In the one dozen years since CPR began, we have tackled a number of big issues in health care, pushing for effective payment reform, helping to launch the price transparency movement, and sounding the alarm on growing provider market power, among others.
Since 2014, CPR has participated in a number of high profile antitrust cases in support of purchasers and their plan members, including Federal Trade Commission (FTC) & State of Idaho v. St. Luke’s Health System and Saltzer Medical Group, U.S. & the State of North Carolina v. Carolinas Healthcare System (now called Atrium), UEBT vs. Sutter Health, and the FTC effort to block Hackensack Meridian Health’s acquisition of Englewood Healthcare Foundation. CPR did all of this work pro bono, with the exception of the Atrium case for which the U.S. Department of Justice hired Suzanne Delbanco, CPR’s executive director, as an expert rebuttal witness.
Most recently, CPR filed an amicus brief in support of the plaintiffs in the Sidibe vs. Sutter Health case in the Ninth Circuit Court of Appeals. We argued that the “District Court’s erroneous application of well-settled antitrust law in this case undermines the important public policy of avoiding harm to millions of consumers caused by market control through excessive consolidation or monopoly.”
Case Background
Sidibe v. Sutter Health was initially filed in federal district court for the Northern District of California in September 2012. Sidibe and the other plaintiffs who joined the case to create a class action lawsuit contend that they overpaid premiums for fully insured health insurance policies due to anticompetitive behavior by Sutter Health. Sutter litigated the Sidibe case to a jury verdict and won. On appeal, the plaintiffs argue that the district court erred in its guidance of the case, such as by prohibiting the plaintiffs from introducing evidence of Sutter’s intent when it developed and formed the challenged contracting practices in the late 1990s and early 2000s. The plaintiffs also argue that the district court erred by allowing the jury to determine whether to consider the likely response of insured patients to price increases, and whether the presence of Kaiser Permanente creates adequate competition for Sutter in its negotiations with health insurance companies.
Why CPR Filed an Amicus Brief in Support of Sidibe
At the center of CPR’s work is the drive to make healthcare more affordable for those who use and pay for it. Today, health care prices are the single biggest driver of health care cost growth. Economic theory suggests that if there were adequate competition in healthcare markets and a more level balance of market power across stakeholders, prices wouldn’t be so high. However, given that health care providers have consolidated significantly, amassing market power, the prices we see now result from a lack of competition.
Research calculates that 75 percent of hospitals markets in the United States are either highly concentrated or very highly concentrated. The rate of hospital “mega mergers” nearly doubled in 2021, along with the rate of physician group mergers and acquisitions. Healthcare providers continue to consolidate, further eroding competition and the buying power of employers, other purchasers and consumers.
In Northern California where Sutter Health has acquired a vast number of hospitals and medical practices, prices are high. In the greater San Francisco Bay Area, business and individuals pay approximately 50% more for healthcare than residents in and around Los Angeles, where there are more hospitals and health systems competing for patients.
If given the chance to implement innovative health insurance benefit designs and selective networks of healthcare providers, employers can successfully connect plan members to high-value providers and generate significant saving for themselves and their plan members. But in Northern California, innovative health insurance benefits design and provider network options are rare. When Sutter Health prohibits its exclusion from narrow provider networks or from the most desirable tier of a tiered provider network, it is no longer competing to win patients by offering the highest quality of care efficiently and at the lowest prices.
This case has far-reaching consequences. CPR members have frequently held up Sutter Health as an example of a health system that uses its market power to inhibit or prohibit competition by effectively eliminating narrow or tiered network insurance options by health insurers. This has left a significant number of purchasers unable to reduce the premiums for employees by eliminating the most expensive providers from the network through narrow or tiered network options.
Antitrust enforcement is a critically important tool to ensure there is adequate competition in the marketplace. We need there to be incentives for healthcare providers and health insurance companies to create new and better offerings for health care consumers. At the very least, we need to ensure that Sutter and other providers do not unreasonably harm consumers. But without enforcement, antitrust laws will not have their intended deterrent effect. It’s cases like Sidibe v. Sutter Health that provide critical opportunities for enforcement.
Stay tuned to see what transpires in this case!