-examination, St. Luke’s counsel asked Dranove questions regarding Saint Al’s standing in the area. Saint Al’s is less preferred than either St. Luke’s or Saltzer, information shared during the trial has shown.

Dranove said he had not looked at St. Luke’s previous integrations to be able to determine what might happen to prices and had not examined area residents’ responses to prices, and went on to note that there are a variety of constraints that ensure a competitive healthcare environment in the area.

An April Brookings Institution report, “Bending the Curve: Person-Centered Health Care Reform,” supports the types of initiatives St. Luke’s has begun, he noted, acknowledging that changes and the pace of change make forecasting the future of health care inappropriate.

Kenneth Kizer, M.D., a faculty member at the University of California, Davis, School of Medicine and director of UC Davis’ Institute for Population Health Improvement. The plaintiffs called Dr. Kizer as a rebuttal expert witness.

Dr. Kizer talked about health data exchanges and his work with California’s health data exchanges, his previous experience as under secretary for health with the U.S. Department of Veterans Affairs and director of the California Department of Health Services, and health coverage in California.

He discussed his work with the National Quality Forum, for which he served as founding president, and with Medsphere, an electronic health records company with which he works, the structure of provider networks and compensation, and health systems’ efforts across the country to make improvements.

“It’s not inaccurate to say that we’re in a revolution in health care,” Dr. Kizer said.

Dr. Kizer talked about health systems that have been able to deliver quality care without employing a large number of physicians. He added that there are many ways to achieve quality of care and many organizational structures that can be used to achieve that.

Dr. Kizer also challenged St. Luke’s arguments that the organization needed a “requisite core of employed physicians” to deliver integrated care. Based on his research, Dr. Kizer said outside of the Saltzer physicians, St. Luke’s already has enough employed physicians in Canyon County to deliver integrated care.

In addition, Dr. Kizer suggested independent physicians have ample access to electronic medical records and to data analytics that St. Luke’s claims is critical to Saltzer to achieve integrated care.

On cross-examination, however, St. Luke’s counsel questioned Dr. Kizer about his knowledge about the Nampa market and about the financial state of Saltzer. Dr. Kizer admitted that he didn’t have enough information about either of these topics because this was not the scope of what he had been asked to address, nor did he have enough information about the Nampa population to determine if St. Luke’s already had enough physicians in the market without including Saltzer.

Dr. Kizer testified to sixteen elements shared by organizations that have been successful in providing integrated care.  Throughout the trial, St. Luke’s has put on testimony that it is pursuing each of these elements.

J. Robert Polk, M.D., a Saint Alphonsus internist, chief quality officer, and vice president of quality and patient safety for Saint Alphonsus Health System. Dr. Polk was called as a rebuttal witness for the plaintiffs.

Dr. Polk, who had been in private practice before joining Saint Alphonsus, testified at length about the various quality initiatives Saint Al’s has undertaken that involved both employed and non-employed physicians.

He testified that doctors do not need to be employed to be supportive of quality efforts. “Most physicians want to do the right thing, and I don’t see any difference in the degree of resistance between employed and not employed,” Dr. Polk said.

The various data analytics efforts Saint Alphonsus uses were also discussed. Dr. Polk said Saint Al’s plans to give non-employed physicians access to the analytics.

On cross-examination, St. Luke’s counsel asked Dr. Polk how often non hospital-based primary care physicians were included in the quality efforts. Dr. Polk said most of the quality efforts involved specialists that were hospital-based.

During cross-examination, Dr. Polk said analytic programs were rolled out to employed physicians, but also to Primary Health physicians, an independent medical group. He couldn’t answer whether or not Saltzer doctors would be able to be integrated into the same analytics programs.

What’s next:

The formal court process came to a close Monday.  Judge Winmill thanked both the plaintiffs’ and the defense attorneys for the “absolute highest quality of lawyering I have seen.”  Closing arguments will take place Nov. 7. Judge Winmill will issue his decision after that.

Friday, Oct. 18:

Today in court:

St. Luke’s wrapped up its case Friday, presenting an expert witness who discussed financial aspects of health system structures and two Saltzer Medical Group physicians. The trial will conclude Monday, when Chief U.S. District Judge Lynn Winmill listens to plaintiffs’ rebuttals.

Who testified:

Lisa Ahern, a financial consultant, analyst, and managing director with AlixPartners, a global financial and operational consulting firm.

Ahern discussed her work with hospitals and health systems around efficiencies, clinical integration, and anti-trust issues, and described the work she did for St. Luke’s around the Saltzer integration.

Judge Winmill directed that the courtroom be closed for Ahern’s testimony.

Thomas Patterson, M.D., a pediatrician with Saltzer Medical Group.

Dr. Patterson, who joined Saltzer in 1998, talked about the state’s patient-centered medical home efforts and discussed his interests in being part of a health system to advance patient-centered approaches.

St. Luke’s has increased patient access among the most needy patients and allowed him to be more active in child advocacy and other unreimbursed but critical community health needs and outreach, he told the court.

“At St. Luke’s, it’s a part of the culture. It’s expected of me,” Dr. Patterson said, going on to say that Saltzer had tried the patient-centered medical home model on its own but did not have the resources or structure to be successful.

Affiliation with St. Luke’s has boosted Saltzer’s physician recruitment efforts, to the point that there now is a backlog of applicant interest, he said. Dr. Patterson told the court that the St. Luke’s relationship has allowed Saltzer physicians to expand their ability to see more Medicaid and self-pay patients and those unable to pay.

“This is probably my most exciting part of being part of St. Luke’s,” he said. “I truly believe that it enhances their ability to seek pediatric care.”

If the Saltzer/St. Luke’s integration were to be dissolved, Dr. Patterson said, his ability to do outreach, patient choice in the region, and Saltzer’s viability all would be jeopardized.

“I’m afraid we’re not going to be a very good competitor in the community,” he said.

“I went into medicine to help children,” Dr. Patterson said, “and this could sideline my ability to do that.”

On cross-examination, he was asked whether he had seen data about a possible dissolution and for additional information about physician payment, recruiting, and patient choices with respect to where their providers are located.

Harold Kunz, M.D., a Saltzer family practice physician.

He talked about his work with Saltzer since he joined the group in 1989, and discussed the group’s reasons to consider integrating with St. Luke’s. Equipment, technology, physician career preferences, and payment models were leaving Saltzer behind, Dr. Kunz said.

“Healthcare delivery has changed in the last 10 or 12 years,” he said. “We had good tools, but not good enough.”

Saltzer also talked to Saint Alphonsus about integration and an offer was made, Dr. Kunz said, going on to explain why Saltzer opted for St. Luke’s instead.

“We wanted to be involved with an organization or affiliated with an organization that had the same vision we did,” he said.

As multiple witnesses previously had done, Dr. Kunz said St. Luke’s has encouraged him to refer his patients as appropriate, no matter the hospital.

“They didn’t want to interfere with our ability to refer,” he said, noting that Saltzer physicians have continued to admit their patients to Saint Al’s in Nampa, just as they were doing before the Saltzer/St. Luke’s integration.

Dr. Kunz said he is seeing more Medicaid patients than he did before the integration.

“I don’t have to worry about certain payer mixes,” he said, adding that the St. Luke’s relationship, which has brought with it data analytics that allow him to check his practice, is improving his care.

“It has changed my approach, how I practice medicine, and that is exciting to me,” Dr. Kunz said. “A whole series of metrics … to help that patient. That’s an exciting way to do it.

“I’ve just been able to scratch the surface,” he said.

“I think it would be disastrous” if the Saltzer/St. Luke’s integration were to be dissolved, he said, describing the group’s desire to do as well as possible by its patients and not to revert to a model that he said he believes will go away. With salary and debt challenges, outreach and access to care for needy patients would dwindle, Dr. Kunz noted.

“I think it would be a tremendous strain on those people,” he said.

On cross-examination, Dr. Kunz was asked questions about his testimony, Saltzer’s finances, physician recruitment, and patient referrals.

Greg Sonnenberg, a former director of managed care with Saint Alphonsus Regional Medical Center and then Saint Alphonsus Health System and now consulting privately. Portions of Sonnenberg’s videotaped testimony were shown Thursday and he appeared in person for cross-examination Friday afternoon.

Sonnenberg was asked questions about his work with Saint Al’s, communications he had with St. Luke’s, and the information he provided in the course of trial preparations.

Plaintiffs’ and defendants’ representatives have additional videotaped testimony, and Judge Winmill has indicated he intends to review that material as well.

What’s next:

Following plaintiffs’ rebuttals Monday, closing arguments will take place Nov. 7. Judge Winmill will issue his decision after that.

Latest News and Court Filings:

To see the latest news coverage, and to read the latest court documents click here,

Thursday, Oct. 17:

Today in court:

On the 16th day of the bench trial Thursday, Chief U.S. District Judge Lynn Winmill listened as a noted healthcare economist discussed how health care is accessed and factors patients take into consideration when choosing providers and deciding when their care needs to change.

Who testified:

David Argue, Ph.D.,  corporate vice president and principal with Economists Inc., an economic consulting firm.

Argue discussed product and geographic markets, and said Nampa was not a properly defined market considered alone, as plaintiffs have contended. Patients consider their expenses, along with travel time and other factors, in making their choices, and 40 percent of Nampa residents now seek care outside the city, he said.

Primary care physicians throughout the region could be alternatives, Argue said, noting that that the heaviest patient travel occurs along the Interstate 84 corridor, where the densest concentrations of patients also live. Many of those people see providers close to work for which they commute, he said.

“That 40 percent is a fairly substantial number,” Argue said. “We’re not talking about 5 or 10 percent.”

Nampa residents have sufficient choice in the city even when Saltzer and St. Luke’s are taken out of the equation, he said.

“There’s still an option in Nampa of primary care providers,” Argue said. “The Nampa residents do not need to change their travel patterns.”

He explained how he worked his analysis out from Nampa and found that the market was not limited by geography, but might be by costs and how much patients might be asked to pay for services. He then looked at competitive effects, and saw that Micron had been able to keep its plan competitive throughout the period in which it was building its own network of providers. His conclusion: health care in the area is competitively priced, with options including but not limited to Saint Al’s and St. Luke’s.

Plaintiffs’ arguments that the Saltzer/St. Luke’s integration creates harmful competitive effects are misplaced, he said, because Saint Al’s provides a robust alternative for patients, payers, and all others who would object to excessive prices, noting that patient patterns shifted during Micron’s network effort. And payers respond to excessive healthcare prices by negotiating with other providers and structuring plans that are more attractive to patients, Argue explained.

“It’s all about how the payer influences patient choice,” he said.

Judge Winmill directed that the courtroom be closed for part of Argue’s testimony.

Argue described changes in practices in several clinics, in which physicians joined up with both Saint Al’s and St. Luke’s, and said there was no evidence that patients were inappropriately directed for care.

St. Luke’s primary care physicians “haven’t shifted their admissions away” from Saint Al’s, he said, observing that shifts Saint Al’s has experienced are “self-inflicted.”

The Saltzer/St. Luke’s integration would be attractive to patients and payers, Argue said, noting that providers and payers build different structures to stay competitive. Other advantages include improved access to Medicaid and uninsured patients and better-coordinated care, he said.

“I think it’s unlikely that this transaction would result in any anti-competitive effect,” Argue said.

On cross-examination, he was asked questions about payer negotiations, provider networks, quality measurements, his research methodology, and electronic health records. Outcomes, in many instances, don’t exist because data-capturing capabilities are only now being added and some initiatives are too new to have shown quantifiable results, Argue noted.

Bill Savage, St. Luke’s Health System director for Saltzer Medical Group.

Savage talked about his work as Saltzer’s chief executive officer before the integration and his involvement in the integration discussions.

“We approached St. Luke’s in the beginning,” he said.

Savage discussed the reasons for the integration, and said Saltzer now was seeing more patients as the result of its ability, brought on by its affiliation with St. Luke’s, to see additional Medicaid patients and patients unable to pay for care.

He discussed patient referrals and physician recruitment, and said the job candidates Saltzer talks to want to be part of a health system. Savage talked about the benefits accruing to Saltzer patients and to the medical group as part of St. Luke’s, and St. Luke’s efforts on behalf of the medical group.

On cross-examination, Savage was asked questions regarding the details of the St. Luke’s/Saltzer agreement and about Saltzer’s operational structure and relationships with payers.

Savage was asked whether Saltzer had a viable plan to stay together in the event that the court orders the integration dissolved.

“No,” Savage replied.

Greg Sonnenberg, a former director of managed care with Saint Alphonsus Regional Medical Center and then Saint Alphonsus Health System and now consulting privately. Portions of Sonnenberg’s videotaped testimony were shown. Sonnenberg talked about his previous work with health maintenance organizations and his roles with Saint Al’s, including provider network involvement.

He talked about the nature of the market for delivering healthcare services in the area, how employers, payers, and providers have traditionally structured contracts, and how the process is changing. Employers in the market increasingly want to work directly with providers, rather than through insurers, for health care, Sonnenberg said.

