California hospital chain going to court docket over excessive costs

One in every of California’s largest hospital techniques is dealing with a trial over accusations that it has used its market dominance to snuff out competitors and overcharge sufferers for medical payments.

The antitrust lawsuit in opposition to Sutter Well being, which operates 24 hospitals with 5,500 docs throughout Northern California, was first introduced by employers and unions amid rising frustration over the rising price of well being care in 2014. California’s lawyer basic, Xavier Becerra, filed an identical swimsuit final 12 months following a six-year investigation.

“We’re alleging that Sutter Well being Methods is providing care at a better value and even perhaps undermining high quality by the best way it goes about doing its enterprise,” Becerra mentioned in a briefing forward of final month’s jury choice. “And that is not solely not honest, however we imagine and we allege it’s in opposition to the legislation.”

“Backside line,” Becerra mentioned, “the general public is being ripped off.”

Opening statements scheduled to begin Thursday had been postponed till subsequent week as a result of not sufficient jurors had been current, San Francisco Superior Court docket Decide Anne-Christine Massullo advised a packed courtroom.

The trial is anticipated to final a number of months. The lawsuit factors to analysis displaying that well being care prices in Northern California are greater than elsewhere within the state, together with a 2018 examine that discovered unadjusted inpatient process costs are 70% greater in Northern California than Southern California.

“A lot of the elevated price of well being care in Northern California is attributable to Sutter” the lawyer basic alleges in a 49-page criticism that particulars a spread of anticompetitive practices it says the Sacramento-based nonprofit has pursued because it devoured up competitors.

Within the 1990s, Sutter launched into “a deliberate technique” to realize market energy in sure geographic areas by a marketing campaign of mergers and acquisitions, the events allege, noting that Sutter’s property rose to $15.6 billion in 2016 from $6.four billion in 2005.

Sutter Well being denies the claims, saying it faces fierce competitors throughout the San Francisco Bay Space and the Sacramento Valley and insurance coverage corporations are guilty for pushing up prices.

“Sutter Well being seems ahead to demonstrating in court docket why its built-in care mannequin promotes competitors and, most significantly, advantages sufferers and communities,” Sutter spokeswoman Amy Thoma Tan mentioned in a press release. She mentioned the most important medical health insurance corporations assist the lawsuit.

“Insurance coverage corporations wish to maximize earnings by pushing insurance policy that restrict their selections and end in shock billing,” Thoma Tan mentioned.

At situation are a number of of Sutter Well being’s contracting insurance policies that Becerra says have allowed the corporate to “completely immunize itself from value competitors.”

A method insurance coverage corporations hold prices down is to steer sufferers to cheaper well being care suppliers by a wide range of incentives. Becerra says Sutter Well being bans insurance coverage corporations from utilizing these incentives, making it tougher for sufferers to make use of their lower-priced rivals.

Becerra additionally says Sutter has an “all or nothing” method to negotiating with insurance coverage corporations, requiring them to incorporate all the corporate’s hospitals of their supplier networks even when it does not make monetary sense to take action.

The case was initially filed in 2014 by a gaggle of self-funded employers and picked up steam final 12 months when Becerra filed an identical lawsuit and the instances had been mixed.

Becerra’s lawsuit seeks to halt Sutter’s alleged practices and doesn’t search financial damages. However the non-public litigation introduced by a category of about 1,400 self-funded employers seeks damages that would exceed $1 billion.

It is uncommon for antitrust lawsuits of this dimension to go to trial. Atrium Well being, a North Carolina-based hospital system, settled an identical anti-trust lawsuit with the federal authorities final 12 months. And CHI Franciscan, a well being system primarily based in Washington state, additionally settled comparable claims in March that had been introduced by the state.