BLOOMBERG FEATURE ON SUTTER’S MARKET POWER FUELS DEBATE ON SKY-HIGH HEALTH CARE COSTS
|Sutter operates both Eden Medical Center
and San Leandro Hospital, while holding
35 percent of the market in Northern California.
“Sutter really has us over a barrel,” a retired police officer told Bloomberg’s Peter Waldman in an excellent feature on Sutter Health’s rising market power in Northern California. It seems Sutter has many entities in a bind when it comes to lower health care prices and offering affordable service to the poor and indigent.
In the lengthy piece published today, Waldman describes Sutter’s ability to charge wildly inflated prices for the same procedures neigbhoring competitors charge far less to execute. An economist says Sutter’s rising market share is a cautionary tale in national health care reform. Executives from health insurance companies Aetna, HealthNet and Blue Shield would not speak on the record for the article, giving the impression both companies, themselves the targets of legislative oversight in Sacramento for charging exorbitant increases in premiums for many Californians, may be pushing some of the heat back on health care providers. “Sutter says to all of its payers–to the best of our knowledge–‘These are the terms by which you will deal with Sutter. Take it or leave it.’,” said an Aetna employee. The elusive CEO of the non-profit Sutter Health Pat Fry, though, says, “Our mission is not to maximize profits.”
The Bloomberg article notably makes reference to San Leandro Hospital, in addition, to its brief courtship last summer with Prime Healthcare. Fry repeated Sutter and the Alameda County Medical Center’s claim San Leandro Hospital is more valuable to residents as an acute rehabilitation facility than a fully-functioning hospital with emergency room services. “You just can’t close something that serves 25,000 people and expect nothing will go wrong,” said Alex Briscoe, director of Alameda County Health Services. “The impact could cost some lives.” Briscoe has offered this statement in the past, but not without certain caveats, namely that the county could absorb the influx of patients to surrounding hospitals if San Leandro Hospital is closed.
Prime and its owner Dr. Prem Reddy attempted with great fanfare to lure San Leandro Hospital into its own growing orbit until Sutter sent the company a stinging letter to back off. The letter referenced an article in The Citizen when a director for the Eden Township Healthcare District implied they had other suitors for the hospital, including Prime. In some ways, according to the brief history of Sutter in the Bloomberg piece, Prime could be the Southern California version of Sutter in terms of accumulating market share through its non-profit status. Like Sutter in the 1980s, Prime has quickly made a name for itself as a rehabilitator of bankrupt local hospitals. San Leandro Hospital in many ways, to Prime, fit this basic profile. Yet, there still remains a stigma among officials in Alameda County over Prime and its own controversial billing practices.
While Sutter has in many ways gamed the local hospital system to its advantage, the scope of this article also shows just how extraordinary the grassroots movement by nurses and activists at St. Luke’s in San Francisco [Also, California Nurses Association files class-action suit against Sutter for discriminating against Filipino workers] and here in San Leandro have staved off imminent closure despite the considerable forces up against it. If not for their constant pressure, San Leandro Hospital would be nearing the first anniversary of its closing next month, instead, with Sutter’s recent announcement the facility would remain open while its lawsuit against the District is litigated, its doors remain open indefinitely.