Sutter Health to pay $575M to settle antitrust case

https://www.beckershospitalreview.com/legal-regulatory-issues/sutter-health-to-pay-575m-to-settle-antitrust-case.html?origin=CFOE&utm_source=CFOE&utm_medium=email

Image result for Sutter Health to pay $575M to settle antitrust case

Sutter Health, a 24-hospital system based in Sacramento, Calif., has agreed to pay $575 million to settle an antitrust case brought by employers and California Attorney General Xavier Becerra.

The settlement resolves allegations that Sutter Health violated California’s antitrust laws by using its market power to overcharge patients and employer-funded health plans. The class members alleged Sutter Health’s inflated prices led to $756 million in overcharges, according to Bloomberg Law.

Under the terms of the settlement, Sutter will pay $575 million to employers, unions and others covered under the class action. The health system will also be required to make several other changes, including limiting what it charges patients for out-of-network services, halting measurers that deny patients access to lower-cost health plans, and improving access to pricing, quality and cost information, according to a Dec. 20 release from Mr. Becerra.

To ensure Sutter is complying with the terms of the settlement, the health system will be required to cooperate with a court-approved compliance monitor for at least 10 years.

Mr. Becerra said the settlement, which he called “a game changer for restoring competition,” is a warning to other organizations.

This first-in-the-nation comprehensive settlement should send a clear message to the markets: if you’re looking to consolidate for any reason other than efficiency that delivers better quality for a lower price, think again. The California Department of Justice is prepared to protect consumers and competition, especially when it comes to healthcare,” he said.

A Sutter spokesperson told The New York Times that the settlement did not acknowledge wrongdoing. “We were able to resolve this matter in a way that enables Sutter Health to maintain our integrated network and ability to provide patients with access to affordable, high-quality care,” said Flo Di Benedetto, Sutter’s senior vice president and general counsel, in a statement to The Times.

The settlement must be approved by the court. A hearing on the settlement is scheduled for Feb. 25, 2020.

 

New Hampshire AG rebuffs Partners acquisition

https://www.modernhealthcare.com/mergers-acquisitions/new-hampshire-ag-rebuffs-partners-acquisition?utm_source=modern-healthcare-daily-dose-tuesday&utm_medium=email&utm_campaign=20190924&utm_content=article6-readmore

New Hampshire officials opposed Partners HealthCare‘s continued expansion into the state, claiming that the health system’s proposed acquisition of Exeter Health Resources would diminish competition.

Partners’ Massachusetts General Hospital’s plans to acquire Exeter (N.H.) Health Resources, an independent system that includes a hospital, a physician group, home health and hospice agency, and a real estate management subsidiary. Exeter would merge with Dover, N.H.-based Wentworth-Douglass Hospital, which Mass General acquired in 2017, to create NewCo, a New Hampshire not-for-profit entity. NewCo was also the name used for the first iteration of what is now Beth Israel Lahey Health.

After a year-long review by the Consumer Protection and Antitrust Bureau, Attorney General Gordon MacDonald said the combination would violate state law requiring free and fair competition.

“New Hampshire patients already pay some of the highest prices for health care in the country,” he said in prepared remarks. “Based on our investigation, we have concluded that this transaction implicates our laws protecting free and fair competition and therefore threatens even higher health care costs to be borne by New Hampshire consumers.”

The AG’s Charitable Trusts Unit report followed a notice of intent to take civil enforcement action issued on Sept. 13 by the Consumer Protection and Antitrust Bureau.

Partners officials said they look to continue talks with the attorney general to allay antitrust concerns.

“We remain fully committed to seeing this transaction through and are confident that the Attorney General’s Office will ultimately determine that our affiliation will pass antitrust review based on the thorough review that the expert economists have completed on this proposal,” Dr. Peter Slavin, Massachusetts General Hospital president, said in prepared remarks.

In a public forum last year, Exeter officials said that the new regional health system would bolster their electronic health record capabilities and streamline care, offer scale to grow services, and enhance care quality.