Judge Winmill directed that the courtroom be closed for a portion of the taped material shown.

What’s next:

On Friday, St. Luke’s intends to call Lisa Ahern, an economist and managing director with AlixPartners, a global financial and operational consulting firm; Thomas Patterson, M.D., a pediatrician with Saltzer Medical Group; and Harold Kunz, M.D., a Saltzer family practice physician.

Video testimony from Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus and a witness called by the plaintiffs last week; Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus; and other witnesses also may be shown.

Plaintiffs’ and defendants’ representatives had prepared additional videotaped testimony, and Judge Winmill has indicated he intends to review that material as well. Each side has worked to stay within its 44.5-hour time allotment to present and to schedule live witnesses, many of whom have had clinic and other appointments to account for.

St. Luke’s intends to wrap up Friday, and the plaintiffs will make rebuttal arguments Monday. Closing arguments are set for Nov. 7, after which Judge Winmill will issue his decision.

 

Wednesday, Oct. 16:

Today in court:

 Chief U.S. District Judge Lynn Winmill on Wednesday listened as an Idaho native and prominent businessman and community leader talked about his commitment to St. Luke’s mission and vision, and heard more from St. Luke’s top health information officer about the benefits and potential of electronic health records systems.

David Argue, a noted healthcare economist, shared his conclusions about the appropriateness of the St. Luke’s/Saltzer integration, and told the court more competition, rather than less, was a likely outcome.    

 Who testified:

 Arthur “Skip” Oppenheimer, a St. Luke’s Health System board member and prominent Treasure Valley businessman and community leader.

 Oppenheimer talked about his work with St. Luke’s and as the first St. Luke’s Health System board chairman, his lifelong connections with Idaho schools and institutions, and his company’s activities.

 He told the court that the St. Luke’s board is made up of long-time community members and experienced business leaders, and noted that the membership includes Bill Whitacre, president and chief executive officer of J.R. Simplot Co.; Bob Lokken, chief executive officer of WhiteCloud Analytics;Larry Cope, executive chairman, president, and chief executive officer of Clear Springs Foods; Tom Saldin, retired senior vice president and general counsel of Albertsons and Idaho Power; and Barbara Wilson, retired Idaho and regional vice president for Qwest. All live in Idaho, he noted.

 “This board is one of the finest boards I’ve ever served on,” he said.

 Members are motivated by the idea of building sustainable health care for the future, Oppenheimer said.  

 “I think there’s a feeling that there’s nothing much more important than health care today,” he said. “I think there’s just a strong feeling that this is an important endeavor.”

 The board is also committed to the direction in which St. Luke’s is heading “to affect in a positive way the direction of health care in this region.

 “I can’t think of a better place to spend my volunteer time,” Oppenheimer said.

 “This is probably the time to do it,” he said, of board members’ motivation to be involved in St. Luke’s transformation efforts. 

 He discussed the board’s interest in an outcomes- and value-based approach, and talked about St. Luke’s culture and self-imposed policies and regulations to ensure that priorities stay focused on patients.

 “We have no desire to grow just to grow,” he said. “What we’re trying to do is create the highest-quality care in this region, but not just to grow.”

 Oppenheimer explained that the board approves all significant acquisitions and said the board has not made its decisions, including its consideration of the Saltzer Medical Group integration, based on increasing revenue. The emphasis is on quality and value, he said.

 “We have no interest in raising prices above competitive levels … It’s not in our DNA,” Oppenheimer said, explaining that St. Luke’s has been interested in transforming health care for at least 15 years.

 St. Luke’s board members, who run some of the largest area businesses and who pay insurance costs, have no desire or interest in paying excessively for health care, he told the court.

 Oppenheimer discussed St. Luke’s alliance with Utah-based insurer SelectHealth and the organizations’ shared goals toward a value-based system. Captured savings could be returned to the community in a variety of ways, he said.

 “I think it’s had a very healthy competitive impact,” Oppenheimer said of SelectHealth’s entry this year to the region’s health insurance market.

 On cross-examination, Oppenheimer answered questions about clinic integrations, St. Luke’s in the Magic Valley, the Saltzer integration, and primary care practices in Nampa.

 “This valley has grown together. I’ve lived here all my life,” Oppenheimer said, explaining that patients travel throughout the Treasure Valley for care.  

 Marc Chasin, M.D., vice president, chief medical information officer, and interim chief information officer for St. Luke’s Health System.

 Dr. Chasin talked about his involvement with the Idaho Health Data Exchange and other health information organizations and committees, and discussed the use and application of the Epic health records platform, which St. Luke’s is implementing as myStLuke’s.

 He talked about his experience with various electronic health records systems, and explained the care, quality, and convenience conferred by a robust system.

 “It allows the patient to become engaged with their care by participating in their care,” Dr. Chasin said. “Patients have better outcomes and are more responsible for their care.”

 Dr. Chasin discussed the limitations on Saltzer’s current electronic records system and talked about the meaningful use push by the federal government to shift health systems nationwide to electronic records systems.

 St. Luke’s is encouraging collaboration by building a program through which independent physicians can access some financial support, in accordance with federal laws, to add the electronic health records system that St. Luke’s is implementing. That program is being built now and will be piloted by a five-partner independent practice, he said.

 On cross-examination, Dr. Chasin provided additional information about St. Luke’s ongoing implementation of its electronic health records system, electronic records in the Magic Valley, and the Idaho Health Data Exchange.

Randell Page, D.O., an internist with Saltzer Medical Group.

Dr. Page talked about Saltzer’s relationships with payers and Saltzer leaders’ interests in integrating with St. Luke’s.

On cross-examination, Dr. Page answered questions regarding the Idaho Physicians Network and discussed previous testimony that contradicted his recollection of a conversation regarding the St. Luke’s/Saltzer integration. St. Luke’s has been supportive of Saltzer throughout, Dr. Page told the court, adding that the two entities share the same goals and values.

He discussed communications with Saltzer colleagues in which he explained his reasoning in supporting the integration with St. Luke’s.

“Saltzer would be in a position to have input into its own future,” Dr. Page said. “… This has never been about better reimbursement.”

Judge Winmill closed the courtroom for parts of videotaped depositions of Steven Brown, M.D., vice president and chief medical officer of Saint Alphonsus Health System and president of Saint Alphonsus Medical Group; Rodney Reider, president of Saint Alphonsus Regional Medical Center; Blaine Petersen, chief financial officer of Saint Alphonsus Health System; and Tom Reinhardt, Saint Al’s assistant vice president for physician network development. Reinhardt talked about referral patterns, Saint Al’s primary care physicians, and Saint Al’s recruitment in Nampa in a portion of his taped deposition shown in open court.

David Argue, Ph.D., corporate vice president and principal with Economists Inc., an economic consulting firm.

Dr. Argue discussed his work in health care, market competition and market definition, and anti-trust cases and investigations. He said he had studied the Saltzer/St. Luke’s integration and described the information he had relied on, including insurers’ data and other resources.

“My conclusion is that there is very little likelihood of anti-competitive effects,” he said, adding that he had concluded that there was likely to be “significant pro-competitive benefits … no harm to competition.”

He discussed the difference between harm to competition and harm to competitors, emphasized the importance of the market context in understanding both, and explained how health plans are negotiated and the bargaining strength of participants. Payers and providers consider many factors in crafting their best proposals, he said, noting that geography was one of the considerations.

“There’s no plan that sells a product just in Nampa,” Dr. Argue said.

He discussed Micron’s attempts to build a narrow provider network and other employers’ efforts to trim costs and compete. Multiple large area employers have put together their own narrow networks and the trend is increasing, he told the court.

St. Luke’s and Saltzer would do themselves damage if they were to increase prices excessively, Dr. Argue said, because they would lose patients, who are sensitive to price.

A portion of Dr. Argue’s testimony was closed to the public. His testimony will continue Thursday.

What’s next:

On Thursday, St. Luke’s also intends to call Bill Savage, Saltzer Medical Group chief executive officer.

Video testimony from Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus and a witness called by the plaintiffs last week, and Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus, and other witnesses also may be shown.

Plaintiffs’ and defendants’ representatives had prepared additional videotaped testimony, and Judge Winmill has indicated he intends to review that material as well. Each side has worked to stay within its 44.5-hour time allotment to present and to schedule live witnesses, many of whom have had clinic and other appointments to account for.

St. Luke’s intends to present three witnesses and wrap up Friday, and the plaintiffs will make rebuttal arguments Monday. Closing arguments are set for Nov. 7, after which Judge Winmill will issue his decision.

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Tuesday, Oct. 15:

 

Today in court:

Chief U.S. District Judge Lynn Winmill on Tuesday heard a prominent healthcare economist and national health policy architect explain the value of integrated healthcare delivery, and discuss how St. Luke’s programs, initiatives, and integration with Saltzer Medical Group are in keeping with national needs to build sustainable care for the future.

Who testified:

Alain Enthoven, PhD,, a Stanford University economist and professor of healthcare economics, founder of the U.S. Office of Systems Analysis, and long-time contributor to the national dialogue on health care through the Institute of Medicine and other agencies and government offices.

Dr. Enthoven, a St. Luke’s expert witness, talked about his four decades of research, teaching, and writing about healthcare systems, and discussed his work in California with Kaiser Permanente, with which he continues to consult.

He talked about a health program he designed for Stanford University, and working with insurers to ensure robust plan design and standardized coverage contracts. Dr. Enthoven discussed the importance of the just-established state health insurance exchanges in letting consumers compare plans and in ensuring that payers can’t selectively exclude sicker enrollees.

Dr. Enthoven explained the benefits of integrated delivery systems, particularly for the complex and chronic care that account for the majority of healthcare spending, and the need for coordination, aligned incentives, and collaboration.

“The culture and ethic is one of teamwork,” he said of the integrated approach, whereas traditionally, “part of the ethics of 20th century medicine was autonomy.”

He talked about Kaiser Permanente’s use of the same electronic health records platform that St. Luke’s is adopting and the difference the system has meant in the quality of care, and referenced the now-classic 1999 Institute of Medicine report, “To Err is Human,” and its findings around waste and errors in health care.

Dr. Enthoven explained that insurers are not in a position to control the volume and intensity of healthcare services, such as determining whether a high-cost or a low-cost procedure should be employed, and why clinicians are in a position to make that determination.

He talked about the fee-for-service model, which he called a “centrifugal force,” meaning that highly paid clinicians have no incentive to collaborate with colleagues who are less expensive  to build an integrated system or to focus on optimal outcomes.

Dr. Enthoven described an effort at Duke University to design a new approach for heart patients and found itself punished financially for adopting the cost-effective, better intervention.

“The more integrated and less fragmented that health care is, the better,” he said, going on to describe the models established by Group Health Cooperative in the Seattle area and Kaiser Permanente, systems that have assumed the risk for the financial consequences of care decisions.

There are many variants of the risk-sharing approach, Dr. Enthoven said, including the federal Accountable Care Organization (ACO) model. St. Luke’s became a federally recognized ACO at the beginning of the year. He talked about the benefits of Medicare Advantage programs, which St. Luke’s participates in.

Dr. Enthoven discussed the value of sharing information within an integrated delivery system, and explained the value Kaiser Permanente has seen through its electronic health records. Other benefits are that clinicians no longer need to maximize reimbursement, and can collaborate in sharing best practices and following evidence-based protocols, he said.

He described a set of mammogram practice guidelines in place at Kaiser to flag patient records, so that any staff member throughout the system could help any patient with getting her screening easily and rapidly, and told of a patient whose breast cancer was detected after a pharmacist responded to the flag alert.  He went on to describe upstream population health efforts Kaiser has been able to make as the result of better tracking and monitoring.

“This is a new dimension for medicine,” he said, “reaching out, where problems can be prevented.”

Dr. Enthoven told the court that integrated delivery systems generally have hundreds of participating physicians to ensure the quality care, teamwork, and cost-effectiveness he was describing.

“Scale is necessary for that,” he said. “They also have to be fairly large to accept risk, because some patients turn out to be fairly costly.”

He talked about Kaiser as a key factor in keeping healthcare costs competitive in California, and gave examples of other integrated care delivery systems elsewhere in the country. Dr. Enthoven went on to discuss multiple studies showing that patients received better care, competitively priced, from integrated delivery systems than more loosely organized systems.

Saltzer Medical Group would not, in and of itself, be successful at integrated care because of its size and limits to its ability to coordinate with sufficient specialists, he said.

Dr. Enthoven explained his analysis of St. Luke’s steps to build an integrated delivery system and his study of the plaintiffs’ arguments and reports. He discussed multiple meetings he had in Idaho with St. Luke’s and Saltzer executives, physician leaders, and staff members, and talked about his conclusions.

St. Luke’s electronic health records system, CoPar initiative to manage the health of high risk patients, physician-led management structure, data analytics, relationship with Utah-based insurer SelectHealth, and other efforts are evidence that St. Luke’s Health System is moving in the right direction to build a sustainable healthcare delivery system, he told the court.

