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California sues hospital chain for charging patients in the richer North of the state twice as much

California sues hospital chain for ‘bullying’ some patients by charging those in the richer North of the state twice as much as those in the South

  • California filed a lawsuit against Sutter Health, which operates 24 hospitals with 5,500 doctors across Northern California 
  • The suit alleges patients in Northern California were paying more for some procedures than Southern Californians
  • Sutter Health denies wrongdoing and says insurance companies are to blame for higher prices

One of California’s largest hospital systems is being sued over accusations that it overcharged some patients for medical bills.

The state has brought an antitrust case against Sutter Health, which operates 24 hospitals with 5,500 doctors across Northern California. 

According to a lawsuit filed by the state’s attorney general, Xavier Becerra, patients from Northern California were paying nearly twice as much for some procedures as those in Southern California.

California also claims that Sutter Health forced insurance companies to include all the company’s hospitals and doctors in their provider networks, leaving patients unable to go elsewhere for cheaper care. 

California has filed a lawsuit against Sutter Health, which operates 24 hospitals with 5,500 doctors across Northern California, claiming it overcharged patients for medical bills. Pictured: Sutter Medical Center in Sacramento, California

The case was originally filed in 2014 by a group of employers and unions, and joined last year by a similar suit from Becerra, whose office conducted a six-year 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,’ said Becerra 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.’   

The lawsuit points to research showing that health care costs in Northern California are higher than elsewhere in the state

A 2018 study that found unadjusted inpatient procedure prices are 70 percent higher in Northern California than Southern California.

For example, the cost of hospital care for a heart attack in San Francisco was about $25,000 compared to roughly $15,000 in Los Angeles. 

‘Much of the increased cost of health care in Northern California is attributable to Sutter,’ Becerra alleges in a 49-page complaint.

Sutter Health officials deny the company has done anything wrong and say insurance companies are to blame for higher prices. 

‘Insurance companies want to maximize profits by pushing insurance plans that limit their choices and result in surprise billing,’ said Sutter spokeswoman Amy Thoma Tan said in a statement.

‘Sutter Health looks forward to demonstrating in court why its integrated care model promotes competition and, most importantly, benefits patients and communities.’

At issue are several of Sutter Health’s contracting policies that Becerra says have allowed the company to ‘thoroughly immunize itself from price competition.’

One way insurance companies keep costs down is to steer patients to cheaper health care providers through a variety of incentives. 

But with no cheaper, competing sources of care, patients and insurers alike are stuck paying more.  

Becerra says Sutter Health bans insurance companies from using these incentives, making it harder for patients to use their lower-priced competitors. 

Additionally, the complaint also details a range of anticompetitive practices the Sacramento-based nonprofit allegedly 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, Becerra says.

Sutter’s assets subsequently rose to $15.6billion in 2016 from $6.4billion in 2005.  

The lawsuit seeks to halt Sutter’s alleged practices and does not seek monetary damages. 

But the private litigation brought about in 2014 seeks damages that could exceed $1billion


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