UPDATE: Oct. 18, 2019: The judge overseeing the antitrust litigation against Sutter expects a February to March timeline for finalizing the settlement between Sutter and California, Amy Thoma Tan, director of public affairs at the hospital chain told Healthcare Dive Thursday.
- Right before trial was supposed to start in the state's far-reaching antitrust case against Sutter Health, the parties settled the case, according to the California Attorney General leading the case. No details were disclosed and deal awaits the court's final approval.
- It's possible the settlement could force Sutter to redo its contracts with payers. The state charged the health system forced insurers into accepting contracts in which they agreed to include all of Sutter's hospitals or none of them.
- Sutter controls more than a third of the market in Northern California, but it denied it exclusively engages in all-or-nothing negotiations regarding its provider network.
Sutter is a regional powerhouse in Northern California healthcare with 24 hospitals, 31 ambulatory surgery centers, nine cancer centers and six specialty care centers.
"This is a big deal case. It's been closely watched in the antitrust community because of its potential ramifications on the way that contracting is done between providers and insurers," James Burns, an antitrust partner with Akerman, told Healthcare Dive.
That wide reach attracted the attention of California Attorney General Xavier Becerra, a Democrat and the state's top regulator, who accused the system of anticompetitive business practices. The state sued the system in state court, alleging Sutter controlled prices and excluded competition in the market, foreclosed Sutter rivals from competing on price and imposed prices that greatly exceeded what it would have been able to charge in a competitive market.
The state claimed Sutter's contracts were drafted to increase prices and restrict competition and included "anti-steering" provisions as well as restrictions on sharing information about Sutter rates, making price comparisons difficult.
Now those claims won't be tested in open court and, without any details yet public, it's unclear what Sutter will be required to do under the settlement with the state.
Yet there may be some clues based on what the state asked for in its precedent-setting complaint: disgorgement of overcharges Sutter received resulting from its allegedly unfair practices, an end to Sutter's challenged contracting practices and requiring the health system to submit to mandatory arbitration to determine its rates.
Healthcare costs are significantly higher in Northern California versus Southern California. A study published last year by the Nicholas C. Petris Center at the University of California, Berkeley, found that inpatient prices were 70% higher in the north, while outpatient prices were between 17% and 55% higher.