He talked about his own experience with the same health records platform that St. Luke’s is implementing, and said the system, in combination with the WhiteCloud Analytics tool capabilities, is of significant value to patients and clinicians in meeting the goals of better health, better care, and lower cost. The culture is also receptive to the shift, he observed.

“This is a physician-led organization,” Dr. Enthoven said. “These are doctors who understand doctoring, and that impressed me favorably.”

He cautioned that efforts to move into population health are relatively new, with pilot projects around the country, but said St. Luke’s CoPar program is in keeping with those targeted approaches. Such approaches are antithetical to the traditional pay-for-volume approach, he said.

“This is a strong sign of commitment … opposite of fee for service,” he said.

The relationship with Saltzer “would be very helpful for St. Luke’s to move down the tracks to integrated care,” Dr. Enthoven said, adding that population health for Canyon County residents would be difficult without the relationship.

“If you really want to see this innovation happen in Idaho, you have to be in favor of this integration with Saltzer,” he said, adding that a looser relationship with St. Luke’s would be far less effective in building a strong and successful culture of integration. Integration is a better benefit for patients, he noted.

“I’m a strong believer in competition,” he said, adding that the St. Luke’s/Saltzer relationship would be “extremely positive” for patients from a cost standpoint and should spur other healthcare providers to develop their own cost-effective structures.

On cross-examination, Dr. Enthoven answered questions about his research, data in various studies, measurement methodologies employed by health systems, pay-for-performance approaches being attempted elsewhere in the country, and integration models. Integrated care is a long and complicated process, he told the court, noting that the transformation can take years.

He responded to questions about meaningful use and the federal government’s interest in having health systems convert to electronic health records systems, health and disease registries, the use of electronic health records systems by independent providers, and data analytics capabilities.

Judge Winmill commented about Dr. Enthoven’s testimony regarding the necessity of integrated health care, the potential concentration of economic power, and Dr. Enthoven’s observation that integrated health care is a work in progress across the country.

“What happens if it fails?” Judge Winmill asked. “Is that problematic from an economist’s point of view?”

Dr. Enthoven noted that there already are few players in health care in the region, saying “the conditions for competition are not very well-fulfilled in Idaho,” and went on to say integration such as St. Luke’s is attempting offers the best hope, given the national healthcare dilemma. He listed numerous examples of successful integrated healthcare systems, including Geisinger, Kaiser Permanente, Park Nicollet, and Intermountain Healthcare, the system connected with SelectHealth in Utah.

“I think that our society is now suffering from an excess of healthcare costs,” Dr. Enthoven said. “This is the most promising strategy. … I think it’s the best chance we’ve got.”                

What’s next:

On Wednesday, St. Luke’s intends to call Arthur “Skip” Oppenheimer, a St. Luke’s Health System board member and prominent Treasure Valley businessman and community leader; Marc Chasin, M.D., vice president, chief medical information officer, and interim chief information officer for St. Luke’s Health System; Randell Page, D.O., an internist with Saltzer Medical Group; and Peter LaFleur, a St. Luke’s consultant with the Consilium Group. David Argue, PhD, of Economists, Inc. may also be called Wednesday.

Video testimony from Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus and a witness called by the plaintiffs last week, and Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus, also may be shown.

St. Luke’s intends to wrap up this week, and the plaintiffs are likely to conclude their rebuttal Monday or Tuesday.

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Friday, Oct. 11:

Today in court:

Chief U.S. District Judge Lynn Winmill on Friday listened as a physician executive and a surgeon described shifts in health care in the Treasure Valley and Saltzer Medical Group’s place in those shifts. The group is at the center of the current trial.

One of the plaintiffs’ witnesses, also a surgeon, took the stand to talk about his work history with Saltzer and his move to Saint Alphonsus.

The trial will resume Tuesday; there will be no proceedings on Monday.

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Who testified:

Chris Roth, chief executive officer of St. Luke’s Treasure Valley. Roth’s testimony began Thursday afternoon, with cross-examination Friday morning.

Plaintiffs’ representatives asked him about the reasoning that went into the St. Luke’s/Saltzer integration. Roth was unequivocal in saying that physician market share wasn’t a reason to integrate.

“That wasn’t an intent of the integration of Saltzer,” Roth said. “There was no purpose of the transaction to gain market share. …

The reason we did the transaction was to accomplish our respective missions.”

Roth also was asked questions about St. Luke’s negotiations with payers, the services of Saltzer physicians in the future, St. Luke’s evolving business model, and details of discussions and communications that preceded the integration.

Additional questions had to do with clinical integration, St. Luke’s electronic health records, and physician compensation.

Roth explained how St. Luke’s has wanted to partner with payers on cost-effective preventive and population health programs, and provided further detail about imaging and other service improvements St. Luke’s has made.

Scott Huerd, M.D., a cardiothoracic surgeon with St. Luke’s Heart.

Dr. Huerd talked about his nine years in Idaho and his three years with St. Luke’s. He described how his group, Cardiothoracic & Vascular Associates, reached its decision to integrate with St. Luke’s, and told of seeing a Saint Al’s recruitment ad for vascular surgeons in a specialty publication and the role that played in the decision.

His group was working actively with Saint Al’s at the time, he said, and did not know Saint Al’s was recruiting to hire. His partners became concerned about their future with Saint Al’s, he said.

“It was upsetting,” he said. “They felt it would have been more appropriate to discuss.”

His group voted, and the majority agreed to approach St. Luke’s about integrating. He described an abrupt end to the surgeons’ activity at Saint Al’s, and how he saw his patient activity drop off at Saint Al’s after it became known his group was talking to St. Luke’s. He talked about his own referral patterns to Salt Lake City, Stanford, Vanderbilt, and the Mayo Clinic.

“They would include Saint Al’s if a patient requested, absolutely,” Dr. Huerd said. “That’s really driven by my patients. …

“I just don’t have any problem with it.”

John Kaiser, M.D., president of Saltzer Medical Group and a practicing ob/gyn physician.

Dr. Kaiser talked about how his referral pattern shifted over time toward St. Luke’s as the result of his patients’ preference, and how Saltzer physicians began to think about transforming their approach. He recalled early discussions with St. Luke’s and areas that St. Luke’s and Saltzer agreed to work on together, including cardiovascular, urology, and occupational medicine.

There came a time when Saltzer knew it could not get any further without a closer relationship, Dr. Kaiser recalled.

“We reached out to St. Luke’s and we said, ‘What can we do? What are the options?’” he said.

Dr. Kaiser told the court that a Saltzer contingent visited Twin Falls to see what the St. Luke’s experience was there, and came away enthusiastic about what they saw and learned about St. Luke’s team-based approach.

“I went there very skeptical,” he said. “We were very impressed with the information that was provided.”

He went on to discuss Saltzer’s use of electronic health records and the limitations of the medical group’s current electronic health records system, and the process by which the integration was designed.  At one point, Dr. Kaiser said, he asked the group whether they really wanted to move forward, or whether talk of remaining independent was meaningful.

“’Let’s proceed on. We want to continue with integration,’” he recalled as the response, adding that St. Luke’s always understood that Saltzer physicians wanted to preserve the option of referring to Saint Al’s locations if it was appropriate for patients.

Dr. Kaiser was asked about the benefits of the integration, and spoke about the value of the St. Luke’s integration when it comes to recruiting.

“Always the question comes up, ‘Who are you affiliated with? Are you with a health system?’” he said. “We can now say, ‘The answer is yes.’”

He went on to provide a lengthy list of improvements and services Saltzer has made and added in the nine months since the integration began, including improvement of nursing protocols based on best practices; changes to methods of medication dispensing , monitoring, tracking, and sampling; improvements to patient safety around potential medication recalls; data analytics; and a variety of services for patients, including St. Luke’s Diabetes Education and Management program resources and diabetes educators, translation services supplied by certified translators, and signing support for deaf patients. Dr. Kaiser gave an example of deaf patients supported through months of pregnancy care.

The group now can take care of patients it could not previously afford to treat, he said. Saltzer physicians now can be “payer blind,” meaning that they now can see all patients regardless of ability to pay.

“Their practice has changed,” he said. “They are now open.”

If the integration were to be unwound, Dr. Kaiser said, Saltzer would need to go back to an approach that “we don’t think is the right model to move forward to where we think health care is going.” That would likely mean turning away some patient populations, deep cost cuts, and a renewed effort to stay open by relying on the fee-for-service, volume strategy, he said.

Plaintiffs’ attorneys asked for additional information regarding the group’s reasoning around the integration, consultants’ work on the agreement, and payer arrangements. On further questioning, Dr. Kaiser reiterated that Saltzer had wanted to work with St. Luke’s because it was the preferred provider in Canyon County and for its favorable physician relationships.

Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus.  Dr. Williams was a witness for the plaintiffs.

Dr. Williams discussed surgeons’ work within Saltzer, use of Saltzer’s electronic health records, and patient referrals. As other physician witnesses have done, he described the difficulties inherent in shuttling between hospitals to treat patients when working with multiple systems.

He talked about his financial investment in Treasure Valley Hospital and described his surgery schedule there. Dr. Williams went on to discuss Saltzer patient referrals while he was affiliated with the medical group, and payer and other considerations that drive surgery scheduling. He talked about his experience at Saltzer when the group was in discussions with St. Luke’s.

On cross-examination, Dr. Williams said he understood that both Saltzer and St. Luke’s wanted to lower healthcare costs and the benefits of integration, and that he understood the position Saltzer was in with respect to payer negotiations. He went on to discuss the limitations of Saltzer’s electronic medical records system, and group members’ desire to continue in relationship with St. Luke’s.

“Everyone felt that it was the best direction for the group,” Dr. Williams said, agreeing that group members did not desire a relationship with Saint Al’s.

He was asked about meetings he had with Saint Al’s representatives regarding potential employment with the system, a conversation in which a representative indicated Saint Al’s would expect to keep patients within the system, and part of a text conversation in which a Saltzer surgeon hypothesized about what might happen to Saltzer financially if surgeons quit. Surgeons ultimately resigned and went to work for Saint Al’s.

What’s next:

When the trial resumes Tuesday, St. Luke’s intends to call Alain Enthoven, a Stanford University economist; St. Luke’s Health System Board Member Arthur “Skip” Oppenheimer; Marc Chasin, M.D., vice president, chief medical information officer, and interim chief information officer for St. Luke’s Health System; and Kurt Seppi, M.D., St. Luke’s Health System vice president and executive medical director.

It’s still unclear when the trial will conclude, but if all allotted time is used, proceedings will wrap up the week of Oct. 21; earlier hopes were to be finished by Oct. 18.

 

Thursday, Oct. 10:

Today in court:

Chief U.S. District Judge Lynn Winmill on Thursday listened as several St. Luke’s witnesses explained how significant investments in technology have improved the health and care of patients and lowered the costs of treatments rendered unnecessary by information to which the technology has provided access.

Who testified:

James Souza, M.D., St. Luke’s Treasure Valley vice president of medical affairs. Dr. Souza first took the stand Wednesday afternoon.

Dr. Souza, who is also a practicing critical care physician and pulmonologist, on Thursday talked about St. Luke’s quality improvements since he joined the system, including progress against sepsis, a highly lethal condition in the absence of rapid intervention.

He talked about St. Luke’s team-based approach, which has steadily improved perfect care rates with sepsis, and described other work around lung nodules and sleep medicine.

As he had Wednesday in other testimony, he explained how working within a system has meant better care and lower costs than had been possible when he was in practice independently.

“St. Luke’s said, ‘Go. Create quality measures,’” Dr. Souza recalled. “There’s a clinical benefit to the patient, and there’s a financial benefit to the payer. We’re doing the good work in the middle.”

He described how several seemingly innocuous conditions can spiral out of economic control if not addressed proactively, and how the current payment model rewards the healthcare system by paying for late, costly interventions. St. Luke’s affiliation has made working proactively possible, he said.

Dr. Souza talked about innovations he has been involved in since joining St. Luke’s and explained that with St. Luke’s, physicians have been “set free to find the waste in the system,” he said. “See, this gives me so much hope that we can save health care. If you set us free to find it, we can do it.”

On cross-examination, plaintiffs’ attorneys asked Dr. Souza questions about physician recruitment, relationships with Saltzer Medical Group, electronic health records systems, use of data and evidence-based medicine, and St. Luke’s eICU electronic intensive care unit.

Dr. Souza told the court that all pulmonologists in the Treasure Valley now are associated with one health system or another, and that both St. Luke’s and Saint Al’s have recruited. And he talked about St. Luke’s emphasis on the necessity of physicians in key decision-making positions.

“This organization has far exceeded my expectations when it comes to physician leadership,” he said. “I guess I’m an example of that.”

Dr. Souza discussed the nature of competition, central to what St. Luke’s is attempting and what the Saint Al’s plaintiffs dispute.

“It’s competition that creates dominance, of course,” he said. It’s “exactly the competitive innovations that this market and health care generally need.

