California AG Details ‘Historic’ Settlement Agreement In Sutter Health Antitrust Case

[Editor’s note: This story will be updated to reflect ongoing developments.]

Sutter Health can pay $575 million to settle a carefully watched antitrust case filed by California Attorney General Xavier Becerra, whose workplace had accused the nonprofit well being care big of utilizing its market dominance in Northern California to illegally drive up costs.

Under phrases of the settlement, Sutter will proceed to function as an built-in system. But it has agreed to finish a bunch of practices that Becerra alleged unfairly stifled competitors, together with all-or-nothing contracting offers demanding that an insurer that wished to incorporate any one of many Sutter hospitals or clinics in its community should embrace all of them — even when a few of these amenities had been costlier than a competitor.

The settlement contains the appointment of a collectively permitted particular monitor who can be charged with guaranteeing that Sutter is following the phrases of the settlement for not less than the following 10 years.

Becerra introduced particulars of the settlement, which he termed “historic,” at a information convention in Sacramento on Friday.

“When one healthcare provider can dominate the market, those who shoulder the cost of care — patients, employers, insurers — are the biggest losers,” Becerra stated. “Today’s settlement can be a game-changer for restoring competitors in our healthcare markets.

The phrases of the settlement are topic to approval by San Francisco Superior Court Judge Anne-Christine Massullo, who is predicted to rule preliminarily on the settlement in February. Among different phrases, the settlement requires Sutter to:

Limit what it fees sufferers for out-of-network providers Increase transparency by permitting insurers and employers to offer sufferers pricing data Cease bundling providers and merchandise, and as a substitute supply stand-alone pricing

Sutter stood accused of violating California’s antitrust legal guidelines by utilizing its market energy to drive up costs. Health care prices in Northern California, the place Sutter is dominant, are 20% to 30% increased than in Southern California after adjusting for value of residing, in accordance with a 2018 research from the Nicholas C. Petris Center on the University of California-Berkeley that was cited within the grievance.

The case was a large enterprise, encompassing years of labor and thousands and thousands of pages of paperwork. Had the plaintiffs prevailed in court docket, Becerra stated, Sutter may need confronted damages of as much as $2.7 billion.

In agreeing to the phrases, Sutter didn’t admit wrongdoing. In a press release, General Counsel Flo Di Benedetto described Sutter’s care as “reasonably priced” and “high quality.” She additionally famous that Sutter had invested almost $10 billion in new applied sciences and state-of-the-art amenities over the previous decade.

“As an organization, we will have to evaluate future capital investments based on the impact of the settlement,” Di Benedetto stated. “Despite the increasing cost of care and operating in high-wage markets, we remain focused on making healthcare more affordable for our patients.”

The case initially was filed as a class-action lawsuit in 2014 by the United Food and Commercial Workers International Union & Employers Benefit Trust (UEBT), representing a number of employers, unions and native governments whose staff use Sutter providers. Becerra’s workplace joined the case in 2018.

“Our settlement with Sutter represents an extraordinary result for working people, their employers, and every Californian who has struggled with the high cost of healthcare,” UEBT Chair Jacques Loveall stated in a press release. “From the outset, our goal has been to not only achieve justice for the members of the class, but to also put an end to the anticompetitive behavior that has allowed Sutter to charge inflated prices.”

Becerra stated the union and employer teams would decide how the $575 million in damages can be distributed.

In a press release, the American Hospital Association criticized the settlement, saying it might improve the price of well being care by benefiting insurers to the detriment of sufferers in rural and susceptible communities.

“Unfortunately, it will be several dominant commercial health insurance companies — not consumers — that will benefit from terms that will allow those insurers to cherry-pick the hospitals with which they contract, as well as eliminate incentives for them to work with hospitals to develop and sustain value-based care,” stated AHA General Counsel Melinda Hatton.

Sutter has 24 hospitals, 34 surgical procedure facilities and 5,500 physicians throughout Northern California, with $13 billion in working income in 2018. The state’s lawsuit alleged Sutter has aggressively purchased up hospitals and doctor practices all through the Bay Area and Northern California, and exploited that market dominance for revenue.

Sutter Health constantly denied the allegations, saying its massive, built-in well being system presents tangible advantages for sufferers, together with extra seamless, high-quality care and elevated entry for residents in rural areas. Sutter additionally disputed that its costs are increased than different main well being care suppliers, saying its inner analyses inform a unique story.

The case is predicted to have nationwide implications on how hospital methods negotiate costs with insurers.

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