The California Department of Justice announced the terms of an antitrust settlement with Sutter Health on Friday that would require the hospital system, the largest in California, to pay $575 million and submit to a court-appointed monitor for 10 years.
Sutter was sued by the International Union and Employers Benefit Trust in 2014 and then by the state Attorney General’s Office in 2018 for allegedly using its market dominance to keep healthcare costs high in Northern California.
Sutter reached a settlement with the Justice Department shortly before the case went to trial in October. It still needs final approval by San Francisco Superior Court Judge Anne-Christine Massullo.
In addition to the financial compensation, Sutter will be required to change some of its business practices in how it sells services to insurance companies and consumers.
That includes allowing customers to purchase services from some of Sutter’s network without requiring them to purchase access to all of Sutter’s hospitals and clinics, even if more affordable services are offered at a
competitor.
Sutter operates 24 hospitals, 36 ambulatory surgery centers and 16 cardiac and cancer centers. It employs more than 35,000 people, according to the Attorney General’s Office.
The Justice Department argued that over-consolidation and Sutter’s business practices have contributed to high costs of healthcare in Northern California.
For example, a University of California at Berkeley study found that outpatient cardiology procedures in Southern California cost $18,000 but in Northern California were nearly $29,000. Inpatient procedures were even
more stark: $132,000 in Southern California compared to $223,000 in Northern California.
A different study found that a cesarean delivery in Sacramento, where Sutter is based, was double the cost than in Los Angeles and New York.
“When one healthcare provider can dominate the market, those who shoulder the cost of care — patients, employers, insurers — are the biggest losers,” Attorney General Xavier Becerra said in a statement.
“It must stop practices that drive patients into more expensive health services and products,” he added.
In a statement, Sutter stressed that in the settlement it did not acknowledge wrongdoing and the company was not found to have broken any laws.
It said that the settlement is not anticipated to directly impact patients or quality of care in Sutter facilities. The settlement will allow the company to maintain its integrated system.
But, the company also said that it would revaluate its capital improvements in the coming years after investing $10 billion into technology and facilities over the last decade.
“As an organization, we will have to evaluate future capital investments based on the impact of the settlement,” Sutter General Counsel Flo Di Benedetto said in a statement.
“Despite the increasing cost of care and operating in high-wage markets, we remain focused on making healthcare more affordable for our patients,” she said.
A corporation that acknowledges “no wrong doing” but pays the fines in order to avoid trial is……scummy. They got caught or got the attention of other greedy folks so now they’re “sorry”.
Exactly.
Government is the problem not the solution. We need free markets. True free markets. The (CON) Certificate of Need is just one example that many people are not aware of. Did you know that the government has to approve that there is a need for a hospital before hospital is permitted to build one?
Can you imagine if they applied this stupid logic to restaurants or to grocery stores or to anything else?
Their theory is that if there are too many beds available that hospitals will raise prices instead of understanding how free markets work where competition drives prices down and quality up thereby always benefiting the consumer when we have a true free market.
It’s so sad to see our country swirling down the toilet because of union corruption, political corruption and absolute failure to educate our young people how this country became great in the first place.
Government is the problem – not the solution!
@ “Patriot” – this country is now a Kleptocracy sold to the highest bidder.
California is NOT one of the states that has CON – but oddly enough a lot of Conservative States do…
http://www.ahpanet.org/websites_copn.html
I’ll just assume everything else you wrote fails the 10 second Google test just as easily.
@Rob – Maybe you should make a point. You know, write something of substance.
My point stands. True free markets are the answer. The article talks about Sutter taking advantage. That doesn’t happen in a true free market. Competition always benefits the consumer. The CON laws, both State and Federal are restrictive and need to be repealed.
In addition, California is a regulatory nightmare (no, did not google that) compared to the rest of the country. And how’s that working out for healthcare consumers in California?
Can you say”Covered California ?” What a joke.
We’ve been screwed.
He did make a point
His point was that you are wrong.
I agree about fair markets but you do know why we have regulations right?
Because business have proved that they cannot be trusted to the right thing unless forced to.
@Yogurt
I never said “fair” market. It’s “FREE” market. BIG difference.
And who would decide what’s “fair” ? You?
One of the worst thing “business” does is lobby for legislation – like CON.
We could stop that crap by ending the “career politician “
I also never even hinted at a regulation free system. That would be crazy.
In this case, your comment is invalid. Not the Government. All about corporate greed. Please leave your slanted political ideology far away from this. So obvious that some want to move this into that silly direction.
In reality the free market does not always provide adequate services for neighborhoods. Case in point is the above-referenced grocery stores. Many poorer neighborhoods do not have grocery stores, and there is no public policy to provide them. (This was a huge problem in Los Angeles in 1990’s and likely set up the tragic shooting death of teenager Latasha Harlins.) This exacerbates health issues with limited access to fresh foods that is then passed down to children who have no control over their circumstances. It may work out to leave some of this to the free market but not hospitals. Public policy dictates that health care should not be left up to survival of the richest.
And so what does this settlement do for compensation to the 1,000’s of patients that were overcharged and probably still paying since bankruptcy does not discharge medical debts.
Another great example of break the rules and you will be rewarded. The company should be dissolved and its assets be offered for sale to 3 different entities. Free open markets are strongly lacking in industry and others in this country.
Yes, consumers can take part in a Class action lawsuit…….keep an eye out for that 12 cent check in the mail.
BTW, President Nixon approved HMO type health care when he heard that their “Business” model was to deny people services.
That’s right Folks……..All on Record.
I agree. This does nothing for the consumers that were ripped off, and every entity that paid them insurance premiums. It just provides a nice boost to the state coffers. I’m confident that the fines they paid were less than the mega profits they earned as a result of their predatory business practices. What happens when the 10 months of “monitoring” ends? I assume they’ll go right back to their predatory practices.
It’s true of the drug business, too. Every single big drug maker has been hit with fraud charges and paid massive fines, but it’s always less than the profits they made from their illegal and dishonest business practices.
what a disgrace Sutter is! glad they have at least some consequences.
Does anyone remember before hospitals became for profits? Before there was health insurance to cover the costs of for profit hospitals? Before the cost of meds became ballooned into out of reach costs? All of those became so ingrained into our cost of health over the years we almost take them for granted. Used to be only private hospitals were what only well to do could afford. Now even they have to overpay pretty much like the rest of us. As far as I can tell only county hospitals and clinics are (almost) non-profit.
Health businesses like Sutter have been buying up community hospitals for years now. Studies have shown that medical costs always go up significantly after this happens. Same with consolidation, where a health system incorporates multiple doctors’ practices in the area, as John Muir has been doing. They’ll argue that consolidation brings more consistency or economies of scale, but it doesn’t lower costs. It primarily helps doctors with things like temporary or fill-in staff and digital records and provides an income stream to the Health business.
Mark Desaulnier is submitting a bill to ensure the funds from this fine and future settlements are distributed to victims and not absorbed by the government…just kidding
Sutter discovers a new motherlode!
@ Rob once again a Straw Man Argument…. There are liberal states with CONs as well. What was your point exactly?
TramaRX any comments on this?