Sutter, citing COVID-19 losses, seeks to delay antitrust settlement approval

Dive Brief:

  • Sutter Health, citing “nothing short of catastrophic” financial losses from the COVID-19 pandemic, is seeking to delay approval of its $575 million antitrust settlement with California, according a filing with the San Francisco Country Superior Court.
  • The system stated it could be forced to shut down, divest or convert for other uses some of its hospitals because of the financial losses from the crisis. It asked the court to delay a hearing scheduled for Monday by 90 days or 30 days after the governor declares California is not longer in a state of emergency, whichever is sooner.
  • The office of California Attorney General Xavier Becerra did not immediately respond to a request for comment, but in a court filing last month said the crisis has not changed the underlying antitrust concerns or the need for commercial insurers and Sutter to negotiate agreements.

Dive Insight:

The system argued that resuming the settlement process, which began in February but was delayed for 60 days in April, taking place amid the continuing pandemic would be “impractical, inefficient, and potentially detrimental” to the communities Sutter serves.

Sutter reported a net loss of more than $1 billion in the first quarter of this year and a net loss of $360 million for April alone, according to a report issued to bondholders about a month ago.

The system said then it had lost $500 million from its portfolio, borrowed $400 million from a $500 million credit line and obtained another $100 million credit line in April.

Sutter, a regional powerhouse in northern California, is accused of anticompetitive business practices, such as contracts that require all of Sutter’s facilities to be in an insurer’s network or none of the facilities.

The system averted a jury trial in October by agreeing to the settlement, but did not admit guilt as part of the agreement.

It includes a requirement to cease the all-or-nothing contracts as well as stop bundling services without offering them for a lower stand-alone price. It also places limits on the amount Sutter can increase the charges in its chargemaster list.

In the court filing, the system argued the limit could be too low “to cover the unprecedented and unforeseeable increases in expenditures to respond to COVID-19 particularly given declining revenue.”

“The rules regarding conditional participation were negotiated based on how Sutter existed and coordinated care in the fall of 2019. But as noted above, there is a distinct possibility that Sutter will operate differently as a result of the pandemic,” according to the document.

Posted in Law