Health-care costs are high, yet a Boise-area group of clinics may die in 2 months. Why?

The owners of Saltzer Health informed its employees and patients that the multipractice physician group and chain of urgent care clinics in the Treasure Valley would close completely by the end of March, absent a last-minute sale.

Health care costs are so high that it’s hard to fathom why Saltzer, a practice founded over 60 years ago in Nampa, is no longer thriving, and why interested buyers aren’t lining up. But it’s not, and they’re not. A sale doesn’t appear likely.

Saltzer, which is owned by Intermountain Health Care, a large nonprofit health system based in Utah, said it is “in active negotiations with other health care companies that may be interested in purchasing some operations ... and is optimistic that a sale can be achieved,” according to a Jan. 18 news release. But three physicians at Saltzer told the Idaho Statesman that they don’t believe Intermountain has had any firm offers, and even if a buyer did materialize in the next two months, it would likely only buy certain parts of the business.

“If those discussions are successful, employees at medical operations included in any sale may have the opportunity to continue their employment with the new organization,” the company said in the news release.

Glen Beeby, a spokesperson for Intermountain, said by phone that he couldn’t comment further on the likelihood of a sale, or whether it has any serious buyers.

Physicians say parts of Saltzer could be sold

Dr. Jesse Chlebeck, an orthopedic surgeon and associate medical director of orthopedics at Saltzer, said if there was a prospective buyer, he’s doubtful a sale could be achieved by April. He also didn’t think Saltzer’s surgical care specialties would be included in any potential sale.

“My hope would be that someone comes in and is able to take over for Intermountain and at least keep primary care and those specialties that really care for sick people that need that continuity intact,” Chlebeck told the Statesman. “My optimism that it’s going to happen in that time window is low.”

Dr. Mark Rasmus, a Saltzer board member and sleep medicine specialist, agreed. Rasmus said even if the company could find a buyer, the purchaser would likely acquire only specific, small parts of the medical group.

“And the rumors are: There is no buyer,” he said by phone.

He and other local Saltzer leaders say they were not involved in the decision to close or sell, and were themselves officially informed of the move Jan. 18.

Who might buy Saltzer, or pieces of it?

St. Luke’s Health System and Saint Alphonsus Health System, the two biggest health systems in the state, could have been candidates for acquiring Saltzer, but are barred from doing so thanks to a major lawsuit filed by the Federal Trade Commission over a decade ago, which challenged St. Luke’s plans at the time to buy it, according to Dr. David Pate, retired physician and former CEO of St. Luke’s.

A federal judge in Boise had struck down the deal, ruling that it violated federal antitrust laws.

Pate, who was head of St. Luke’s when it pursued Saltzer, said if he was trying to sell Saltzer he would look to Kootenai Health in Coeur d’Alene or Portneuf Medical Center in Pocatello to see if they wanted an entree into the Valley.

Primary Health Medical Group, the largest independent medical group in the state, might also be a contender, but is not interested. Its president, Brian Windau, told the Statesman that the medical group is not pursuing Saltzer but is willing and able to absorb more patients should Saltzer close by the end of March.

Dr. Erik Richardson, associate medical director of family medicine at Saltzer, told the Statesman that Saltzer sees about 100,000 patients a year, and he worries how they’ll be able to maintain continuity of care should its 11 locations shutter.

Saltzer has had a presence in the Valley since it was founded in 1961 by Dr. Joseph Saltzer. Primary Health, started nearly 30 years ago, has 23 clinics in the Boise area.

Tommy Ahlquist, a prominent Idaho developer and former emergency room physician, bought Saltzer in early 2019 before selling it to Intermountain. Ahlquist told the Statesman that he was not aware it was again for sale.

Saltzer operates the Valley’s only 24-hour, seven-day-a-week urgent-care clinic in the Ten Mile Crossing business development north of Interstate 84 in southwest Meridian, which Ahlquist’s commercial real estate development company, Ball Ventures Ahlquist, developed.

“We have not been involved at all,” Ahlquist said by phone. “I got my first text about it the day the announcement went out and was very much surprised. They are an incredible group of providers who have taken amazing care of their patients for a long time. I’m hopeful that in the time between now and when they announced they’d close, that there’s going to be some solutions that come forth, because I do think there’s a lot of value in the care they provide, and we’re in an area where we need more access, not less.”

Barring any local interest, Pate said he would look to some of the national companies that run physician groups. Intermountain says it is already in talks with other health care companies, and Richardson said those discussions have purportedly been with out-of-state organizations.

Why a deal is unlikely

Pate said such a transaction — selling a large, multidisciplinary medical group like Saltzer — would generally take at least four to six months, “if you rushed it.” It would require lawyers, careful negotiations, valuations of Saltzer’s worth and due diligence reports that examine any risks.

It’s not an easy process, he said, and two months is an incredibly short timeframe to make it happen.

“Unless they’ve already got potential buyers in the wings, and they very well may, this is not going to happen in two months,” he said. “Even if you worked 24 hours a day, every day, I’m not sure you could get that done.”

