Advocate Aurora Health has been hit with a class-action antitrust lawsuit alleging the system has used its market strength in eastern Wisconsin to suppress competition and drive “unreasonably high prices.”
Filed Tuesday, the case was brought by Uriel Pharmacy, based in Wisconsin, and its self-funded health plan.
“Our complaint alleges that Advocate Aurora’s anticompetitive conduct has unlawfully taken huge sums of money from the pockets of Wisconsin employers to fund the hospital system’s never-ending expansion across the country,” Jamie Crooks, managing partner of Fairmark Partners, LLP, the law firm representing the plaintiffs, said in a statement. “Advocate Aurora’s actions in recent years look more like that of a ruthless Wall Street institution that happens to own Wisconsin hospitals instead of a non-profit charity focused on the delivery of healthcare.”
Among the anticompetitive strategies plaintiffs alleged the large nonprofit employed were “all-or-nothing” clauses that require commercial health plans to include all Advocate Aurora facilities in their networks.
Advocate Aurora “aggressively” blocks employers and payers from directing patients to competing facilities, according to the complaint, and “has gone to extraordinary lengths to suppress innovative insurance products, such as tiered plans, that would reduce costs for employers.”
Additionally, the plaintiffs alleged Advocate Aurora suppressed competition from other eastern Wisconsin providers through “a combination of acquisitions, referral restraints, non-competes and gag clauses.”
The result, plaintiffs wrote, is that the system is able to charge and receive higher rates for healthcare procedures.
The $62,538 negotiated price of a knee replacement at Advocate Aurora, for instance, is more than $21,000 higher than that of a nearby hospital competitor. A colonoscopy with biopsy would run employer health plans $10,700 at the large system compared to roughly $4,700 at Froedtert & the Medical College of Wisconsin, “a facility that is about 15 minutes away and has generally higher quality and safety ratings,” they wrote in the complaint.
Plaintiffs asked the court to recognize Advocate Aurora’s monopolization of certain healthcare markets and the damages and injuries it caused. They also sought an injunction preventing further anticompetitive behavior and restitution.
"Although we were just made aware of this complaint, we are already mounting what will be a vigorous defense as all of our decisions are guided by a relentless pursuit to provide the highest quality, affordable care for our patients," Advocate Aurora told Fierce Healthcare in an emailed statement. "Our data continues to demonstrate the added value we provide for our patients, communities and team members by growing as a system. Through our population health model, we drive efficiency and quality improvements, enhance health outcomes and bend the cost curve."
Formed from the 2018 merger of Advocate Health Care and Aurora Health Care, Advocate Aurora operates more than 500 ambulatory locations and 27 hospitals in Illinois and Wisconsin. It treats 2.6 million unique patients, employs 75,000 people and logged just under $14.1 billion in total revenue during 2021 as well as a net income of more than $1.8 billion.
Citing academic literature linking provider consolidation to higher prices, the lawsuit also drew attention to Advocate Aurora’s recently announced plans to merge with Atrium Health. That deal would yield a 67-hospital nonprofit juggernaut with combined revenues exceeding $27 billion.
“If permitted to go through, this merger would further increase [Advocate Aurora’s] market power with Network Vendors, especially the Network Vendors who operate in both the existing [Advocate Aurora] and Atrium markets, according to healthcare economists,” the plaintiffs wrote.