Breaking News
January 19, 2019 - Highly effective protocol to prepare cannabis samples for THC/CBD analysis
January 19, 2019 - Prinston Pharmaceutical Inc. Issues Voluntary Nationwide Recall of Irbesartan and Irbesartan HCTZ Tablets Due to Detection of a Trace Amount of Unexpected Impurity, N-Nitrosodiethylamine (NDEA) in the Products
January 19, 2019 - How does solid stress from brain tumors cause neuronal loss, neurologic dysfunction?
January 19, 2019 - $14.7 million partnership to supercharge vaccine development
January 19, 2019 - Ian Fotheringham receives Charles Tennant Memorial Lecture award
January 19, 2019 - Brain vital signs detect neurophysiological impairments in players with concussions
January 19, 2019 - Lack of job and poor housing conditions increased likelihood of people attending A&E
January 19, 2019 - Novel targeted drug delivery system improves conventional cancer treatments
January 19, 2019 - Rutgers study finds gene responsible for spread of prostate cancer
January 19, 2019 - Complications Higher Than Expected for Invasive Lung Tests
January 19, 2019 - 3-D printed implant promotes nerve cell growth to treat spinal cord injury
January 19, 2019 - Automated texts lead to improved outcomes after total knee or hip replacement surgery
January 19, 2019 - Poor cardiorespiratory fitness could increase risk of future heart attack, finds new study
January 19, 2019 - Drinking soft drinks while exercising in hot weather may increase risk of kidney disease
January 19, 2019 - Formlabs 3D prints anatomical models
January 19, 2019 - Heart-Healthy Living Also Wards Off Type 2 Diabetes
January 19, 2019 - Teaching Kids to Be Smart About Social Media (for Parents)
January 19, 2019 - Metabolite produced by gut microbiota from pomegranates reduces inflammatory bowel disease
January 19, 2019 - Researchers examine how spray from showers and toilets expose us to disease causing bacteria
January 19, 2019 - Behavioral experiments confirm that additional neurons improve brain function
January 19, 2019 - New study compares performance of real-time infectious disease forecasting models
January 19, 2019 - Obesity can be risk factor for developing renal cell carcinoma, confirms study
January 19, 2019 - New regulation designs on cigarette packs direct smokers’ attention to health warnings
January 19, 2019 - QIAGEN receives first companion diagnostic approval in Japan
January 19, 2019 - Study explores role of Dunning-Kruger effect in anti-vaccine attitudes
January 19, 2019 - Newly identified subset of immune cells may be key to fighting chronic inflammation
January 19, 2019 - New immune response regulators discovered
January 18, 2019 - Poor blood oxygenation during sleep predicts chance of heart-related death
January 18, 2019 - First international consensus on the diagnosis and management of fibromuscular dysplasia
January 18, 2019 - Rapid resistance gene sequencing technology can hasten identification of antibiotic-resistant bacteria
January 18, 2019 - Researchers develop artificial enzymatic pathway for synthesizing isoprenoids in E. coli
January 18, 2019 - Scientists advise caution in immunotherapy research
January 18, 2019 - How children across the world develop language
January 18, 2019 - Columbia Medical Student Receives McDonogh Scholarship
January 18, 2019 - Secretive ‘Rebate Trap’ Keeps Generic Drugs For Diabetes And Other Ills Out Of Reach
January 18, 2019 - Plant based diet could be the best option for the planet says commission
January 18, 2019 - New conservation practice could reduce nitrogen from agricultural drainage, study shows
January 18, 2019 - UIC researchers receive $1.7 million NCI grant to study Southeast Asian fruit
January 18, 2019 - New study determines the fate of DNA derived from genetically modified food
January 18, 2019 - Scientists develop new gene therapy that prevents axon destruction in mice
January 18, 2019 - Study finds critically low HPV vaccination rates among younger adolescents in the U.S.
January 18, 2019 - Brain cells involved in memory play key role in reducing future eating behavior
January 18, 2019 - Risk for Conversion of MS Varies With Different Therapies
January 18, 2019 - Investigational cream may help patients with inflammatory skin disease
January 18, 2019 - Medical school news office receives six writing awards | News Center
January 18, 2019 - County By County, Researchers Link Opioid Deaths To Drugmakers’ Marketing
January 18, 2019 - Research reveals risk for developing more than one mental health disorder
January 18, 2019 - Scientists discover a dramatic pattern of bone growth in female mice
January 18, 2019 - Study finds link between lengthy periods of undisturbed maternal sleep and stillbirths
January 18, 2019 - New nuclear medicine method could improve detection of primary and metastatic melanoma
January 18, 2019 - Combination therapy shows high efficacy in treating people with leishmaniasis and HIV
January 18, 2019 - Health Tip: Don’t Ignore Changes in Skin Color
January 18, 2019 - Dietary Recommendations for Healthy Children
January 18, 2019 - Eliminating the latent reservoir of HIV
January 18, 2019 - Pain From The Government Shutdown Spreads. This Time It’s Food Stamps
January 18, 2019 - Newly discovered regulatory mechanism helps control fat metabolism
January 18, 2019 - New rapid blood tests could speed up TB diagnosis, save the NHS money
January 18, 2019 - Researchers develop intelligent system for ‘tuning’ powered prosthetic knees
January 18, 2019 - Monoclonal antibody pembrolizumab prolongs survival in patients with squamous cell carcinoma
January 18, 2019 - New research detects mosquito known to transmit malaria for the first time in Ethiopia
January 18, 2019 - Researchers identify new genes linked to development of age-related macular degeneration
January 18, 2019 - Computerized method helps better protect pharma patents
January 18, 2019 - New guidelines to make swallowing safer for people in Australian nursing homes
January 18, 2019 - Lumex Instruments’ RA-915AM monitor installed at Hg treatment plant in Almadén, Spain
January 18, 2019 - ACCC survey finds multiple threats to growth of cancer programs
January 18, 2019 - Meeting the challenge of engaging men in HIV prevention and treatment
January 18, 2019 - Furloughed Feds’ Health Coverage Intact, But Shutdown Still Complicates Things
January 18, 2019 - Experts discuss various aspects on health risks posed by fumigated containers
January 18, 2019 - Researchers use gene-editing tool CRISPR/Cas9 to limit impact of parasitic diseases
January 18, 2019 - Alpha neurofeedback training could be a means of enhancing learning success
January 18, 2019 - Innovative ‘light’ method demonstrates positive results in fight against malignant tumors
January 18, 2019 - The cytoskeleton of neurons found to play role in Alzheimer’s disease
January 18, 2019 - New resource-based approach to improve HIV care in low- and middle-income countries
January 18, 2019 - Bedfont appoints Dr Jafar Jafari as first member of the Gastrolyzer Medical Advisory Board
January 18, 2019 - New study shows link between secondhand smoke and cardiac arrhythmia
January 18, 2019 - DZIF scientists reveal problems with available diagnostics for Zika and chikungunya virus
January 18, 2019 - Breast cancers more likely to metastasize in young women within 10 years of giving birth
January 18, 2019 - Over 5.6 million Americans exposed to high nitrate levels in drinking water
January 18, 2019 - Blood vessels can now be created perfectly in a petri dish
January 18, 2019 - Study identifies prominent socioeconomic and racial disparities in health behavior in Indiana
California hospital giant Sutter Health faces heavy backlash on prices

