From the
Sacramento News and Review:
Attorney Richard Grossman represents a group of 1,500 health plans in a class-action suit against Sacramento-based Sutter Health, alleging that the industry giant has been illegally overcharging patients for more than a decade. The case is being closely watched by policymakers across the country as hospital consolidation increases and prices continue to rise. Last November, it was discovered that Sutter destroyed 10 years of records after the lawsuit was filed. SN&R publisher Jeff vonKaenel visited Grossman in his San Francisco office for an interview.
What is significant about this lawsuit?
This case is extraordinarily important, because it’s a documented fact that the cost of hospital health care in Northern California exceeds the cost for the same health care in Southern California by 30 to 40 percent. When I learned that that was the case and examined what was likely to be behind it, I determined that there is no explanation for that kind of price disparity other than anti-competitive behavior that restrains price competition here and allows hospital providers to increase their prices without discipline. The discipline that we all accept and rely upon to keep prices low and quality high. And that’s competition in our marketplace.
Without that competition, there is no reason for competitors to keep their prices at the lowest possible rates and no reason for them to increase their quality. With competition, they have tremendous incentive to do what our economic system requires, which is provide the best quality at the lowest possible price and, if you fail to do so, you do so at your peril.
Who are you representing in this case?
As of last August, I represent all self-funded health plans—employers that pay for the health care of their employees directly without purchasing insurance to cover those costs. That’s how half of the individuals in Northern California—for that matter, across the country—obtain their health care coverage.
What are you alleging in the lawsuit that Sutter did to allow their health care costs to go up 30 to 40 percent?
Sutter’s anti-competitive conduct is extremely treacherous. What they did was they entered into anti-competitive and illegal contracts with all of the major health insurance companies that provide health care coverage in Northern California. And those contracts require the following: One, that if you utilize one Sutter Health provider, one of their hospitals or one of their medical practices across the state, you must utilize all of them in your network. And if you fail to do that, you will pay a huge pricing penalty.
The full interview is absolutely worth reading and can be found
here.
