Sutter Health, a large network of doctors and hospitals in Northern California that has long been accused of abusing its market power, is now squaring off against major U.S. corporations in a closely watched legal fight.
The battle is over Sutter's demand that companies sign an arbitration agreement to resolve any legal disputes with the health system. If firms don't sign the agreement, Sutter says, the companies will have to pay sharply higher rates for medical treatment of their employees at Sutter's hospitals, surgery centers and clinics – 95 percent of Sutter's full charge.
Sutter's nonprofit system, based in Sacramento, includes 24 hospitals, 34 surgery centers and more than 5,000 physicians. It reported $11 billion in revenue last year and an operating profit of $287 million.
Some companies and labor unions say Sutter's ultimatum is aimed at preventing them from joining an ongoing class-action lawsuit that accuses the giant health system of imposing anticompetitive terms and "illegally inflated prices" for health care. Sutter disputes the allegations, and says its charges are in line with those of its peers.
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