August 28, 2021

Sutter Health is $575 million poorer — and now must operate under new rules designed to curb its ability to dictate the price of health care in Sacramento and Northern California.

A judge late Friday approved a landmark antitrust settlement agreement between the Sacramento-based hospital chain, the state of California and a group of health insurers and big employers.

The final approval by Judge Anne-Christine Massullo, in San Francisco Superior Court, came nearly two years after Sutter tentatively agreed to the deal – and seven years after a health insurance plan run by the United Food and Commercial Workers union sued the health care giant. The state joined the case in 2018.

The case, which drew national attention, focused on Sutter’s business practices. The state and others said Sutter – with 24 main hospitals, 12,000 doctors and $13 billion in annual revenue – used its market power to strong-arm employers and insurers into lopsided contract terms that inflated prices for a wide range of services.

Because of an “umbrella effect,” Sutter’s high prices allowed its competitors to raise their rates, too, critics said. State officials frequently cited various studies showing the high cost of medical care in Northern California, including a 2016 report showing that cesarean births cost about $27,000 on average in Sacramento, nearly twice the cost of Los Angeles.

Among other things, Sutter agreed to end “all-or-nothing” contracts that critics said were forcing insurers and big employers to cover services at Sutter hospitals and clinics they didn’t necessarily want. Sutter will be under a court-approved independent monitor’s supervision for 10 years. In addition, Sutter agreed to pay $575 million in damages to the employers and insurers.

“This is a groundbreaking settlement and a win for Californians,” said Attorney General Rob Bonta in a prepared statement. “Sutter will no longer have free rein to engage in anticompetitive practices that force patients to pay more for health services.”

The complete article can be accessed here.

This article also appeared in the Merced Sun-Star, The Fresno Bee, and The Modesto Bee.