“Dominance is not conquering the world,” he said. “I wanted to be in an organization that is going to be here tomorrow.”

Brian Fortuin, M.D., an internist whose practice contracts with St. Luke’s in Twin Falls and who serves in multiple physician leadership roles with St. Luke’s.

Dr. Fortuin, who has practiced in Twin Falls since 1997, talked about his history and work in the Magic Valley, including the 2002 acquisition of the clinic and hospital with which he previously was affiliated by what later became St. Luke’s Magic Valley.

He talked about his use of electronic health records, and how he has been able to effectively care for patients living as far away as Elko, Nevada, through the communications, information, and connections possible with other clinicians through the electronic systems.

He talked about various Triple Aim efforts St. Luke’s is making, including assessment of pharmaceuticals and medical devices and implants for cost-effectiveness and optimal outcomes.

He discussed use of the scorecards developed by St. Luke’s and WhiteCloud Analytics, and showed how he has used the scorecards to monitor his group’s performance and his own performance. He showed how he is doing relative to other St. Luke’s internists when it comes to the metrics St. Luke’s has established based on best practices and evidence-based medicine, and how he can assess the data.

He showed how he can tell whether he is being most efficient with the use of generic medicines, and discussed how St. Luke’s can track the use of tests and interventions, again to ensure cost-effectiveness.

He was candid about showing his scores on specific measures, and talked about the competitive nature of physicians to want to improve.

“For me, it’s very exciting, because in medicine we haven’t had this information,” Dr. Fortuin said. “In my mind, this is really ground-breaking. … I guess I’m just a little enthusiastic.”

Dr. Fortuin told the court that he has changed his approach and is now thinking more in terms of population health and less as an “I’ll fix you when you’re sick type of doctor.”

“Philosophically, this is a deviation from the traditional practice of medicine,” he said. “It wasn’t until I had the data in front of me … Today, I can be really proud …”

Due to his use of the WhiteCloud tool and efforts he has made to focus on mammogram recommendations as the result of what he learned about his own practice, he said, breast cancer recently was caught early enough in one of his female patients so that chemotherapy and radiation likely can be avoided and her outcomes substantially improved.

“That’s sort of the Triple Aim personified,” Dr. Fortuin said.

He compared others’ quality measures with the WhiteCloud tools, and explained that he now is able to get more detailed, more timely information. He talked about the importance of accuracy in the data, and told the court the WhiteCloud investment was not something independent practices would likely contemplate.

On cross-examination, plaintiffs’ representatives asked Dr. Fortuin about his experience in Twin Falls before he began to work with St. Luke’s, and for additional information about his use of the WhiteCloud tools. He explained how difficult it would be for independent physicians to make the investments in technology that St. Luke’s has made.

“Having this tool at my disposal makes me a better doctor,” he said.

Dr. Fortuin provided additional information about his practice’s reasons for integrating with St. Luke’s, which echoed earlier testimony from several physician witnesses, and how St. Luke’s and WhiteCloud work to ensure the data systems and the data’s accuracy. He explained the physician alignment element and culture that is helping St. Luke’s succeed with the early data and population health efforts.

“We’re all part of the process. We’re all part of the mission that we’re trying to accomplish,” he said.

Adebayo Crownson, M.D., a family practice physician with St. Luke’s Clinic in Nampa.

Dr. Crownson talked about his previous career with the Air Force, tours in the Middle East, and his work history with Saint Alphonsus Medical Group starting in 2002, when the current Saint Al’s Nampa hospital was called Mercy Medical Center. Saint Al’s purchased the hospital in 2009, and Dr. Crownson joined St. Luke’s in 2011.

He explained the reasons he twice left Saint Al’s employ, chose employment with St. Luke’s, and became part of St. Luke’s Clinic. He reiterated what other witnesses have said, that St. Luke’s has not directed referrals to any particular hospital.

“There was absolutely no pressure on me at all,” Dr. Crownson said.

He discussed the structure of lab practices and ancillary services, how St. Luke’s established various services for patients’ convenience, and the two electronic health records systems he has worked with. Referral processes were simplified and improved by the St. Luke’s electronic health records system, Dr. Crownson said. Many of his patients have specifically called out the myStLuke’s electronic health record as a benefit and a reason to want to stay within the system, he testified.

“Patients have a preference based on my electronic medical record,” he said.

Dr. Crownson additionally talked about patterns of care that he disagreed with involving non-St. Luke’s surgeons and facilities, in which some of his patients were routed to facilities they had not chosen.

Chris Roth, chief executive officer of St. Luke’s Treasure Valley.

Roth talked about his duties and work as chief executive officer and previously, chief operating officer. He discussed his relationships with physicians and with Saltzer Medical Group and its leaders, and explained talks going back to 2008 between St. Luke’s and Saltzer executives.

He talked about successes the collaboration yielded, and explained how the relationship with Saltzer grew closer over time as both St. Luke’s and Saltzer saw the possibilities of a tighter affiliation. St. Luke’s was interested, he said, because St. Luke’s and Saltzer physicians had close and trusting working relationships, the two entities shared common goals, and St. Luke’s was seeing increasing need for its services from the west, in the form of increased activity at St. Luke’s Meridian.

“Saltzer wanted to work with us,” he said. “They wanted to sit down with St. Luke’s, and only St. Luke’s.”

Roth explained St. Luke’s mission and vision, and noted that transformation entails an entirely new approach to health care. He talked about St. Luke’s presence and plans in Canyon County, and said he’d told Saltzer that a St. Luke’s hospital was not going to happen right away.

“Saltzer was very interested in St. Luke’s plans,” he said. “It was a continual topic throughout our discussions.”

He discussed the lengthy process the two organizations went through to arrive at integration, and described the “road map” that guided the relationship. He explained Saltzer physicians’ decision in late 2011 and early 2012 to explore the possibility of a relationship with Saint Alphonsus, which St. Luke’s agreed to. Saltzer then dropped the discussion with Saint Al’s, held an internal vote that resulted in an overwhelming endorsement of support for integration with St. Luke’s, and arrangements continued.

Saltzer leadership always was concerned that several of its surgeons had financial interests in Treasure Valley Hospital, Roth said, going on to describe another, stand-alone surgery center that closed after physicians moved their financial interests over to Treasure Valley Hospital. The pattern illustrates the need for alignment of interests in a way that serves patients, Roth explained.

He talked about a meeting with Dr. Steve Williams, one of the Saltzer surgeons who was invested in Treasure Valley Hospital, and recalled talking about how St. Luke’s would recruit surgeons if there was the need.

“We disagreed on that point,” Roth said. “He felt that he and other surgeons could support Treasure Valley Hospital, the Meridian hospital, and a future Nampa hospital.

“… He indicated that some of the Saltzer physicians would be leaving the group as the result of that,” he said.

Roth explained compensation models and talked about how St. Luke’s built appropriate compensation arrangements for Saltzer. As other witnesses have, Roth discussed St. Luke’s gradual shift from the fee-for-service business model to a value-based methodology, and said it would not have been feasible to put Saltzer on that new methodology when the practice integrated with St. Luke’s at the beginning of this year.

St. Luke’s Internal Medicine physicians recently have shifted their own compensation and are putting a portion of their incomes at risk based on quality and value measures, Roth said, observing that to have physicians put their paychecks on the line is a meaningful step in the process.

“It’s a start,” he said.

Roth talked about St. Luke’s other collaborations throughout the area, and how it has supported competing clinics and practices.

Richard Armstrong, director of the Idaho Department of Health and Welfare.

Armstrong, who has served as director since 2006, talked about the department’s work and the functions of the department in the region that includes Caldwell, Nampa, Boise, and Meridian.

“It’s pretty much the same medical region,” he said. “I don’t see (Nampa) as an isolated medical region.”

He testified that independent physicians are not required to treat medically indigent patients, and said he expects the number of Medicaid-eligible residents to increase significantly as people become aware of their status through the new health insurance exchange. Independent physicians are not required to treat Medicaid-eligible patients either, he testified.

Armstrong talked about his department’s goal of moving away from fee for service to pay for performance, and toward increased managed care. The department already has shifted some of its programs to a managed-care model, he said.

“Each of those pieces of business has been successful,” Armstrong said, adding that the shift is gradual and goes on over a period of time.

Armstrong explained how the future of health care is shaping up, including risk stratification to tailor care according to the different levels of need of people with different health conditions, and the critical role played by electronic data systems in targeting care. All health systems will have to alter how they deliver care, he told the court.

“Change is necessary,” Armstrong said, adding that his department is going to be reliant on the community’s health systems to change in order to meet its goals, and noting that systems throughout the state are taking different approaches to the challenge.

If the St. Luke’s/Saltzer integration were dissolved and Saltzer physicians were unable to treat as many Medicaid and medically indigent patients as they are able to with the St. Luke’s affiliation, Armstrong said, public health could suffer.

If St. Luke’s is successful in its approach, it will advance the goals of the Idaho Department of Health and Welfare, Armstrong told the court.

On cross-examination, Armstrong provided additional detail around his department’s functions and jurisdiction, and said he did not have information about the business functions of health organizations in Nampa.

The courtroom was closed for a portion of the videotaped deposition of Michael Roach, M.D., a Saint Alphonsus family medicine physician in Caldwell.

What’s next:

Chris Roth’s testimony will continue Friday when plaintiffs’ representatives start their cross-examination. St. Luke’s also expects to call John Kaiser, M.D., president of Saltzer Medical Group; Peter LaFleur, a consultant with the Consilium Group.; and Scott Huerd, M.D., a cardiothoracic surgeon with St. Luke’s Heart.

The plaintiffs are expected to call two witnesses, Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus, and Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus.

It’s still unclear when the trial will conclude. All parties earlier had expected to wrap up by Oct. 18, but the one-day suspension earlier this week and additional testimony-processing procedures added during the course of the trial mean proceedings may continue into the week of Oct. 21.

 

Wednesday, Oct. 9:

Today in court:

Chief U.S. District Judge Lynn Winmill on Wednesday listened as St. Luke’s physicians and an executive and long-time leader in Idaho health care told how culture and alignment are critical elements to making the improvements the health system intends.

Who testified:

Marshall Priest, M.D., executive medical director of St. Luke’s Heart. Dr. Priest first took the stand Tuesday afternoon in open court.

During Wednesday’s cross-examination by plaintiffs’ attorneys, Dr. Priest talked about compensation changes for St. Luke’s heart physicians, St. Luke’s Congestive Heart Failure Clinic, and how physicians have shifted practice patterns across both Saint Alphonsus and St. Luke’s over time.

Mark Johnson, M.D., St. Luke’s division medical director of family medicine for the Treasure Valley and a primary care physician.

Dr. Johnson discussed his previous private practice and his work with St. Luke’s since his clinic integrated with St. Luke’s in 2008. He told the court that his group’s affiliation with St. Luke’s freed the physicians from the business aspects of running a clinic, that the electronic health records system was a meaningful factor in the group’s decision, and that clinic partners were excited about being part of a physician-led transformation of health care.

He talked about St. Luke’s Clinic and clinic activity in Nampa, and how clinic physicians are integrating with St. Luke’s Health System. He discussed the importance of the myStLuke’s electronic health record system and the information that the WhiteCloud data analytics tool has made possible. Dr. Johnson said the WhiteCloud tool is helping St. Luke’s physicians improve their practices and deliver better care for patients.

Dr. Johnson explained the data that is emerging and how it is starting to connect with quality goals and compensation discussions.

Plaintiffs’ attorneys asked additional questions regarding the data and the electronic health records system.

John Kee, vice president of network operations of St. Luke’s Health System.

Kee discussed the SELECT Medical Network and his role in the network’s clinical integration, implementation of evidence-based medicine and care coordination, and steps toward value-based reimbursement with payers.

He talked about his earlier work as vice president for physician services for St. Luke’s Health System, and his decades of work with Idaho’s critical access hospitals, larger hospitals, and both Saint Al’s and St. Luke’s. Kee said he had helped to facilitate Saint Al’s acquisition of clinics earlier in his career, and later became chief operating officer at what is now St. Luke’s Magic Valley.

He talked about how the Twin Falls hospital, owned at the time by the county, had deteriorated, and how Saint Al’s sought out a relationship with the hospital. The county integrated its hospital with St. Luke’s after an 84 percent public vote in support.

Kee told how influential the landmark Institute of Medicine’s Quality of Health Care in America report, “Crossing the Quality Chasm,” was on his thinking around integrated care and what needed to change around healthcare delivery, and said the Triple Aim covers the spectrum of “redesign imperatives” laid out in that report.

He discussed his efforts in Twin Falls to change the payment model, the challenges involved in physician alignment, and the difference an electronic health records system made in that effort.

Kee talked about his continuing work with St. Luke’s Health System after the Twin Falls hospital became part of the organization and the difference the St. Luke’s presence made in the Magic Valley, describing it as “stunning … it was stunningly different.”

