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St. Alphonsus Med. Ctr. - Nampa, Inc. v. St. Luke's Health Sys.

United States Court of Appeals for the Ninth Circuit

November 19, 2014, Argued and Submitted, Portland, Oregon; February 10, 2015, Filed

No. 14-35173

Opinion

 [*781]  HURWITZ, Circuit Judge:

This case arises out of the 2012 merger of two health care [**6]  providers in Nampa, Idaho. The Federal Trade Commission ("FTC") and the State of Idaho sued, alleging that the merger violated § 7 of the Clayton Act, 15 U.S.C. § 18, and state law; two local hospitals filed a similar complaint. Although the district court believed that the merger was intended to improve patient outcomes and might well do so, the judge nonetheless found that the merger violated § 7 and ordered divestiture.

As the district court recognized, the job before us is not to determine the optimal future shape of the country's health care system, but instead to determine whether this particular merger violates the Clayton Act. In light of the careful factual findings by the able district judge, we affirm the judgment below.

I. Background

A. The Health Care Market in Nampa, Idaho

Nampa, the second-largest city in Idaho, is some twenty miles west of Boise and has a population of approximately 85,000. Before the merger at issue, St. Luke's Health Systems, Ltd. ("St. Luke's"), an Idaho-based, not-for-profit health care system, operated an emergency clinic in the city. Saltzer Medical Group, P.A. ("Saltzer"), the largest independent multi-specialty physician group in Idaho, had thirty-four physicians practicing [**7]  at its offices in Nampa. The only hospital in Nampa was operated by Saint Alphonsus Health System, Inc. ("Saint Alphonsus"), a part of the multistate Trinity Health system. Saint Alphonsus and Treasure Valley Hospital Limited Partnership ("TVH") jointly operated an outpatient surgery center.2

The largest adult primary care physician ("PCP") provider in the Nampa market was Saltzer, which had sixteen PCPs.3 St. Luke's had eight PCPs and Saint Alphonsus nine. Several other PCPs had solo or small practices.

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778 F.3d 775 *; 2015 U.S. App. LEXIS 2098 **; 2015-1 Trade Cas. (CCH) P79,053

SAINT ALPHONSUS MEDICAL CENTER - NAMPA INC.; SAINT ALPHONSUS HEALTH SYSTEM INC.; SAINT ALPHONSUS REGIONAL MEDICAL CENTER, INC.; TREASURE VALLEY HOSPITAL LIMITED PARTNERSHIP; FEDERAL TRADE COMMISSION; STATE OF IDAHO, Plaintiffs-Appellees, and IDAHO STATESMAN PUBLISHING, LLC; THE ASSOCIATED PRESS; IDAHO PRESS CLUB; IDAHO PRESS-TRIBUNE LLC; LEE PUBLICATIONS INC., Intervenors, v. ST. LUKE'S HEALTH SYSTEM, LTD.; ST. LUKE'S REGIONAL MEDICAL CENTER, LTD.; SALTZER MEDICAL GROUP, Defendants-Appellants.

Prior History:  [**1] Appeal from the United States District Court for the District of Idaho. D.C. Nos. 1:12-cv-00560-BLW, 1:13-cv-00116-BLW. B. Lynn Winmill, Chief District Judge, Presiding.

St. Alphonsus Med. Ctr.-Nampa, Inc. v. St. Luke's Health Sys., 2014 U.S. Dist. LEXIS 9264 (D. Idaho, Jan. 24, 2014)

CORE TERMS

merger, district court, prima facie case, anticompetitive, Clayton Act, Antitrust, effects, divestiture, reimbursement, healthcare, patients, acquisition, ancillary services, consumers, insurers, market share, prediction, prices, entity, merged, post-merger, geographic, negotiate, providers, rebut, concentrated, quotation, cases, integrated, remedies

Civil Procedure, Appeals, Standards of Review, Abuse of Discretion, Clearly Erroneous Review, De Novo Review, Antitrust & Trade Law, Clayton Act, General Overview, Evidence, Burdens of Proof, Burden Shifting, Market Definition, Relevant Market, Geographic Market Definition, Product Market Definition, Allocation, Price Fixing & Restraints of Trade, Tying Arrangements, Clayton Act, Defenses, Remedies