- Sutter Health has asked the San Francisco Superior Court to drop an antitrust lawsuit filed last month by California Attorney General Xavier Becerra. Becerra accused northern California's largest healthcare system of "illegal anti-competitive conduct" that he says has resulted in higher healthcare costs.
- Sutter said in a statement Becerra's lawsuit "gets the facts wrong" and that its hospitals charge less than other northern California hospitals.
- Becerra is looking to consolidate the state's case with a concurrent class-action antitrust lawsuit filed by United Employees Benefit Trust (UEBT) against the 24-hospital system that seeks reparations for overcharges. Sutter accused the AG of seeking to "ride the coattails" of this lawsuit.
California's state regulators are concerned over Sutter's market power, and the AG is hoping this case will help set a regulatory precedent for challenging large healthcare systems. Other state regulators will be watching this case as hospital systems continue to ride the wave of mergers and acquisitions that has allowed them to build regional market share through consolidation.
According to the AG, Sutter uses "all or nothing terms" and "price secrecy" mechanisms to avoid price competition, such as barring insurers that contract with its network from disclosing the prices the health system has negotiated for their services and products. In response, Sutter is accusing the state of what it says is a “sweeping and unprecedented effort to intrude into private contracting” that would force the court to intervene in processes already regulated by the executive and legislative branches.
"In effect, the Attorney General seeks to break up Sutter's system," Sutter's attorneys said in a May 7 court filing. "The magnitude of what is at stake — not just for Sutter, but also for the communities it serves and the healthcare industry throughout California — is fundamentally different from what is presented by UEBT's action."
Markets like northern California, where systems such as Sutter maintain regional control, are experiencing increased costs of care. A recent report from researchers at University of California-Berkeley found that healthcare costs were 30% higher in northern California, where Sutter has consolidated market power, than they were in southern California.
Becerra, citing this study, told the Sacramento Bee that the cost of the average in-patient hospital procedure in northern California can be $90,000 more than the same procedure in southern California.
Sutter has refuted this claim, citing "publicly available data from the Office of Statewide Health Planning and Development" that it says show that, on average, total charges for an inpatient stay in a Sutter hospital are lower than prices charged by competitors in northern California.
Providers are certainly watching this case, as it has implications over exerting market influence to set prices in their favor.