California hospital giant Sutter Health faces heavy backlash on prices

image_pdfDownload PDFimage_print

The 51-year-old businessman headed to the emergency room at Sutter Health’s California Pacific Medical Center in San Francisco. Sutter charged $1,555 for the 10 minutes it treated him, including $55 for a gel bandage and $487 for a tetanus shot.

“It was ridiculous,” he said. “Health insurance costs are through the roof because of things like this.”

California Attorney General Xavier Becerra couldn’t agree more. The state’s top cop is suing Sutter, accusing one of the nation’s biggest health systems of systematically overcharging patients and illegally driving out competition in Northern California.

For years, economists and researchers have warned of the dangers posed by large health systems across the country that are gobbling up hospitals, surgery centers and physicians’ offices — enabling them to limit competition and hike prices.

Becerra’s suit amounts to a giant test case with the potential for national repercussions. If California prevails and is able to tame prices at Northern California’s most powerful, dominant health system, regulators and politicians in other states are likely to follow.

“A major court ruling in California could be a deterrent to other hospital systems,” said Ge Bai, an assistant professor at Johns Hopkins University who has researched hospital prices nationwide. “We’re getting to a tipping point where the nation cannot afford these out-of-control prices.”

Reflecting that sense of public desperation, Sutter faces two other major suits — from employers and consumers — which are wending their way through the courts, both alleging anticompetitive conduct and inflated pricing. Meanwhile, California lawmakers are considering a bill that would ban some contracting practices used by large health systems to corner markets.

Sutter, a nonprofit chain, is pushing back hard, denying anticompetitive behavior and accusing Becerra in court papers of a “sweeping and unprecedented effort to intrude into private contracting.” Recognizing the broader implications of the suit, both the American Hospital Association and its California counterpart asked to file amicus briefs in support of Sutter.

In his 49-page complaint, Becerra cited a recent study finding that, on average, an inpatient procedure in Northern California costs 70 percent more than one in Southern California. He said there was no justification for that difference and stopped just short of dropping an expletive to make his point.

“This is a big ‘F’ deal,” Becerra declared at his March 30 news conference to unveil the lawsuit. In an interview last week, he said, “We don’t believe it’s fair to allow consolidation to end up artificially driving up prices. … This anticompetitive behavior is not only bad for consumers, it’s bad for the state and for businesses.”

