A California superior court judge ruled that Sutter Health intentionally destroyed 192 boxes of documents that were involved in a lawsuit involving employers and labor unions that alleged the health system abused its market power and charged inflated prices, reported California Healthline.
The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case in 2014 alleging that Sutter Health required health plans to include all Sutter hospitals in networks.
San Francisco County Superior Court Judge Curtis E.A. Karnow said that Sutter knew the evidence “was relevant to antitrust issues” and the company was “grossly reckless.” A Sutter spokeswoman told California Healthline that the incident was a “mistake made as part of a routine destruction of old paper records.”
The recent ruling doesn’t put Sutter Health in a great light. The nonprofit system of 24 hospitals based in Sacramento reportedly destroyed documents related to the case — and its actions miffed the judge in the case.
Of course, this issue goes beyond destroying records, Sutter Health and California. The case involves a growing health system that allegedly increased prices to employers and employees while gaining a larger market foothold.
Mergers and acquisitions continue to become a common way for health systems to reduce costs, resolve inefficiencies and gain a larger market share. However, having one system own a large part of the healthcare market also inflates healthcare prices. Brent Fulton, assistant adjunct professor at Petris Center in the School of Public Health, University of California, Berkeley, recently wrote in a Health Affairs article "reviews of studies of hospital markets have found that concentrated markets are associated with higher hospital prices, with price increases often exceeding 20% when mergers occur in such markets."
Sutter Health holds more than 45% of the healthcare market share in six Northern California counties. That gives the system leverage over employers. If employers don’t come to an agreement with Sutter Health, employees have limited options in those counties. Sutter Health charges about 25% higher than other California hospitals, according to the University of Southern California.
Those costs are higher if that care is considered out-of-network. Last year, Sutter Health allegedly asked employers to waive their rights to sue and to agree to arbitration following a court ruling that employers and health plans can seek class-action status in a lawsuit pertaining overcharges against Sutter Health. Those who didn’t agree were threatened to lose access to discounted in-network prices and pay higher out-of-network costs.
The court filing states the parties should not expect further orders in the case until after mid-December. Industry experts are awaiting the results as the trend of M&A continues and stakeholders question who the activity is benefiting: the companies or the patient?