“And the reason I don’t think they have a buyer in the wings is because if I were selling you St. Luke’s Health System, you would be buying it because of all the current business it has. How many patients are they seeing? What kind of revenue are they generating? That kind of stuff. If that’s how you’re selling it, you don’t then make an announcement that ‘we’re either selling or closing in two months.’ That’s just going to tank the value.”

‘Significant financial pressures’

Saltzer said in its news release that it faced economic and financial headwinds not unlike other heath care organizations across the country.

“Saltzer has faced significant financial pressures as the rising cost of providing care, driven by inflation, has increased since the pandemic,” the release said. “... vital contracts and other market relationships did not progress as had been hoped for, making it financially challenging.”

Beeby, the spokesperson for Intermountain, declined to elaborate on what specifically those financial pressures are.

Windau, the president of Primary Health, said he’s unable to speak to Saltzer’s situation, but said the last several years have proved volatile for the health care industry. Providers saw a spike in illness during the COVID-19 pandemic and were forced to adapt. As the pandemic subsided, the volume of patients Primary Health sees in an urgent care setting declined.

At the same time, he said, the cost of doing business has increased substantially.

“Staff and providers are more challenging to employ and retain,” Windau said. “In health care, we cannot change our pricing structure like other businesses can. In essence, costs have risen, volume has declined, and our payment models have not kept up with these cost issues.”

Richardson, the associate medical director of family medicine at Saltzer, said local leaders aren’t privy to Saltzer’s financial information, but that its lease rates are very high and some space that was planned for expansion has gone unused.

Why isn’t Saltzer profitable?

Pate speculated, as an observer with no inside information, that Saltzer’s malaise may stem from what’s called a fee-for-service payment model, which most patient bills in America are paid by. He worked to change that during his time at St. Luke’s, but it’s still the dominant model across the country.

Fee-for-service is a system in which patients are billed a fee for each particular service rendered.

Let’s say you go to the doctor because you’re concerned you might have pneumonia. Under the fee-for-service model, you’ll get a bill for the visit. If the doctor decides to check your blood count, because the doctor is worried you may have an infection, you’ll also get a bill from the lab for that test. And if the doctor orders a chest X-ray, you’ll get a bill for the radiologist’s interpretation of that X-ray.

“That’s called fee-for-service, because you’re getting a charge for every service you’re getting,” Pate said. “It’s not the best way to drive quality and health, because it doesn’t reward focusing on trying to prevent things. If a patient gets an infection, they get hospitalized, get IV antibiotics and probably get another surgery. You just get paid more. It’s kind of a perverse system.”

Insufficient fees provide too little revenue to cover expenses, Pate said. Insurers’ reimbursement rates are lowered each year, he said, to bring down premiums and allow insurance companies to be more competitive. Pate said it makes for a constant downward pressure on reimbursement that does not keep up with increases in inflation or supply costs.

“Saltzer knew all the way back before the antitrust lawsuit that their financial future under fee-for-service was in danger and not secure,” he said.

He said Saltzer leaders chose to merge with St. Luke’s over a decade ago because St. Luke’s leaders were pursing a value-based payment model instead, and Saltzer “knew that’s where the future is.” Pate hoped that when Intermountain, a health system he said he respects and admires, bought Saltzer, it would allow Saltzer to pursue the same strategy.

So did Ahlquist, who said the value-based payment model is driven by metrics that must be tracked closely.

He said it would have been difficult for Saltzer to transition on its own, without the help of a bigger health system like St. Luke’s or Intermountain that already has the infrastructure to do it. That’s part of the reason he sold Saltzer to Intermountain in late 2020, Ahlquist said.

“I just don’t know what went wrong,” Ahlquist said. “My hope is that there’s going to be someone that sees the value and wants to figure this out. The passion and quality of care that is done through that group of providers, from the physicians to the mid-levels to the nurses to the support staff to the administration — there’s a legacy of fantastic service.”

Some Saltzer patients turn to St. Luke’s

Saltzer sent a letter to its patients Jan. 18 notifying them of its plans, saying it hopes “early notice of these changes” will give patients time to transition their care before operations perhaps cease on March 29. But Rasmus, the sleep medicine specialist at Saltzer, said that’s not nearly enough time.

Even if Rasmus were to retire, he said, it would take at least six months to wind down his practice and transfer patients elsewhere.

Christine Myron, a spokesperson for St. Luke’s, said the health system has already received phone calls from affected patients looking to establish care with its providers.

So far, the greatest number of requests have come to St. Luke’s Nampa clinics, she said. Nampa is where Saltzer was founded.

“St. Luke’s is committed to helping fill gaps in access to care that this potential closure may create for our communities,” Myron said. “Should Saltzer facilities close, it will ultimately take a community response by health care providers across the Treasure Valley — Saint Alphonsus, Primary Health, West Valley, independent providers and others — to help bridge the gap for these patients. We hope that Saltzer providers and other staff will remain in the community.”

She added that Saltzer staff who apply for open positions at St. Luke’s will be considered as applicants.

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