He described his early work with SELECT, the overlapping provider networks in the state, and St. Luke’s significant Triple Aim initiatives, including care coordination, the electronic health records system, data analytics, value-based compensation, and value-based payer relationships.

Kee talked about the settings in which St. Luke’s has implemented the electronic health records, and described “the potpourri of paper charts” that preceded myStLuke’s. He explained how the electronic system is making care safer, more timely, and more efficient, and how it is making patients part of the conversation in ways that weren’t possible before.

He explained how clinical metrics will stitch into compensation models going forward, and how value is increasingly becoming a basis for physician compensation. Because data sources are increasingly available, the shift away from volume-based payment is becoming possible, Kee said.

Kee talked about St. Luke’s early care coordination efforts and work with payers to focus on enrollees who merit special care focus. Judge Winmill asked about the goals of that approach, St. Luke’s CoPartner program. Kee went on to talk about population health programs covering mental health, pediatric mental health, diabetes, and other efforts to work upstream of patient hospitalization.

“We are making serious investments in this overarching care coordination program,” he said. “Again, these are not fee-for-service investments that make sense, but they make sense for the good of the community … consistent with our mission to improve health.

“… It’s a big deal. What we’re doing is a serious big deal,” Kee said.

He talked about emerging health assessments and screenings, improvements in billing, stepped-up transparency, St. Luke’s Center for Spine Wellness, and a variety of St. Luke’s other programs, all in keeping with the Triple Aim and accountable care. Data is only beginning to come in, but early results are promising, Kee said.

He talked about St. Luke’s investment in WhiteCloud Analytics to access information for improved care programs, and explained Saltzer’s role in pulling together information upon which to base the improved programs. The tools allow St. Luke’s to study service utilization, disease prevalence, and many other patterns within the populations served.

Kee stepped the court through the web-based WhiteCloud application and how St. Luke’s care managers can read and take action on the data recorded. The goal is to head more costly interventions off proactively, he said.

“We’re trying to get a rhythm and get out in front of the curve,” Kee told the court. “The intent is to make this seamless for the patient experience.”

He talked about St. Luke’s discussions with Saltzer before the integrations, and echoed what other witnesses have said, that St. Luke’s has not directed patient referrals.

“At the end of the day, if they’ve chosen to work with us, we think they should have the choice,” Kee said. “There just hasn’t been any particular reason to tell them what to do.”

Kee talked about St. Luke’s plan to make its electronic health records system available to independent physicians, and talked about federal regulations that limit St. Luke’s investment in electronic health records for independent clinics. He explained how the federal government has built financial incentives for health clinics and systems to move to electronic health records, and why physicians would want to take part in St. Luke’s program to extend myStLuke’s for their use.

If the Saltzer integration were not allowed to continue, Kee said, the practice likely would revert to “the same, old-school principles … more or less, business as usual.

“I don’t know what choice they’d have, actually,” he said.

Plaintiffs’ attorneys asked Kee questions about quality data that came up earlier in the investigation. The courtroom was closed for a portion of Kee’s cross-examination. In light of his decision Tuesday regarding media access to information sealed as part of the proceedings, Judge Winmill said there would be a determination as to whether the information subsequently would be made available.

He also was asked questions about St. Luke’s plan to extend access to myStLuke’s for use by independent physicians, the Twin Falls hospital’s electronic health records system, independent physicians’ relationships with St. Luke’s, and WhiteCloud Analytics and other data analytics tools.

Kee talked about St. Luke’s Clinic’s work with independent physicians and provided additional detail regarding St. Luke’s accountable care efforts. He discussed compensation approaches and how changes are likely to speed improvements to health care. And he provided additional information about Magic Valley’s electronic health records system.

James Souza, M.D., St. Luke’s Treasure Valley vice president of medical affairs.

Dr. Souza, who is also a practicing critical care physician and pulmonologist, talked about his work in the three years since he became a physician leader with St. Luke’s. He discussed his practice with Idaho Pulmonary Associates and the group’s experience with an electronic health records system before the group integrated with St. Luke’s. He contrasted the system with the different, more robust platform that St. Luke’s has adopted, and said it was like comparing horses and buggies with modern transportation.

“It had its day and that day has passed,” Dr. Souza said, calling the other system an “electronic filing system” with significant limitations.

“It’s the patient’s record,” he said, describing the system St. Luke’s is implementing.

Dr. Souza talked about the difficulties his group had recruiting and running a practice, and the group’s decision to seek integration with St. Luke’s. He said the group approached St. Luke’s and came away excited by the idea of physician leadership and clinical integration.

The group was thinking about Harvard Business School faculty member Michael Porter’s 2006 book, “Redefining Health Care,” at the time, and Dr. Souza and his partners were running between four hospitals, including both St. Luke’s and Saint Al’s locations, to meet the needs of patients.

“We weren’t seeking a windfall,” he said, describing the group’s talks with St. Luke’s as “inspiring.”

Dr. Souza explained that not all members of his practice came to St. Luke’s, and discussed the value of St. Luke’s electronic medical records, quality measures and metrics, evolving compensation structures, and St. Luke’s application of best practices and steps to innovate.

He was asked whether his group’s practice had improved as the result of its integration with St. Luke’s.

“Without any question,” he said.

He talked about St. Luke’s electronic intensive care unit and the improvements he and other physicians are seeing as the result.

“Within the first night, we started noticing little catches,” Dr. Souza said. “We’re moving the needle in the ICU.”

What’s next:

Dr. Souza’s testimony will continue Thursday. St. Luke’s also expects to call Brian Fortuin, M.D., a Magic Valley physician with St. Luke’s; Adebayo Crownson, M.D., a St. Luke’s physician; Richard Armstrong,director of the Idaho Department of Health and Welfare; and Chris Roth, chief executive officer of St. Luke’s Treasure Valley.

The plaintiffs are expected to call two witnesses, Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus, and Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus, on Friday.

All parties earlier had thought the trial would conclude Oct. 18, but the one-day suspension earlier this week and additional testimony-processing procedures necessitated by Judge Winmill’s Tuesday decision regarding media access to previously sealed testimony mean the trial now is likely to continue into the week of Oct. 21.

There are also questions regarding the federal government’s functions in light of the stalemate in Washington, D.C. Some employees in the federal building where the trial is being held have said they believe federal reserves may be exhausted early next week, and there are questions around staffing for various functions related to the trial.

 

Tuesday, Oct. 8:

Today in court:

On Tuesday, the 10th day of the bench trial, Chief U.S. District Judge Lynn Winmill listened as the head of St. Luke’s Health System described health care in Idaho and what St. Luke’s is trying to do to transform it.

Also Tuesday, Judge Winmill denied Idaho media outlets’ request to open all previously sealed testimony. 

The judge said he believes that all previously closed testimony met the legal standard that allows for its redaction, but said more formality was needed to determine if items should be redacted or closed from public view.

He issued a verbal order requiring all parties to review previously filed testimony and exhibits to ensure they still meet the legal standard for redaction, and to indicate any material they now believe should be open. The plaintiffs have until Friday to accomplish this, and the defendants and third parties have until Tuesday. 

Judge Winmill said he would rule early next week to determine if any previously redacted testimony will be open to the public. Going forward, he said all parties will have to file affidavits to support requests to close testimony.

In addition, the judge will give Charles Brown, the media outlet’s attorney, full un-redacted access to all court testimony and documents to allow Brown the opportunity to challenge any redacted material that he believes doesn’t meet the legal standard. Much of the testimony presented during the first half of the trial has been closed to the public; St. Luke’s is expected to have an open courtroom for much of its examination of witnesses.

Who testified:

David Pate, M.D., J.D., president and chief executive officer of St. Luke’s Health System.

Dr. Pate described his education and medical career, previous executive experience, writing and academic work, and his four years at the helm of St. Luke’s. He related his previous experience with clinical integration and physician alignment.

He talked about the limitations of the fee-for-service payment approach and how that business model curbed previous efforts he’d been involved with to achieve clinical integration. He talked about his excitement upon seeing what might be possible in Idaho, and told the court that as an independent physician in Texas, a hospital administrator, and later a cancer patient, he saw what needed to change.

“We can do something important here,” he told the court he remembers thinking.

He discussed St. Luke’s mission, vision, and values, and described how the Triple Aim of better health, better care, and lower cost is the vehicle by which the organization is trying to shift care. He talked about St. Luke’s community outreach, work to care for everyone regardless of the ability to pay, efforts to build an integrated delivery system, and the need to shift the business model.

He explained how important it is that St. Luke’s provides community outreach programs, especially because of the increasing prevalence and severity of obesity in the population and among children, and described significant health initiatives. Dr. Pate talked about many of the components of St. Luke’s strategy, incorporating electronic health records, physician leadership, investment in data analytics, and other efforts, and explained how the strategy is meant to transform health care for the benefit of the region.

“St. Luke’s is making strides,” Dr. Pate said, noting that the transformation effort is ongoing.

He said he has challenged St. Luke’s leaders to be prepared to move to a value-based payment model, rather than volume-based, by 2015. He explained the challenges of completely overhauling a business structure, and described efforts St. Luke’s is making with insurers and providers to move in the direction of reform.

He explained St. Luke’s alliance with SelectHealth, a Utah-based insurance company, and how that relationship is letting St. Luke’s begin to make the needed investments in community health.

Dr. Pate provided as an example of physician alignment Dr. Kevin Shea, a St. Luke’s orthopedic surgeon, and his Project Zero work to cut the rate of post-surgical infections in a work effort involving Micron and Boise State University. That sort of improvement would not be possible if physicians weren’t aligned with St. Luke’s Health System, Dr. Pate pointed out.

He described other health system’s structures, and said that he’d concluded that successful new healthcare delivery models are based on a core of employed physicians.

He talked about St. Luke’s relationship with Saltzer Medical Group, the factors St. Luke’s Health System’s board of directors considered in approving the St. Luke’s/Saltzer integration, the demand for St. Luke’s services west of Boise, and the need to work toward the Triple Aim in the area.

Dr. Pate provided the several reasons St. Luke’s viewed the Saltzer integration as pro-competitive, rather than the opposite, and said that at the same time, St. Luke’s was primarily concerned with the health system’s mission, “To improve the health of people in the region,” in coming to its decision.

Plaintiffs’ concerns that the integration will push prices up are misplaced, Dr. Pate said, noting that St. Luke’s board members, who are business owners and would end up paying the higher prices, would not stand for that.

“I guarantee it, I’d hear from the board,” he said.

He talked about St. Luke’s negotiations with Idaho payers, how the robust presence of both St. Luke’s and Saint Alphonsus  in the community has made both systems better, and St. Luke’s physicians’ latitude to refer patients wherever the care is most appropriate.

“We do not direct referrals and as long as I’m CEO, we will not direct referrals,” he said.

On cross-examination, the plaintiffs’ legal team asked Dr. Pate to provide details on physician relationships and the SELECT Medical Network, of which St. Luke’s is a part.

Dr. Pate was asked about outcomes, quality rankings, and various relationships with physicians and physician groups. He talked about clinical integration, the use of scorecards to improve quality and outcomes, and how physicians have been involved in building clinical integration with St. Luke’s.

He was asked about the Saltzer relationship, St. Luke’s discussions with Micron around its health insurance plans, and physician practices.

“St. Luke’s approach is not an ‘either/or,’ it’s an ‘and,’” Dr. Pate said, in explaining how the system has taken a blended approach with both employed and aligned physicians. He talked about the difficulties of achieving the Triple Aim in Canyon County without a Saltzer integration.

“We have got to stop feeding the fire,” he said, noting that the “lower cost” component of the Triple Aim is of particular concern to area residents, and that lowering costs would be problematic without a Saltzer integration.

Part of the plaintiffs’ questioning was closed to the public.

Patricia Richards, president and chief executive officer of SelectHealth, the Utah-based insurance company and subsidiary of Intermountain Healthcare with which St. Luke’s has an alliance.

Richards talked about her company’s mission and its history as an offshoot of Intermountain Healthcare, which was given back to its communities in 1975by founders The Church of Jesus Christ of Latter-day Saints. She explained how working together had allowed the health system and the insurance company to build quality, low-cost healthcare delivery.

She talked about SelectHealth’s popularity and quality rankings, and its emphasis on community service and healthcare improvement. She discussed SelectHealth’s understanding of the need to fix health care and how her company has adopted the Triple Aim in its work and functions.

Richards explained how the company has worked with providers to improve population health and the company’s position that improving health lowers costs for a community. She discussed a managed Medicaid plan SelectHealth recently launched in Utah to work upstream of health problems, and how an alliance with St. Luke’s was a good fit with her company’s values and priorities.

She talked about the benefits of an integrated approach such as the SelectHealth/St. Luke’s alliance, and told the court how difficult it is for some players to come around to the need for such a shift. Richards explained the need for physician leadership in building successful care delivery systems.

“I’ve seen so many failed attempts to control costs that … the only possible way … is through these integrated delivery systems,” she said.

