Sutter Health demands arbitration from employers--or higher charges

Sutter Health, the large hospital chain in Northern California, is pushing for employer groups that contract for its services to agree to arbitration if there are legal disputes, or pay far more for services at its out-of-network facilities, according to NPR. 

The request for an arbitration clause is seen as a way for Sutter to save money on legal costs if there is a dispute. If employer groups do not comply, they will face charges at out-of-network Sutter facilities that would be at 95 percent of full charges, potentially creating huge bills for those groups.

The demands have raised concern that Sutter is using its market clout to not only wrest major concessions from self-insured employer groups, but also to discourage them from joining a class-action lawsuit accusing Sutter of inflating prices and engaging in anti-competitive tactics, according to Kaiser Health News.

"Their choice is between two unacceptable alternatives: Pay 95 percent out-of-network pricing for enrollees that access Sutter services or agree to give up their claims in this litigation," David Lansky, president of the Pacific Business Group on Health, told Kaiser Health News. Lansky noted that Sutter's market reach is too large for his members to provide coverage without contracting with Sutter hospitals.

Sutter said the arbitration clause would not preclude employer groups from entering the class-action suit. Instead, a spokesperson said, it was intended to keep costs down.

Sutter has long drawn criticism for its prices, which tend to be higher than other providers in California by as much as 30 percent. In the already expensive Bay Area, where continued consolidation has raised concerns about pricing, Sutter charges 40 percent more than other hospitals in that area. One major insurer, Blue Shield of California, has called out Sutter's business practices in recent contract negotiations.

To learn more:
- here's the NPR article
- read the Kaiser Health News article

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