Judge Denies Delay of Sutter Settlement, Shows Need for SB 977

Last week, a judge denied the delay of Sutter Health’s $575 million settlement with California Attorney General Becerra regarding unfair competition in Northern California.

Health care consumers, employers, and all who pay premiums are glad that the judge denied this delay sought by Sutter Health. The current COVID-19 crisis only increases the urgency for Sutter to stop its anti-competitive practices that serve to inflate their prices, and otherwise abide by the $575 million settlement to which they previously committed.

This settlement begins to attack the reason why inpatient rates are 70% higher in Northern California, and premiums are typically $3,000 more for coverage here than in Los Angeles.

Now more than ever, Northern Californians need relief from the so-called Sutter surcharge they face in part because of Sutter Health’s concentrated power, as well as their anti-competitive practices and contract provisions.

According to Sutter’s most recent financial disclosure to its bondholders, even after the market took a hit from COVID, as of April 30, 2020 the system had more than $6 billion in investments, not including the property and other assets it owns.  Sutter’s total net assets are more than $19 billion.

It’s hard for Sutter to claim that they need to push off their commitments when Sutter could pay the settlement amount every year for the next 11 years using their investments in hedge funds, U.S. and foreign equity, securities, and private equity alone.

Several large hospital systems, including Sutter, Adventist and Sharp, have around a decade’s worth of cash reserves if not more–at the same time they charge high rates to families and employers struggling in this economy. We need oversight over the consolidation and anti-competitive practices that allow big hospital chains to stockpile such reserves while there is such need.

SB 977

The tactics of Sutter Health show the need to address the issues of hospital concentration and anti-competitive practices comprehensively through legislation like SB 977 (Monning), and not just lawsuit-by-lawsuit.  SB 977 would provide Attorney General Xavier Becerra the ability to review transactions of hospital takeovers by other for-profit chains or private equity firms. Our Attorney General needs more anti-trust tools to take on the righteous cause of addressing health care consolidation and rising costs due to anti-competitive behavior.

Bigger is often not better for consumers, and we need to have public oversight over this transformation of our health system happening under our noses. Health care consumers need continued action against this trend that can lead to health care monopolies, less competition, and ever-increasing health prices.


The Distribution of Provider Relief Payments Among California Health Systems