How a Hospital System Grew to Gain Market Power and Drove up California Health Costs

60 minutes | Lesly Stahl | Dec 13, 2020

The coronavirus pandemic has unleashed more than a flood of disease in this country. It's also expected to accelerate a wave of hospital mergers and acquisitions – with big hospitals buying up smaller ones. This consolidation, economists say, is one of the main reasons the cost of health care in this country is going through the roof.

There's a lawsuit over this in COVID-ravaged California, with the state attorney general claiming that Sutter Health, a hospital chain based in Sacramento, got so big it had essentially become a monopoly.

On the eve of the trial, Sutter tentatively agreed to a settlement that's awaiting a judge's approval. But this is, even at this stage, a landmark case because it pulled back the curtain on what has rarely been seen or so thoroughly documented before: how and why hospital prices have been skyrocketing.

Sutter is a sprawling health care system that's the largest and most dominant provider in Northern California. 

Xavier Becerra: They're like the bully on the block. They were able to bully everyone else to conform; it was my way or the highway.

The state's attorney general, Xavier Becerra, filed a civil lawsuit against Sutter in 2018. We interviewed him before the pandemic and before he was nominated for secretary of Health and Human Services. 

Watch interview here

Hospital Consolidation in California Linked To Higher Health Prices 

San Francisco |  Catherine Ho |  Sept. 5, 2018

Growing consolidation among hospitals and doctors’ practices in California is linked to higher health insurance premiums and higher prices for specialty and primary care, according to a study by UC Berkeley researchers published Tuesday.

In California, between 2010 and 2016, the percentage of doctors in medical practices owned by hospitals grew from 25 to 40 percent. The shift is associated with a 12 percent increase in Affordable Care Act insurance premiums, a 9 percent price increase for outpatient doctors’ visits in four specialties — cardiology, oncology, orthopedics and radiology — and a 5 percent price increase for primary care office visits, the study in the health policy journal Health Affairs found.

The prices represent what health care providers are charging; the costs are split between consumers and their insurance plans.

There are several reasons a doctors’ practice owned by a hospital or hospital chain can charge higher prices. A hospital can tack on what’s called a facility fee, which pays for overhead costs like building maintenance. And a doctors’ practice acquired by a larger, well-known health system like...

Read more here.

As California Hospitals Sweep Up Physician Practices, Patients See Higher Bills | California healthline