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St. Luke's Court Update for Sept. 27, 2013

By Ken Dey, News and Community
September 26, 2013

Friday, Sept. 27:

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:

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 statewide provider network, and other witnesses, whose videotaped depositions were shown.

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 shown 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 shown 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.

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 isIdaho’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:  Media manager, (208) 381-2894.

About The Author

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