St. Luke’s-Saltzer: Where Does the Ninth Circuit Opinion Leave Quality-Enhancing Provider Integration in Allegedly Concentrated Markets?

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Monica Noether, Apr 27, 2015

On February 10, 2015, the Ninth Circuit Court of Appeals issued its opinion in the St. Luke’s–Saltzer matter, upholding district court Judge B. Lynn Winmill’s opinion that St. Luke’s Health System’s acquisition of the Saltzer Medical Group should be undone through a divestiture of Saltzer. Judge Andrew Hurwitz, on behalf of the Panel, summarized the Court’s decisions that the “district court did not clearly err” in its conclusions regarding three issues in dispute:

  • “Nampa, Idaho was the relevant geographic market;”
  • “the plaintiffs established a prima facie case that the merger will probably lead to anticompetitive effects in that market;” and
  • “the defendant did not rebut the plaintiffs’ prima facie case where the defendant did not demonstrate that efficiencies resulting from the merger would have a positive effect on competition.”

The Panel disagreed with Judge Winmill’s opinion that “prices in the hospital-based ancillary services market,” would rise due to market power created by the acquisition, concluding that the District Court made no findings regarding market power in such a market.

Below, I focus primarily on a discussion of the Appeal Panel’s third decision, regarding the likely effect of efficiencies brought about by the merger.  I also comment briefly on the Court’s discussion of the likely effects on ancillary services.