She talked about her work with the Alliance of Community Health Plans and its emphasis on cost, quality, and transparency, and discussed other successful healthcare delivery systems that she had worked with and studied. She talked about the core of employed physicians common to successfully integrated delivery systems, and said such systems and plans have scored better when it comes to cost and quality.

Richards talked about discussions with St. Luke’s about risk-based arrangements, meaning that a health system assumes responsibility for delivering appropriate care, and the role of employed physicians within a risk-based model, where the incentive for all parties is to keep people as healthy as possible.

She talked about SelectHealth’s ongoing efforts to curb healthcare costs in Utah and the company’s early successes in Idaho. Richards said the Saltzer/St. Luke’s integration is important to the broad network that SelectHealth is trying to build to offer competitive insurance products.

Richards talked about various SelectHealth products and the company’s collaboration with St. Luke’s in such areas as pharmacy, incentives, maternal care, and medical technology.

The courtroom was closed for a portion of Richards’ testimony.

William Deal, director of the Idaho Department of Insurance.

Deal talked about his experience operating his own insurance agency, the new state health insurance exchange, and the competitive environment created within the new online health insurance marketplace. He talked about the process of approving health plans for the exchange and the nature of the Idaho insurance industry.

He said he had not looked at provider networks in the state.

Marshall Priest, M.D., executive medical director of St. Luke’s Heart.

He talked about his role, St. Luke’s Heart’s services, and his previous work in a private practice, then known as Idaho Cardiology Associates, which affiliated with St. Luke’s in 2007.

Dr. Priest discussed compensation structures, and described the evolution toward payment based on quality and away from fee for service. He talked about quality scorecards developed to gauge performance.

“The idea is that we’re a team,” Dr. Priest said. “The whole focus is team-based care for cardiac patients.”

He explained how the heart physicians wanted to help transform health care, and said he did not believe the improvements would have been possible if the physicians were not employed by St. Luke’s. Dr. Priest talked about efforts to keep people out of the hospital and St. Luke’s efforts to learn how to do that. He talked about St. Luke’s Congestive Heart Failure Clinic, dedicated to supporting high-risk patients through a variety of non-invasive interventions to keep them out of hospitals.

What’s next:

Dr. Priest’s testimony will continue Wednesday. St. Luke’s representatives also intend to call John Kee, vice president of network operations of St. Luke’s Health System, and James Souza, M.D., St. Luke’s Treasure Valley vice president of medical affairs and a practicing critical care physician and pulmonologist.

Additional physicians and executives will be called throughout the week.

 

Monday, Oct. 7

Today in court:

Trial did not continue as planned Monday on what would have been the 10th day of the bench trial.

Chief U.S. District Judge Lynn Winmill postponed proceedings, which had been planned to begin at 8:30 a.m., and directed that court resume Tuesday morning.

This is the third week of the trial. Weeks one and two were plaintiffs’ opportunity to present their case, although two plaintiffs’ witnesses are expected to testify later this week.

Defendants’ attorneys, along with the plaintiffs’ representatives, have been allotted a fixed amount of time to present their evidence. All parties have been attempting to coordinate efforts to wrap up in four weeks, but the Monday delay puts additional pressure on attorneys, witnesses, the judge, and the courtroom staff to continue according to schedule.

Judge Winmill previously has indicated he intends to see the trial through as planned, but there is also the possibility of impacts due to the federal government shutdown, particularly during the fourth week, which is about the time federal courts administrators have said funding reserves will expire. It now appears that the trial may spill over into a fifth week, or continue with a Saturday or Columbus Day session.

Contractors in the federal building where the trial is being held already have stopped working and military employees are working without pay.

Who testified:

Dr. David Pate, president and chief executive officer of St. Luke’s Health System, is St. Luke’s first witness and was expected to testify Monday but will do so instead Tuesday morning.

St. Luke’s also had planned to present John Kee, vice president of network operations of St. Luke’s Health System, and James Souza, M.D., St. Luke’s Treasure Valley vice president of medical affairs and a practicing critical care physician and pulmonologist.

Media Coverage and Court Documents:

To see the latest court filings and news stories click here.

What’s next:

St. Luke’s intends to call Dr. Pate; Pat Richards, president and chief executive officer of SelectHealth, the Utah-based insurance company with which St. Luke’s has an alliance; Marshall Priest, M.D., executive medical director of St. Luke's Heart; and Bill Deal, director of the Idaho Department of Insurance. Additional physicians and executives will be called throughout the week.

The judge has scheduled a hearing for 3:30 p.m. Tuesday regarding press requests to open the courtroom. Much of the testimony presented during the first half of the trial has been closed to the public; St. Luke’s is expected to have an open courtroom for much of its examination of witnesses.

 

Thursday, Oct. 3:

Today in court:

Chief U.S. District Judge Lynn Winmill on Thursday heard from a Massachusetts college professor who gave testimony regarding healthcare markets and viewed additional pieces of videotaped depositions.

The Saint Al’s team had hoped to wrap up Thursday, but parts of several additional videotaped depositions, along with one live witness, are likely to be shown early next week.

Plaintiffs’ attorneys, along with defendants’ representatives, have been allotted a fixed amount of time to present their evidence, and were attempting to coordinate that effort even before the possibility of impacts due to the federal government shutdown became apparent.

Media Coverage and Court Documents:

To see the latest court filings and news stories click here.

Who testified:

Deborah Haas-Wilson, an economist and Smith College faculty member, who testified in person.

Haas-Wilson, who has focused on healthcare competition and related anti-trust issues, discussed market dynamics and concentration, provider network makeup, and payer efficiencies. She discussed her research methodology and findings, and talked about possible practice patterns in the Saltzer Medical Group’s area. She noted that physicians routinely work more closely with health systems when they are acquired by those health systems.

Haas-Wilson talked about health systems’ market positions in the area, and noted that Saint Alphonsus provides “a competitive constraint” to St. Luke’s. She described a competitive environment among a handful of providers.

At one point in Haas-Wilson’s testimony, Judge Winmill noted that anti-trust law addresses possible harms to competition, and not to competitors.

Haas-Wilson also talked about changes to provider networks and insurance plans that she believes are possible with the advent of the nationwide health insurance exchanges that launched this week.

On cross-examination, she acknowledged that the sort of integration St. Luke’s and Saltzer have entered into could result in efficiencies, and said she did not look at potential pro-competitive benefits as part of her paid work for the Saint Al’s parties. Information she presented in court appeared to conflict with her previously published writings regarding the possibility of harm in similar situations.

She discussed the various provider networks that operate in the area, and presented ideas regarding the possible effects on networks of the St. Luke’s/Saltzer integration.

She said she had not looked at any variables other than the one her clients, the Saint Al’s plaintiffs, had paid her to examine in studying patient flow through the area’s health systems and providers, and could not say that other St. Luke’s integrations had resulted in significant erosion in Saint Al’s activity in several specific areas of specialty practice.

She could not say at what level an integration between a health system and a physicians practice would not pose a threat to competition; health systems operating in the area, including St. Luke’s and Saint Al’s, have integrated with multiple physician practices over the years. She also could not say at what level a change in patient flow would have anti-competitive impacts.

Haas-Wilson’s testimony took up the entirety of the trial time Thursday; a second witness that the Saint Al’s team had planned to present, Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus, was not called forward.

Dr. Williams is one of seven surgeons who left Saltzer to work for Saint Alphonsus when the group chose to affiliate with St. Luke’s.

What’s next:

The bulk of the plaintiffs’ case concluded Thursday. Judge Winmill gave the Saint Al’s team 44.5 hours to present its case and has given St. Luke’s representatives the same amount of time. Judge Winmill did not schedule proceedings for Friday, and Thursday concluded about noon.

While the trial has been set to span four weeks, generally two weeks for each side, Judge Winmill indicated Thursday he would make himself available to watch portions of videotaped depositions the plaintiffs’ representatives want to enter into evidence over the weekend.

The plaintiffs also are expected to call in person Andrew Curran, M.D., D.O., an orthopedic surgeon with Saint Alphonsus, and Dr. Williams a week from Friday.

St. Luke’s intends to call several of the organization’s executives Monday, leading off with St. Luke’s Health System President and CEO Dr. David Pate.

The judge has scheduled a hearing for 3:30 p.m. Tuesday regarding press requests to open the courtroom. Much of the testimony presented during the first half of the trial has been closed to the public; St. Luke’s is not expected to request a closed courtroom much during the next two weeks. The courtroom was open for most of Thursday morning.

Attorneys for all parties are considering how closed trial material might be opened to the public; much of the information presented in closed court has had to do with insurers’ business data. Judge Winmill is also considering other third parties.

It is not clear whether the stalemate in Washington, D.C., will have any impact on the trial. Administrators have said they believe the federal courts have approximately two weeks of reserve funds, and federal employees in the Boise federal building believe the reserves will be exhausted by Oct. 10; the current trial is scheduled to extend through Oct. 18. Judge Winmill has indicated that he intends to keep the trial going regardless.

 

Wednesday, Oct. 2:

Today in court:

Chief U.S. District Judge Lynn Winmill on Wednesday listened to a university economist from the Chicago area describe the relationships between healthcare organizations, providers, and patients and various scenarios possible with changes in any area of the relationships, and viewed additional pieces of videotaped depositions.

The Saint Al’s team had hoped to wrap up Thursday, but parts of several additional videotaped depositions are likely to be shown early next week. Plaintiffs’ attorneys, along with defendants’ representatives, have been allotted a fixed amount of time to present their evidence, and were attempting to coordinate that effort even before the possibility of impacts due to the federal government shutdown became apparent.

Media Coverage and Court Documents:

To see the latest court filings and news stories click here.

Who testified:

David Dranove, a professor of management and strategy at Northwestern University’s Kellogg School of Management , who testified in person.

Dranove, whose research focuses on the healthcare industry and healthcare economics, was called as an expert by the plaintiffs to discuss competition and contracting in health care. The Federal Trade Commission and the State of Idaho had asked him to conduct an economic analysis in conjunction with the case.

He talked about his research, methodology, and findings, and explained health care’s shift over time to “selective contracting” and networks of preferred providers. He discussed the difficulties inherent in comparison-shopping in health care as it is now structured, and how that has changed insurers’ roles.

Dranove talked about how insurers market their plans, the structure of provider networks, the factors that go into negotiations between providers and insurers, various payment models, ways to view markets, pricing, and how patients travel for medical care.

Judge Winmill asked about emerging networks, and whether consumer behavior might be changing along with changes in health care. The judge closed the courtroom for a portion of Dranove’s testimony.

Judge Winmill opened the courtroom for the St. Luke’s team’s cross-examination, in which Dranove was asked questions about his work on behalf of insurers in previous legal disputes. He said he had supported insurers in previous antitrust cases, but repeatedly did not recall his previous work on behalf of Blue Cross of Idaho.

Dranove said he had not performed any analysis of Saltzer Medical Group’s position in the market or the Saltzer/St. Luke’s relationship’s potential impact on either Saint Alphonsus or Treasure Valley Hospital, or whether competition would be affected.

Dranove said he had not included any comparison of prices in his analysis, and did not recall the details of various employers’ insurance plans. He was not able to produce data to show that employers leave provider networks related to price changes.

He could not say that he had concluded that the St. Luke’s/Saltzer relationship would be a violation of anti-trust law, noted there would still be choice among primary care providers with the integration, and said he had not looked at other integrations in the area to see if there had been any ramifications.

Dranove acknowledged that St. Luke’s has a mixed model of employed and aligned physicians, and that the integration with Saltzer might lead in the direction of the sorts of changes health care has been looking for.

Judge Winmill asked questions about instances elsewhere in the country where integration has succeeded, where new payment models may have succeeded, and whether there were comparable settings elsewhere in the country. Dranove had cited examples from California, but Judge Winmill noted that Idaho is much different.

Chris Roth, chief executive officer of St. Luke’s Treasure Valley, portions of whose videotaped deposition were shown in closed court. The plaintiffs’ representatives had begun showing parts of Roth’s deposition Tuesday.

Jeff Taylor, St. Luke’s Health System chief financial officer, a brief portion of whose videotaped deposition was shown in closed court.

Peter LaFleur, a St. Luke’s management consultant and owner of the Consilium Group, portions of whose videotaped deposition were shown in open court.

LaFleur described his work for St. Luke’s and healthcare services in Nampa.

Gary Fletcher, chief operating officer for St. Luke’s Health System, portions of whose videotaped deposition were shown in open court.

Fletcher talked about physician alignment, the role of alignment in making improvements in health care, and physician leadership within St. Luke’s.

James Souza, M.D., St. Luke’s Treasure Valley vice president of medical affairs and a practicing critical care physician and pulmonologist, portions of whose videotaped deposition were shown in open court.

Dr. Souza discussed his work within St. Luke’s and before he joined St. Luke’s Health System, practice patterns, and matters of quality and documentation.

Erik Heggland, M.D., an orthopedic surgeon for St. Luke’s in Boise, portions of whose videotaped deposition were shown in open court.

