San Francisco Bay Area companies say Sutter Health, the largest medical system in Northern California, is strong-arming them into a contract that would help the hospital system secure its power over prices and potentially raise the cost of medical care for their employees in the future. Dozens of companies have received a letter, via their insurance administrators, asking them to waive their rights to sue Sutter. If they don't, a fact sheet says, the companies' employees who get care through Sutter's network of hospitals, doctors and medical services will no longer have access to discounted in-network prices.
“In both choices, Castlight and our employees lose,” says Jennifer Chaloemtiarana, general counsel for Castlight Health, a tech company in San Francisco.
As an employer that pays its employees' medical claims, Castlight doesn't like the idea that it will never be able to challenge Sutter over its prices in open court … waiving that right would only help strengthen the power of Sutter's “already dominant” provider network.
Economists have long argued that Sutter uses this power to charge more for its services. Sutter's hospital prices are about 25 percent higher than other hospitals around the state, according to a recent study from the University of Southern California. Having a very strong, dominant provider system will reduce choice.
“Recent academic studies have been one-sided and misrepresent the competitive environment of Northern California,” said Bill Gleeson, vice president of communications for Sutter, adding that the studies “unjustly inflate the so-called market share of Sutter. There's competition all around.” Gleeson says companies “can't accept deep discounts and make up their own rules.”
A former liberal radio talk host who likes to ask the “follow-up question” at Democurmudgeon.blogspot.com