Blue Shield of California alleges that Sutter Health, which runs 23 hospitals in northern California, is charging excessive prices and doing it in sneaky ways that hide its expensiveness from the public. But Sutter, for its part, said state data show that its per-hospital-discharge prices are at or below its peers.
The Los Angeles Times reports that the legal dispute between the giants has prevented Blue Shield and Sutter from reaching a new contract that would affect many employers and consumers.
Blue Shield is telling about 280,000 health plan members that they ”might lose network coverage with Sutter doctors and hospitals” in the fight, the paper says.
Some groups have accused Sutter of sneakily imposing anti-competitive actions and illegally inflated prices.
“‘Blue Shield is demanding significant rate rollbacks as well as several changes to language that has been in our contracts for years, Sutter spokesman Bill Gleeson said. ‘Rate rollbacks of the magnitude that Blue Shield demands would have a negative impact on the level of healthcare services we offer.”‘
The Sutter case but one large example of complaints about big hospital systems’ pricing power, which has grown as they buy more and more physician practices and outpatient medical facilities. Perhaps the most famous complaints are those involving Partners HealthCare, in the Boston area.
”James Robinson, a University of California at Berkeley professor of health economics, published a study in October showing hospital ownership of physician groups in California led to 10-20 percent higher costs overall for patient care,” the Times reported.
“Consolidation can create better coordination and efficiencies in healthcare. However, it can also create opportunities for higher prices.”