Dr. Heggland talked about quality and efficiency improvements and infection control successes, discussed documentation and evidence-based medicine, and described various St. Luke’s community outreach and care initiatives.

Jon Schott, M.D., medical director of St. Luke’s Eastern Oregon Medical Associates, portions of whose videotaped deposition were shown in open court.

Dr. Schott talked about his clinic’s quality efforts, use of electronic medical records, and improvements possible through the clinic’s relationship with St. Luke’s.

What’s next:

Plaintiffs representatives on Thursday are expected to call Deborah Haas-Wilson, an economist and Smith College faculty member who has focused on competition in health care, and Steven Williams, M.D., formerly a surgeon with Saltzer Medical Group and now a staff surgeon with Saint Alphonsus. Dr. Williams was one of seven surgeons who left Saltzer to work for Saint Alphonsus when the group chose to affiliate with St. Luke’s. The bulk of the plaintiffs’ case will conclude after that.

Judge Winmill has given the Saint Al’s team 44.5 hours to present its case and has given St. Luke’s representatives the same amount of time, and while the trial has been set to span four weeks, generally two weeks for each side, portions of videotaped depositions the plaintiffs’ representatives hope to enter into evidence are likely to be presented during the early part of next week.

Judge Winmill has not scheduled proceedings for Friday, and Thursday is expected to conclude about noon.

It is not clear whether the stalemate in Washington, D.C., will have an impact on the trial. Administrators have said they believe the federal courts have approximately two weeks of reserve funds; the current trial is scheduled to extend slightly beyond that time frame. Internal Revenue Service offices already are closed in the federal building where the trial is being conducted, and at least some government contractors in the building have stopped coming to work.

To see media coverage of the trial and related court documents click here.

Tuesday, Oct. 1:

Today in court:

Chief U.S. District Judge Lynn Winmill heard from witnesses who described relationships between and among area providers and payers.

The Saint Al’s team has called some witnesses out of order and bypassed others to accommodate the trial and witnesses’ schedules, and is attempting to wrap up this week.

Plaintiffs’ attorneys, along with defendants’ representatives, have been allotted a fixed amount of time to present their evidence, and were attempting to coordinate that effort even before the possibility of impacts due to the federal government shutdown became apparent.

Who testified:

Nicholas Genna, chief executive officer of Treasure Valley Hospital, who testified in person starting Monday and continuing into Tuesday morning. Judge Winmill had directed that the courtroom be closed for a portion of Genna’s testimony Monday afternoon, and that continued and concluded Tuesday morning.

David Peterman, M.D., a pediatrician with and president of Primary Health Medical Group, a for-profit, 13-clinic company in Boise, Meridian, Eagle, Nampa, and Caldwell.

Dr. Peterman described his role and his company’s functions. He explained Primary Health’s origins as part of an insurance company, and ways the company has used data to plan and grow. Primary Health Inc. was the insurance company with a medical group; the providers purchased the medical group in 2007, and in 2009, PacificSource Health Plans acquired the insurance company.

Dr. Peterman discussed the company’s participation with multiple provider and payer networks, including networks that St. Luke’s and Saint Al’s are involved with, and noted that he chairs the Saint Alphonsus Health Alliance providers network.

He talked about quality measures Primary Health has employed, and provided information about the company’s electronic medical records system and Primary Health’s collaborations with St. Luke’s and Saint Al’s. Dr. Peterman explained the value of electronic health records to physicians and patients, and the challenges of implementing such systems.

Dr. Peterman talked about the Idaho Health Data Exchange, in which Primary Health, St. Luke’s, Saint Al’s, and other providers participate, and how physicians use data to improve their practices.

Judge Winmill closed the courtroom for much of Dr. Peterman’s testimony.

Blaine Petersen, chief financial officer of Saint Alphonsus Health System. Petersen has been with Saint Alphonsus for nearly three years, and arrived shortly after the health system acquired the former Mercy Medical Center in Nampa.

He talked about his duties, his relationships with payers, and payer contracting, and noted that he previously has worked for Blue Cross and other payers. He discussed Saint Alphonsus’ acquisitions since his arrival.

Judge Winmill closed the courtroom for much of Petersen’s testimony.

Kathy Moore, chief operating officer for St. Luke’s Treasure Valley, portions of whose videotaped deposition were shown in open court.

Moore talked about quality measures and efforts, several business transactions, and physician alignments.

Gregory Orr, a former St. Luke’s director with St. Luke’s Clinic now with PeaceHealth, portions of whose videotaped deposition were shown in open court.

Orr talked about provider networks, clinical integration efforts, and ways St. Luke’s has tried to improve care and control and lower costs.

Chris Roth, chief executive officer of St. Luke’s Treasure Valley, portions of whose videotaped deposition were shown in open court.

Roth talked about care patterns, physician compensation, St. Luke’s work with West Valley Medical Center, and St. Luke’s support of Primary Health Medical Group. Roth sits on the group’s board along with other St. Luke’s executives.

Judge Winmill closed the courtroom for a portion of Roth’s testimony.

What’s next:

The plaintiffs are expected to continue to present portions of videotaped depositions along with witnesses who appear in person. Judge Winmill has given the Saint Al’s team 44.5 hours to present its case and has given St. Luke’s representatives the same amount of time.

Plaintiffs’ representatives on Tuesday indicated that while they hope to wrap up Thursday, portions of videotaped depositions might need to be presented during the early part of next week. Judge Winmill has not scheduled proceedings for Friday, and Thursday is expected to conclude about noon.

Some federal employees, such as Internal Revenue Service workers, were not in the federal building Tuesday as the government shutdown began, and it is not clear whether the stalemate in Washington, D.C., will have an impact on the trial. Administrators have said they believe the federal courts have approximately two weeks of reserve funds; the current trial is scheduled to extend slightly beyond that time frame.

Monday, Sept. 30:

Today in court:

On Monday, the sixth day of the bench trial, Chief U.S. District Judge Lynn Winmill heard from witnesses who described the nature of medical care in Nampa.

The Saint Al’s team has called some witnesses out of order and bypassed others to accommodate the trial and witnesses’ schedules, and is attempting to wrap up this week.

Testimony Monday was provided by witnesses who spoke in person, and was largely open to the public. Much of the testimony during the first week of the trial was closed, due to the proprietary nature of insurers’ work and other considerations, and was presented through previously taped depositions.

Who testified:

Karl Keeler, president and chief executive officer of St. Alphonsus’ Nampa Medical Center, who testified in person.

Keeler, who joined Saint Alphonsus shortly after the organization acquired the Nampa hospital formerly called Mercy Medical Center in 2010, talked about the history, patient demographics, and efforts made to improve the facility, its services, and relationships with physician groups and other employees.

Keeler discussed how business and practice patterns have changed as the result of Saint Alphonsus’ and St. Luke’s activity in Nampa, and described what he thought might happen if Saltzer Medical Group’s integration with St. Luke’s is allowed to stand.

Judge Winmill closed the courtroom for the remainder of Keeler’s testimony at the request of the plaintiffs’ representatives.

Lannie Checketts, vice president of finance and chief financial officer with St. Alphonsus’ Nampa Medical Center, who testified in person.

Checketts, who has worked at the Nampa hospital since 1999, described his duties, his past work on negotiations with physician groups and payers, and a six-month period while he served as interim chief executive officer at what was then Mercy Medical Center.

Checketts talked about work he’d done, in the course of Saint Al’s planning processes, to estimate what the Saltzer change might mean for Saint Alphonsus in Nampa. St. Luke’s legal team objected to late data submitted by the plaintiffs Friday after the end of the day, saying there had been inadequate time to respond to the information.

Judge Winmill closed the courtroom for a portion of Checketts’ testimony.

Nicholas Genna, chief executive officer of Treasure Valley hospital, who testified in person.

Genna, who started at Treasure Valley Hospital in 2007, described the hospital’s services, structure, and ownership and talked about his relationships with physicians and conversations he has with patients and family members.

Genna also discussed several transactions having to do with the organizations providing medical care in Nampa and Boise, including the Saltzer integration with St. Luke’s, how hospital space is used, hospitals’ electronic medical records systems, and prices for various services.

He was asked questions regarding quality. Judge Winmill closed the courtroom for additional testimony from Genna for the remainder of the day. Genna's testimony is expected to resume Tuesday morning.

What’s next:

The plaintiffs are trying to conclude their presentation Thursday, and will continue to present portions of videotaped depositions along with witnesses who appear in person. Possible witnesses include Saint Alphonsus and St. Luke’s executives, physicians, and consultants.

St. Luke’s legal team intends to call Dr. David Pate, the health system’s president and chief executive officer, as its first witness.

Testimony may continue to be closed periodically, although Judge Winmill has said that attorneys periodically can read on-screen transcripts with the audio turned off to avoid having to repeatedly empty the courtroom.

The possibility of a government shutdown is not expected to have any impact on the trial, which is likely to conclude before any government employee furloughs would take effect.

 

Friday, Sept. 27, 2013:

Today in court:

Chief U.S. District Judge Lynn Winmill heard Friday from witnesses who described St. Luke’s efforts to shift to accountable care through changed business and clinical models.

Much of the testimony during the first week of the trial has been closed to the public, due to the proprietary nature of insurers’ work and other considerations, and presented through previously taped depositions.

Who testified:

Randy Billings, St. Luke’s Health System vice president of payor and provider relations, portions of whose videotaped deposition were shown in open court starting Thursday and continued in closed court Friday morning.

Billings talked about contracting arrangements he has been involved in during the course of his career, clinical integration, and how St. Luke’s has approached payer contracting.

Joni Stright, St. Luke’s Health System administrator of physician services, portions of whose videotaped deposition were shown in open court.

Stright explained how St. Luke’s used consultants’ data in developing contracts with physicians and physician groups, how St. Luke’s Health System has begun integrating quality benchmarks in its considerations, and how St. Luke’s has tried to ensure provider coverage for patients’ convenience.

Geoff Swanson, M.D., St. Luke’s Health System vice president of clinical integration and president of SELECT Medical Network, portions of whose videotaped deposition were shown in open court. SELECT is a provider network owned by St. Luke’s.

Dr. Swanson described St. Luke’s efforts to shift the model toward affordable, sustainable health care and to engage in population health management, and explained early measurements intended to gauge effectiveness. He also explained St. Luke’s work to organize working structures among physicians.

Robert Walker, M.D., division medical director of surgical services and medical director of sports medicine for St. Luke’s Health System, portions of whose videotaped deposition were shown in open court. Dr. Walker was a partner in Boise Orthopedic Clinic and Orthopedic Surgery Center of Idaho, which became part of St. Luke’s near the end of 2009.

Nancy Powell, former chief financial officer of Saltzer Medical Group and now Saint Alphonsus chief administrative officer, who testified in person in open court. Judge Winmill closed the courtroom for a portion of Powell’s testimony.

Powell moved to Saint Alphonsus Medical Group about two years ago after 13 years with Saltzer, and described how Saltzer was structured, governed, and financed while she was there, and the medical group’s position within the community.

She also described Saint Alphonsus’ business and physician recruitment activities, how competitive the market has been for medical groups operating in the area, payer relationships and fee schedules, and relationships Saltzer had with several provider networks in the past.

She recalled working with St. Luke’s when she was with Saltzer as far back as 2009.

In another part of her testimony, she talked about Saltzer’s early consideration of participation in Micron’s provider network, which it rejected.

St. Luke’s attorney asked Powell about Saltzer’s financial structure, a previous electronic health records system, and recruitment efforts, Saint Alphonsus’ area practices and recruiting efforts, payers’ approaches to negotiations, and Saltzer’s reluctance to be part of the Micron network.

Powell also echoed what other witnesses had indicated, that physicians tend to refer business to those physicians they know well.

Ed Castledine, administrator of St. Luke’s Health System’s orthopedics and neuroscience services and sports medicine programs and former St. Luke’s consultant and director of business development, a small portion of whose videotaped deposition was shown in open court.

Mark Johnson, M.D., St. Luke’s division medical director of family medicine in the Treasure Valley, a small portion of whose videotaped deposition was shown in open court. Dr. Johnson explained St. Luke’s clinical integration efforts, and that physicians defer to patient preference in making referrals. He reaffirmed what other witnesses have indicated, that physicians will refer to those providers with which they have the most familiarity and confidence.

The plaintiffs bypassed testimony from one witness expected to testify Friday, St. Luke’s consultant Peter LaFleur of the Consilium Group.

What’s next:

The plaintiffs are trying to conclude their presentation Thursday, and will continue to present portions of videotaped depositions along with witnesses who appear in person. Possible witnesses include Saint Alphonsus and St. Luke’s executives, physicians, and consultants.

St. Luke’s legal team intends to call Dr. David Pate, the health system’s president and chief executive officer, as its first witness.

Testimony may continue to be closed periodically, although Judge Winmill has said that attorneys periodically can read on-screen transcripts with the audio turned off to avoid having to repeatedly empty the courtroom.

