California Files Lawsuit Against Sutter Health Over Price Inflation

California Attorney General Xavier Becerra announced on Friday that the state was filing a lawsuit against Sutter Health, the largest hospital system in Northern California, for anticompetitive practices that allegedly resulted in higher healthcare costs.

The AG’s office hopes to stop Sutter Health from “unlawful conduct under state antitrust laws and restore competition in the California healthcare market.”

“Sutter Health is throwing its weight around in the healthcare market, engaging in illegal, anticompetitive pricing that hurts California families,” said Attorney General Becerra. “These tactics are risking Californians’ lives by driving up the cost of healthcare for everyone. Big business should not be able to throttle competition at the expense of patients. The California Department of Justice is dedicated to ensuring that all families in our state can access quality, affordable healthcare no matter where they live.”

The complaint alleges that Sutter Health engaged in anticompetitive behavior. These illegal practices resulted in higher prices for health care in Northern California by:

  • Establishing, increasing and maintaining Sutter Health’s power to control prices and exclude competition;
  • Foreclosing price competition by Sutter Health’s competitors; and
  • Enabling Sutter Health to impose prices for hospital healthcare services and ancillary products that far exceed the prices it would have been able to charge in an unconstrained, competitive market.

Officials noted that Sutter Health consists of at least 24 acute care hospital facilities, 31 ambulatory surgery centers, nine cancer centers, six specialty care centers, nine major physician organizations, 8,200 physicians and 48,000 employees located in 19 counties in Northern California.

According to a new report by University of California Berkeley’s Petris Center on Health Care Markets and Consumer Welfare, the cost of the average inpatient hospital procedure in Northern California $223,278 exceeded that in Southern California $131,586 by more than $90,000.