Sutter requests competitor pricing data as part of antitrust lawsuit

Les Masterson

Oct. 17, 2018

Dive Brief:

• Sutter Health has subpoenaed pricing information for 50 California hospitals in response to a lawsuit that accuses the Sacramento-based system of antitrust practices.
• The other hospitals have pushed back on the request, saying the information is proprietary.
• Amy Thoma Tan, Sutter Health spokesperson, told Healthcare Dive in a statement on Tuesday that Sutter's request is "common in antitrust litigation."

Dive Insight:

California Attorney General Xavier Becerra filed a lawsuit against Sutter earlier this year that alleged the system uses its market power in Northern California to charge higher prices.

Spokeswoman Thoma Tan said the lawsuit "gets the facts wrong and mischaracterizes how Sutter serves patients and communities as a not-for-profit organization in the competitive Northern California healthcare environment."

In response to the lawsuit, Sutter requested the contracting information from competing hospitals between 2000 and 2012. Competitors like El Camino Hospital and Good Samaritan protested the request.

Thoma Tan said Sutter will use the information about the broader healthcare marketplace to defend itself.

"The court has agreed that contracts and pricing from other hospitals are relevant in the case, and while Sutter won't ever see this information, in order to defend ourselves and demonstrate that the plaintiffs' claims are false, this information provides important evidence of the actual prices in California and the contracting terms commonly used in the industry. Sutter will use the information to provide an accurate picture of what the healthcare industry really looks like in California," Thoma Tan said.

This case comes after researchers at University of California-Berkeley found earlier this year that healthcare costs in Northern California are much higher than Southern California. The report estimated 30% higher costs in the northern part of the state, where Sutter has consolidated market power.

This lawsuit involving Sutter goes beyond one region and competing health systems. It also highlights national issues like lack of price transparency and how consolidation can affect prices. Publishing hospital prices are one way to improve transparency and consumerism. However, as this case shows, hospitals may not want to provide that information, which they deem proprietary.

With that in mind, California approved legislation this year that aims to improve hospital pricing data. The plan will create a database with pricing information from health insurance companies about inpatient stays, procedures and medical services. It's expected to roll out by 2023.

The case also goes to the broader M&A trend, which remains red hot. PricewaterhouseCoopers said the second quarter of the year was the 15th in a row with more than 200 healthcare M&A deals. That might be good for the facilities involved, but it might actually contribute to higher costs. The Commonwealth Fund recently said providers are consolidating faster than payers.

If the trend continues, Deloitte predicted that only half of the current health systems will still be around in the next decade.

https://www.healthcaredive.com/news/sutter-requests-competitor-pricing-data-as-part-of-antitrust-lawsuit/539849/