Sutter Health Wins Antitrust Case Amid Stronger Enforcement

Today's Featured Story Sutter Health Wins Antitrust Case Amid Stronger Enforcement by Peter Johnson Sutter Health, the nonprofit hospital system that dominates the Northern California market, recently won a class action lawsuit brought by individuals and small-group plan sponsors who accused the hospital system of anticompetitive practices, including price gouging. Experts tell AIS Health that the trial shows the difficulty of limiting hospitals’ price-setting power when they consolidate, and that robust antitrust enforcement — the kind that ended a proposed hospital system merger in Rhode Island — is critical to keep prices down. Sutter’s strong position will continue In the lawsuit, according to a website maintained by the plaintiffs’ council, “plaintiffs claim that Sutter forced upon health plans certain pricing and contractual terms, and those practices and terms violated state and federal antitrust and unfair competition laws. Plaintiffs claim this caused the health plans to pay more than they otherwise would for Sutter’s hospital services, and that this resulted in higher insurance premiums for class members whether or not they used Sutter hospitals. “As long as I’ve been in this business, health plans and insurance companies in California have been less than happy about Sutter’s geographic concentration strategy, which is just a fact. You can’t deny it — look at a map, and you can see their geographic concentration in certain markets. According to the result of this trial, that’s not unlawful,” Raja Sékaran, a health care attorney and partner at Nossman LLP, tells AIS Health, a division of MMIT. That said, Sékaran continues, “health plans are unhappy negotiating with the company in that position, because health plans have to put together a network for each market that they are selling their products in, and no one likes when the opposing party has a really strong bargaining position.” Many antitrust defendants fear jury trials Seth Goldstein, an attorney and partner at Nossman LLP, tells AIS Health that “generally in big antitrust litigation, there’s a big fear on behalf of most defendants of going to a jury trial...the worry is always that it’s going to be really complicated to try to explain to a jury why what they did is legit.” Sékaran says that public perceptions of both payers and providers play a role in jury decisions like the Sutter case. “Whether public sympathies lie more with providers than insurance companies — that may be the case, and maybe the pendulum swings both ways,” Sékaran says. “But having represented the hospital industry for some time now, I think the hospital industry also has some trepidation about being in front of a jury.” Even though the hospital market is already highly concentrated, Sékaran says that the merger frenzy is far from over. “Every time I think it’s over, there seems to be another one being contemplated,” Sékaran says. “The appetite for consolidation — I don’t know that it’s passed.” From Health Plan Weekly Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.