Sun | Mar 29, 2020

California hospital chain going to court over high prices

Published:Thursday | October 10, 2019 | 2:42 PM
In this September 20, 2019, file photo, an American flag flutters in the breeze outside of the Sutter Medical Center in Sacramento, California. (AP Photo/Rich Pedroncelli, File)

SAN FRANCISCO (AP) — One of California’s largest hospital systems is facing a trial over accusations that it has used its market dominance to snuff out competition and overcharge patients for medical bills.

Opening arguments begin Thursday in the antitrust case against Sutter Health, which operates 24 hospitals with 5,500 doctors across Northern California.

It was first brought by employers and unions amid growing frustration over the rising cost of health care in 2014; California’s attorney general, Xavier Becerra, filed a similar suit last year following a six-year DOJ investigation.

“We’re alleging that Sutter Health Systems is offering care at a higher price and perhaps even undermining quality by the way it goes about doing its business,” Becerra said in a briefing ahead of last month’s jury selection.

“And that’s not only not fair, but we believe and we allege it is against the law.”

“Bottom line,” Becerra said, “the public is being ripped off.”

The trial is expected to last months.

The lawsuit points to research showing that health care costs in Northern California are higher than elsewhere in the state, including a 2018 study that found unadjusted inpatient procedure prices are 70% higher in Northern California than Southern California.

“Much of the increased cost of health care in Northern California is attributable to Sutter” the AG alleges in a 49-page complaint that details a range of anti-competitive practices it says the Sacramento-based nonprofit has pursued as it gobbled up competition.

In the 1990s, Sutter embarked on “a deliberate strategy” to gain market power in certain geographic areas through a campaign of mergers and acquisitions, the parties allege, noting that Sutter’s assets rose to $15.6 billion in 2016 from $6.4 billion in 2005.

Sutter Health denies the claims, saying it faces fierce competition across the San Francisco Bay Area and the Sacramento Valley and insurance companies are to blame for pushing up costs.

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