Sutter’s $575 Antitrust Settlement Gets Green-light

A landmark US$575 million settlement by Sutter Health over the Sacramento medical giant’s business practices received a judge’s preliminary approval Tuesday, March 9.

A year ago, Sutter agreed to pay US$575 million to settle antitrust claims brought by California Attorney General Xavier Becerra. The deal also requires Sutter to change its relationships with insurance companies, employers and other key players in the health care industry, and have its business operations monitored for a decade.

Becerra’s office charged that Sutter used its considerable market muscle — a system with 24 hospitals, 12,000 doctors, and 35 outpatient centers — to bend insurance companies and employers to its will. Its practices skewed medical costs throughout Northern California; Becerra cited one study showing that a Cesarean section in Sacramento costs US$27,000, nearly double the price in Los Angeles or New York.

The litigation targeted a number of Sutter practices, including contract language forbidding insurers from paying incentives to doctors to steer patients toward providers that were cheaper. Among other things, Sutter agreed to stop bundling its services and forcing insurers and employers to buy more than they really needed.

“This landmark settlement will require Sutter to stop practices that drive patients into more expensive health services and to operate with more transparency,” Becerra said in a prepared statement Tuesday.