To lessen Sutter’s market power, the state’s lawsuit seeks to force Sutter to negotiate reimbursements separately for each of its hospitals — precluding an “all or nothing” approach — and to bar Sutter employees from sharing the details of those negotiations across its facilities. Becerra said Sutter has required insurers and employers to contract with its facilities systemwide or face “excessively high out-of-network rates.”

Heft In The Marketplace

Overall, Sutter has 24 hospitals, 36 surgery centers and more than 5,500 physicians in its network. The system boasts more than $12 billion in annual revenue and posted net income of $958 million last year.

The company’s heft in the marketplace is one reason why Northern California is the most expensive place in the country to have a baby, according to a 2016 report. A cesarean delivery in Sacramento, where Sutter is based, cost $27,067, nearly double what it costs in Los Angeles and New York City.

For years, doctors and consumers have also accused Sutter of cutting hospital beds and critical services in rural communities to maximize revenue. “Patients are the ones getting hurt,” said Dr. Greg Duncan, an orthopedic surgeon and former board member at Sutter Coast Hospital in Crescent City, Calif.

Sutter says patients across Northern California have plenty of providers to choose from and that it has held its average rate increases to health plans to less than 3 percent annually since 2012. It also says it does not require all facilities to be included in every contract — that insurers have excluded parts of its system from their networks.

As for emergency room patients like Frizzell, Sutter says its charges reflect the cost of maintaining services round-the-clock and that for some patients urgent-care centers are a less costly option.

“The California Attorney General’s lawsuit gets the facts wrong,” Sutter said in a statement. “Our integrated network of high-quality doctors and care centers aims to provide better, more efficient care — and has proven to help lower costs.”

Regulators in other states also have sought to block deals they view as potentially harmful.

In North Carolina, for instance, the state’s attorney general and treasurer both expressed concerns about a proposed merger between the University of North Carolina Health Care system and Charlotte-based Atrium Health. The two dropped their bid in March. The combined system would have had roughly $14 billion in revenue and more than 50 hospitals.

Last year, in Illinois, state and federal officials persuaded a judge to block the merger between Advocate Health Care and NorthShore University HealthSystem. The Federal Trade Commission said the new entity would have had 60 percent market share in Chicago’s northern suburbs. Still, Advocate won approval for a new deal with Wisconsin’s Aurora Health Care last month, creating a system with $11 billion in annual revenue.

Antitrust experts say states can deliver a meaningful counterpunch to health care monopolies, but they warn that these cases aren’t easy to win and it could be too little, too late in some markets.

“How do you unscramble the egg?” said Zack Cooper, an assistant professor of economics and health policy at Yale University. “There aren’t a lot of great solutions.”

A Seven-Year Investigation

California authorities took their time sounding the alarm over Sutter — a fact Sutter is now using against the state in court.

The state attorney general’s office, under the leadership of Democrat Kamala Harris, now a U.S. senator, started investigating Sutter seven years ago with a 2011 subpoena, court documents show. Sutter said the investigation appeared to go dormant in March 2015, just as Harris began ramping up her Senate campaign.

Becerra, a Democrat and former member of Congress, was appointed to replace Harris last year, took over the investigation and sued Sutter on March 29. His aggressive action comes as he prepares for a June 5 primary against three opponents.

Sutter faces a separate class-action suit in San Francisco state court, spearheaded by a health plan covering unionized grocery workers and representing more than 2,000 employer-funded health plans. The plaintiffs are seeking to recoup $700 million for alleged overcharges plus damages of $1.4 billion if Sutter is found liable for antitrust violations. Sutter also has been sued in federal court by five consumers who blame the health system for inflating their insurance premiums and copays. The plaintiffs are seeking class-action status.

San Francisco County Superior Court Judge Curtis E.A. Karnow granted Becerra’s request to consolidate his case with the grocery workers’ suit, which is slated for trial in June 2019.

The judge sanctioned Sutter in November after finding that Sutter was “grossly reckless” in intentionally destroying 192 boxes of evidence that were relevant to antitrust issues. As a result, Karnow said, he will consider issuing jury instructions that are adverse to Sutter.

In a note to employees, Sutter chief executive Sarah Krevans said she deeply regretted the situation but “mistakes do happen.”

In an April 27 court filing, Sutter’s lawyers criticized the state for piggybacking onto the grocery workers’ case. “The government sat on its hands for seven years, exposing the public to the alleged anticompetitive conduct. … Rather than driving the agenda, the Attorney General seeks to ride coattails.”

Outside court, California legislators are taking aim at “all or nothing” contracting terms used by Sutter and other hospital chains. The proposed law stalled last year amid opposition from the hospital industry. But consumer and labor groups are seeking to revive it this year.

In the meantime, Frizzell said he will probably wind up at one of Sutter’s hospitals again despite his disgust over his ER bill. “Most of the hospitals here are Sutter,” he said. “It’s difficult to avoid them.”

KHN senior correspondent Anna Gorman contributed to this report.

This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.

Kaiser Health NewsThis article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

Tagged with:

About author

Related Articles