Opinion ID: 2778249
Heading Depth: 3
Heading Rank: 2

Heading: The Challenged Acquisition

Text: Saltzer had long had the goal of moving toward integrated patient care and risk-based reimbursement. After unsuccessfully attempting several informal affiliations, including one with St. Luke’s, Saltzer sought a formal partnership with a large health care system. In 2012, St. Luke’s acquired Saltzer’s assets and entered into a five-year professional service agreement (“PSA”) with the Saltzer physicians (the “merger” or the “acquisition”).3 Saltzer received a $9 million payment for goodwill. The initial PSA contained hortatory language about the parties’ 1 For simplicity, this opinion sometimes refers to St. Luke’s and Saltzer collectively as “St. Luke’s,” and Saint Alphonsus and TVH collectively as the “Private Hospitals.” 2 The district court found that “[a]dult PCP services include physician services provided to commercially insured patients aged 18 and over by physicians practicing internal medicine, family practice, and general practice.” 3 The parties and the district court regarded the PSA as the functional equivalent of an employment agreement, and we assume the same. ST. ALPHONSUS MED. CTR. V. ST. LUKE’S HEALTH SYS. 9 desire to move away from fee-for-service reimbursement, but included no provisions implementing that goal. An amended PSA, however, contained some quality-based incentives. The merger did not require Saltzer doctors to refer patients to the St. Luke’s Boise hospital, nor did it require that Saltzer physicians use St. Luke’s facilities for ancillary services.