Economists counter that hospital consolidation often inflates prices thanks to reduced competition and that so-called efficiencies don’t often reach expectations.

Under the deal, NewCo would be substituted as the sole member of Exeter Health Resources and Wentworth-Douglass Hospital. Mass General would become the sole member of NewCo, giving it significant control over the governance and operations, which is a matter of “considerable interest to this state,” the report said.

Exeter Hospital, a 100-bed hospital with outpatient programs in surgery, radiation, oncology and cardiac catheterization, and Wentworth-Douglass Hospital are within 18 miles of each other and provide similar inpatient and outpatient services, according to the report. Both Exeter and Wentworth-Douglass own a significant number of physician practices, such as Exeter’s 140-doctor group that offers primary care, pediatrics, orthopedics, gastroenterology and other specialties. Within the seacoast region, there are a limited number of healthcare entities of size and breadth similar to Exeter and Wentworth-Douglass that also own physician practices, the report said.

“Should EHR, WDH and MGH take further steps to consummate the transaction despite the objection set forth in this report, the Charitable Trusts Unit will bring judicial proceedings and seek injunctive relief,” New Hampshire authorities said in the report.

Partners has continued to try to expand into neighboring states, with varying success. The Boston-based integrated health system was targeting an entry point into the Rhode Island market through a deal with Care New England, adding Lifespan to the proposed talks early last year. It later dropped Lifespan and ultimately nixed the entire deal in June.

Establishing a presence in Rhode Island was an emphasis of Dr. David Torchiana, former president and CEO of Partners. Torchiana retired in April, making way for Dr. Anne Klibanski, who took on the interim CEO role in February and officially became the system’s first female chief executive in June.

Partners has been criticized for its high prices stemming from higher than average inpatient and academic medical center utilization. Beth Israel Deaconess Medical Center and Lahey Health said that a significant driver behind their merger late last year was to keep Partners in check.

Partners reported operating income of $309.9 million on operating revenue of $13.31 billion in 2018, up from $52.6 million in operating income on $13.37 billion of operating revenue in 2017, according to Modern Healthcare’s Health System Financials database.

Through three quarters of its fiscal 2019, Partners reported operating income of $450 million on total operating revenue of to $10.4 billion. That was up from $275 million of operating income on $10 billion of total operating revenue over the same period the year prior.

 

 

 

Sutter Health faces class-action lawsuit over pricing: 4 things to know

https://www.beckershospitalreview.com/finance/sutter-health-faces-class-action-lawsuit-over-pricing-4-things-to-know.html?oly_enc_id=2893H2397267F7G

Image result for sutter health headquarters

A class-action lawsuit alleging Sutter Health violated California’s antitrust laws by using its market power to overcharge patients is slated to open Sept. 23, according to the Los Angeles Times.

Four things to know:

1. The lawsuit dates back to 2014. Self-funded employers and union trusts initially filed the case, which was later joined with a lawsuit brought in 2018 by California’s attorney general.

2. In March, California Attorney General Xavier Becerra said a six-year investigation revealed Sutter restricted health insurers from providing consumers with more low-cost health plan options, and the health system set excessively high out-of-network prices. Sutter also allegedly restricted publication of provider cost information, which impeded transparency.

3. Sutter could be liable for as much as $2.7 billion. The plaintiffs are seeking up to $900 million in damages, and that amount can be tripled under California’s antitrust law, according to the Los Angeles Times.

4. Sutter denies the allegations. Regarding the lawsuit, a health system spokesperson released the following statement to the Los Angeles Times:

“This lawsuit irresponsibly targets Sutter’s integrated system of hospitals, clinics, urgent care centers and affiliated doctors serving millions of patients throughout Northern California. While insurance companies want to sell narrow networks to employers, integrated networks like Sutter’s benefit patient care and experience, which leads to greater patient choice and reduces surprise out-of-network bills to our patients.”

Access the full Los Angeles Times article here.