California sues hospital network over high health costs

California sues hospital network over high health costs
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California on Friday sued one of the largest hospitals in the state for "anticompetitive practices" that increase health care costs. 

California Attorney General Xavier BecerraXavier BecerraJudge dismisses most of Trump administration lawsuit over California immigration laws Overnight Health Care: Trump officials want more time to reunite families | Washington braces for Supreme Court pick | Nebraska could be next state to vote on Medicaid expansion Judge rejects Trump administration's request to block California sanctuary laws MORE (D) alleges Sutter Health has used its power to exclude competition and increase prices for patients substantially. 

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“Sutter Health is throwing its weight around in the healthcare market, engaging in illegal, anticompetitive pricing that hurts California families,” Becerra said in a statement. “These tactics are risking Californians’ lives by driving up the cost of healthcare for everyone."

Becerra alleges that Sutter Health sets excessively high out-of-network rates for patients who must get care outside of their provider network; restricts publication of provider cost information and rates; and requires insurance companies negotiate with the entire system or face termination of contracts. 

Becerra alleges Sutter Health used its excess profits from illegal pricing practices for "waves of acquisitions," extreme levels of executive compensation and for financing its own insurance arm. 

The lawsuit comes as concerns about high health care costs boil over in the U.S., brought in part by consolidation of hospitals, insurance companies, and other industry players. 

Becerra pointed to a recent report that showed market consolidation has caused prices to be as much as 30 percent higher in Northern California, where Sutter Health operates, than in Southern California. 

"Much of the increased cost of healthcare in Northern California is attributable to Sutter and its anticompetitive contractual practices which it has imposed as a result of its market power," reads the complaint from Becerra's office.

Sutter Health operates a massive system in 19 counties in Northern California, comprised of 24 acute care hospital facilities, 31 ambulatory surgery centers, nine cancer centers, six specialty care centers and nine major physician organizations. 

Sutter Health, one of the largest nonprofit hospital systems in the U.S., reported a net income of $893 million last year on $12.4 billion in revenue in 2017.