Thursday, Sept. 26:

Today in court:

Chief U.S. District Judge Lynn Winmill heard Thursday from witnesses who described the nature of payers’ relationships with St. Luke’s and Saint Alphonsus, the several provider networks that function in the health systems’ service area, and large employers’ involvement with the health systems and the provider networks.

Much of the testimony to date has been closed to the public, due to the proprietary nature of insurers’ work and other considerations.

Judge Winmill has allotted plaintiffs’ and defendants’ representatives 44.5 hours for each side to present its consolidated cases. At day’s end Thursday, the plaintiffs had about 24 hours of time left.

Who testified:

Jackie Butterbaugh, manager of network development for Imagine Health, portions of whose deposition were shown in open court starting Wednesday and continuing Thursday morning. Online sources list Butterbaugh as a vice president of Wise Provider Network. Subsequently renamed Imagine Health, Wise Provider Networks works with Micron.

Butterbaugh talked about how the network built to serve Micron employees was structured, and how Wise worked with health providers to put together the network, which does not include St. Luke’s. Micron ultimately built and now uses a network including independent physicians and providers for its employees.

Patrick Otte, vice president of human resources at Micron.

Otte, a long-time Micron employee, described his work with employee benefits for the Boise-based company, the challenges the company has faced to stay competitive in its industry while facing significant financial losses, and the changes it made as the result.

Judge Winmill directed that the courtroom be closed for much of Otte’s testimony, which the plaintiffs’ representatives indicated would be of a proprietary nature.

Linda House, St. Luke’s Health System director of employer relations and former manager of SELECT Medical Network, portions of whose videotaped deposition were shown. SELECT is a provider network of which St. Luke’s is a part.

House provided information about St. Luke’s interactions with large area employers, including the Boise School District, Idaho Power, and Micron, and employers’ health plans.

Steve Drake, director of payer contracting for St. Luke’s Health System, portions of whose videotaped deposition were shown. Drake discussed St. Luke’s efforts to change payer contracting from fee-for-service arrangements to risk-based agreements.

Randy Billings, St. Luke’s Health System vice president of payor and provider relations, portions of whose videotaped deposition were shown. Billings talked about contracting arrangements he has been involved in during the course of his career and how St. Luke’s has approached clinical integration.

What’s next:

The plaintiffs are expected to show more of Billings’ taped deposition and additional videotaped statements Friday. Among other likely witnesses: Nancy Powell, former chief financial officer of Saltzer Medical Group and now Saint Alphonsus chief administrative officer, who is expected to testify in person. The plaintiffs also may call additional St. Luke’s and Saltzer representatives to testify.

Testimony may continue to be closed periodically, although Judge Winmill on Thursday agreed that attorneys could read on-screen transcripts with the audio turned off to avoid having to repeatedly empty the courtroom.

 

Wednesday, Sept. 25, 2013

Today in court:

Chief U.S. District Judge Lynn Winmill heard from a former representative of Regence Blue Shield, whose video deposition covered the nature of the insurer’s relationships with Saint Alphonsus, St. Luke’s, and Saltzer Medical Group, before closing the courtroom to hear from the executive director of a state consortium of independent providers, and other witnesses, whose videotaped depositions were shown. Jackie Butterbaugh, manager of network development for Imagine Health, later described via taped testimony in open court her experience building a provider network for Micron in Boise.

Judge Winmill informed plaintiffs’ and defendants’ representatives Tuesday that both Director Richard Armstrong of the Idaho Department of Health and Welfare and Director Bill Deal of the Idaho Department of Insurance will appear during the course of the trial.

Who testified:

Scott Clement, former director of provider contracting for Regence Blue Shield and now with United Health Group, portions of whose deposition were played in court.

Clement discussed how Regence, Blue Cross of Idaho, and Micron built provider networks, and how Saltzer Medical Group was reimbursed for its participation in the Regence network. Saltzer was considered necessary for a plan’s success in the region, Clement said, but noted that while he was at Regence, Saltzer was not part of Micron’s provider network.

Linda Duer, executive director of the Idaho Physicians Network, whose testimony was closed to the public. The network is partially owned by PacificSource Health Plans.

Max Reiboldt, president and chief executive officer of the Coker Group, a Georgia-based national healthcare consulting firm, portions of whose deposition were played in closed court.

Randell Page, D.O., a Saltzer osteopathic physician, portions of whose deposition were shown in closed court.

Michael Djernes, M.D., a Saltzer neurologist, portions of whose deposition were shown in closed court.

Bill Savage, chief executive officer of Saltzer Medical Group, portions of whose deposition were shown in closed court.

John Kaiser, M.D., president of Saltzer Medical Group, portions of whose deposition were shown in closed court.

Jackie Butterbaugh, manager of network development for Imagine Health, portions of whose deposition were shown in open court. Online sources list Butterbaugh as a vice president of Wise Provider Network. Wise Provider Networks operate in Boise and worked with Micron.

What’s next:

The plaintiffs are expected to show additional videotaped depositions through the rest of the week, and may call St. Luke’s and additional Saltzer representatives to testify. The courtroom may continue to be closed periodically.

 

Tuesday, Sept. 24:

Today in court:

Chief U.S. District Judge Lynn Winmill continued with a closed courtroom Tuesday, as testimony from Blue Cross of Idaho continued from Monday afternoon.

Judge Winmill had indicated at the outset of the trial that he intended to close the courtroom occasionally, when witnesses would present information of a proprietary nature.

Who testified:

Judge Winmill heard from Jeff Crouch, vice president of provider services for Blue Cross of Idaho, whose testimony in closed court started Monday afternoon.

Crouch’s testimony has been the first in the four-week trial, following opening arguments Monday by plaintiffs the state of Idaho, the Federal Trade Commission, Saint Alphonsus, and Treasure Valley Hospital, and by defendants St. Luke’s Health System and Saltzer Medical Group.

On Monday, attorneys for the plaintiffs and defendants painted very different pictures of what could happen as the result of St. Luke’s Health System’s affiliation with Saltzer Medical Group.

Saint Alphonsus’ Nampa hospital could be threatened by the affiliation, the Michigan-based health system’s legal team contends. But the St. Luke’s legal team maintains that both Saint Al’s and St. Luke’s are robust, vigorous participants in the region’s healthcare activity, and that there is no reason to think that won’t continue.

Other differences have to do with patient referral patterns. The Saint Al’s team has said it will present evidence that shows that referral patterns change when St. Luke’s acquires physician practices, while in opening arguments, St. Luke’s attorneys said changes in referral patterns often have been the result of actions on Saint Al’s part.

During opening arguments, Judge Winmill expressed interest in the dynamics of transitioning between healthcare business models, asking questions about how long it could conceivably take for efficiencies in a new model to be quantifiable. The question drives at what St. Luke’s is trying to do: create a physician group broad enough to improve the health and care of people in the region and lower costs.

Judge Winmill also had questions about the nature of sectors of the economy, and noted that health care, which is an expensive line of work to enter, would be by its nature a less crowded field in which to compete. This, too, is fundamental to addressing the nature of the market and the degree and meaning of “market concentration” all of which are points of contention.

What’s next:

Witnesses Saint Alphonsus and the other plaintiffs are expected to call next include Linda Duer, executive director of the Idaho Physicians Network, Scott Clement, formerly of Regence Blue Shield (by video), and Nancy Powell, chief administrative officer of Saint Alphonsus Medical Group, who used to be the chief financial officer of Saltzer Medical Group.

Monday, Sept. 23:

Today in court:

Trial began Monday in federal court to resolve claims brought in connection with St. Luke’s Health System’s affiliation with Saltzer Medical Group.

Attorneys for the state of Idaho, the Federal Trade Commission, Saint Alphonsus, and Treasure Valley Hospital presented opening arguments. The plaintiffs have overlapping disputes with the St. Luke’s-Saltzer relationship, and Chief U.S. District Judge Lynn Winmill has combined the complaints for the purpose of fast-tracking a trial in the public interest.

Plaintiffs’ attorneys were followed by attorneys for St. Luke’s Health System and Saltzer Medical Group, and by the first of the plaintiff’s witnesses, Jeff Crouch, vice president of provider services for Blue Cross of Idaho.

In opening arguments, the government attorneys presented antitrust concerns based primarily on their view of the legal requirements of the Clayton Act and its counterpart in Idaho law, while attorneys for Saint Alphonsus and Treasure Valley Hospital, the physician-owned, for-profit hospital that joined Saint Al’s in its complaint, described what they believe could happen to the services they provide for Canyon County residents if the acquisition is allowed to stand.

St. Luke’s attorney described the need for the health system to establish a physician group sufficiently broad to shift health care away from the traditional fee-for-service approach, and said the Saltzer relationship was necessary to ensure residents get modern health care.

Narrow definitions of a geographic market, the St. Luke’s attorney said, would send a message across America that residents of less densely populated areas deserved “horse and buggy medicine” and not the efficiencies, evidence-based approaches, sophisticated technology, and access made possible through an integrated approach to medicine.

Who testified:

The sole witness called Monday was Blue Cross’ Jeff Crouch, and Judge Winmill closed the courtroom to the public and corporate representatives of both sides for his testimony. Crouch was expected to give evidence regarding payer relationships and the nature of contracts Blue Cross holds with the hospitals.

What’s next:

Crouch was expected to continue to provide testimony Tuesday as well.

The history:

Saint Alphonsus Health System and Treasure Valley Hospital filed suit against St. Luke’s Health System in November 2012 in an effort to stop St. Luke’s integration with Saltzer Medical Group, alleging irreparable harm should the integration proceed. Saint Alphonsus previously had tried to purchase Saltzer Medical Group, but was unsuccessful.

At the time the lawsuit was filed, St. Luke’s integration with Saltzer was being reviewed by the Federal Trade Commission and the Idaho Attorney General’s Office. Saint Alphonsus had said in a public statement that they believed St. Luke’s should allow the investigation by the FTC and AG to take its course and not proceed with the integration until the investigation was complete.

In October, in accordance with an agreement with the FTC, St. Luke’s notified the commission that the transaction would be closed by year’s end. Soon after, Saint Alphonsus and Treasure Valley Hospital filed a request for preliminary injunction to block the integration.

Saint Alphonsus’ request for a preliminary injunction was denied in December, and St. Luke’s affiliation with Saltzer Medical Group was allowed to proceed. Chief U.S. District Judge Lynn Winmill did not find that Saint Alphonsus had carried its burden of showing that it was likely to suffer irreparable harm before a trial could be held.

At the same time, Judge Winmill instructed all parties to fast-track trial preparations, and set a trial start date of July 29. That date was pushed back when, in March, the FTC and the Idaho AG filed a complaint in federal court, alleging St. Luke’s integration with Saltzer could put St. Luke’s in a position to improperly use market power to raise prices above competitive levels at some point in the future. St. Luke’s denied these claims. The trial started September 23.

What do the plaintiffs say?

Saint Alphonsus has alleged that St. Luke’s integration with Saltzer will result in decreased admissions to their Nampa hospital and that the St. Luke’s/Saltzer integration would give St. Luke’s such a dominant market share in Nampa that it could raise prices and block referrals to Saint Alphonsus in that market.

The FTC and the Idaho Attorney General’s Office are alleging that St. Luke’s affiliation with Saltzer will give St. Luke’s too much market share in Nampa, creating an anti-competitive environment that may allow St. Luke’s to raise prices for care sometime in the future.

What is St. Luke’s position?

St. Luke’s is seeking to provide integrated care in Idaho and to transform the payment model so that providers are compensated based on value, rather than volume, of care. The Saltzer transaction is a critical step in this endeavor, and will significantly advance the achievement of these patient-centered goals, particularly for those in Canyon County.

St. Luke’s presence and service in Nampa, where historically there has only been one hospital, give patients a choice of medical providers and will not create an anti-competitive environment as the plaintiffs allege. In fact, St. Luke’s believes the transaction will have substantial pro-competitive benefits in two different markets – the market for the delivery of medical care in Ada and Canyon counties and the market for health insurance in the state.

St. Luke’s is Idaho’s only locally-governed healthcare system. The organization works with independent physicians, as well as employs and contracts with physicians whose practices are based in a number of communities where St. Luke’s does not have hospitals, including Nampa. Regardless of employment arrangements or other contracts, St. Luke’s has always been committed to physicians practicing at and supporting local hospitals, including Saint Alphonsus Nampa and other area hospitals. This commitment will not change as a result of this integration.

St. Luke’s believes that the Saltzer affiliation will allow St. Luke’s and its physician partners to better deliver coordinated care in a fashion similar to well-regarded institutions such as the Mayo Clinic, which has become a model for providing quality care at lower cost in line with the goals expressed in the Affordable Care Act.

For court documents and related media coverage, click here.

For more information, contact: Ken Dey, media manager, (208) 381-2894 or deyke@slhs.org

 

About The Author

Ken Dey served as Public Relations Coordinator at St. Luke's from 2008-2014.