How to resolve AdBlock issue? Sutter Health is reported to be the largest hospital system in California. Its network includes 24 acute care hospitals – among them, Sutter Lakeside Hospital in Lakeport – along with, 31 ambulatory surgery centers, nine cancer centers, six specialty care centers, nine major physician organizations, 8,200 physicians and 48,000 employees located in 19 counties in Northern California. It also negotiates contracts on behalf of a variety of other affiliated physician groups, the largest being the Palo Alto Medical Foundation.
Attorney General Xavier Becerra, who said he is trying to restore competition in the California health care market, filed the 49-page suit against Sutter Health in the San Francisco Superior Court. A copy of it can be seen below.
The suit alleges violations of California’s Cartwright Act – similar to federal antitrust laws – which prohibits anticompetitive activity, such as price fixing and agreements among competitors to restrict trade.
“Sutter Health is throwing its weight around in the health care market, engaging in illegal, anticompetitive pricing that hurts California families,” Becerra said in a written statement. “These tactics are risking Californians’ lives by driving up the cost of health care for everyone. Big business should not be able to throttle competition at the expense of patients. The California Department of Justice is dedicated to ensuring that all families in our state can access quality, affordable healthcare no matter where they live.”
“We are aware that a complaint was filed, but we have not seen it at this time, so we cannot comment on specific claims,” said Sutter Health spokesperson Karen Garner in a statement released Friday to Lake County News.
The suit lists three causes of action: price tampering and fixing, unreasonable restraint of trade and combination to monopolize, all in violation of the Cartwright Act.
The newly filed court document outlines concerns about rising health care costs in California, “far outstripping population growth or inflation.” From 1999 to 2009, the state’s health care costs grew 111 percent, compared to a 15-percent population increase, based on the suit.
It referenced a 2011 Los Angeles Times analysis that found that hospitals in Northern California’s six most populous counties collected 56 percent more revenue per patient per day from insurance companies and patients than hospitals in Southern California’s six largest counties.
The suit also cited a study from 2015 that showed that these higher costs persist, and that insurance premiums offered through Covered California are 16 to 48 percent more expensive in San Francisco than in Southern California.
“That these increased costs are due to increased market concentration in healthcare provider markets in Northern California, and no other factors, has been observed by studies and public analysis,” the suit stated.
The document goes on to state, “Much of the increased cost of healthcare in Northern California is attributable to Sutter and its anticompetitive contractual practices which it has imposed as a result of its market power. Specifically, Sutter embarked on an intentional, and successful, strategy of securing market power in certain local markets in Northern California.”
In his suit Becerra is alleging that Sutter Health attempted to control prices and exclude competition, foreclosed price competition by its competitors and, as a result, imposed prices for hospital services and ancillary products that far exceeded the prices it would have been able to charge in an unconstrained, competitive market.
Becerra’s complaint also alleges that the excess profits Sutter Health received from illegal pricing practices went toward waves of acquisitions, extreme levels of executive compensation and financing its own insurance arm.
Sutter Health’s Garner maintained that the organization’s rates are lower than others in the region.
“Sutter Health is proud to save patients, government payers and health plans hundreds of millions of dollars each year by providing more efficient and integrated care,” Garner said.
She said it’s important to note that publicly available data from the Office of Statewide Health Planning and Development, or OSHPD, show that, on average, total charges for an inpatient stay in a Sutter hospital are lower than what other Northern California hospitals charge.
“Further, Sutter Health has held average overall rate increases to health plans to the low single digits since 2012 in spite of our actual expenses for labor, facilities and technology increasing more than 37 percent during the same time period. We don’t know why some health plans have increased their rates to consumers as much as 20 percent annually,” she said.
Garner said healthy competition and choice exists across Northern California.
“There are 15 major hospital systems and 142 hospitals in Northern California, including Kaiser Permanente, Dignity, Adventist, Tenet, UC and more. And health plans can elect to include or exclude parts of the Sutter Health system from their networks, and health plans have been doing so for many years,” Garner said.
Becerra’s suit against Sutter Health took place in the same week that he called for action in light of a new report by University of California Berkeley’s Petris Center on Health Care Markets and Consumer Welfare.
That report’s documents show how the rapid consolidation of health care markets in California has led to rising health care costs for consumers throughout the state.
Becerra’s Friday statement said that UC Berkeley report showed market consolidation in Northern California to be “especially glaring,” with the cost of the average inpatient hospital procedure in Northern California, $223,278, exceeded that in Southern California, $131,586.
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033018 AG's complaint against Sutter Health by LakeCoNews on Scribd
