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Sutter Health Sued for Anticompetitive Practices

By John Commins  
   March 30, 2018

California prosecutors allege the Sacramento-based health system engages in illegal practices that stifle competition and lead to higher healthcare costs for consumers.

The California Attorney General’s Office has filed suit against Sutter Health, alleging that the largest health system in Northern California is engaged in anticompetitive practices that are raising healthcare costs for consumers.

"Sutter Health is throwing its weight around in the healthcare market, engaging in illegal, anticompetitive pricing that hurts California families," California Attorney General Xavier Becerra said Friday.

"These tactics are risking Californians' lives by driving up the cost of healthcare for everyone. Big business should not be able to throttle competition at the expense of patients," Becerra said.

Sutter Health spokesperson Karen Garner said the Sacramento-based health system was still reviewing the suit and could not comment on the specifics of the complaint.

"It's important to note that publicly available data show that on average, total charges for an inpatient stay in a Sutter hospital are lower than what other Northern California hospitals charge," Garner said.

 The complaint alleges that Sutter Health’s illegal practices resulted in higher prices for healthcare in Northern California by:   

  • Establishing, increasing and maintaining Sutter Health's power to control prices and exclude competition;
  • Foreclosing price competition by Sutter Health's competitors;
  • Enabling Sutter Health to impose prices for hospital healthcare services and ancillary products that far exceed the prices it would have been able to charge in an unconstrained, competitive market. Those pricing practices went toward more acquisitions, extreme levels of executive compensation, and financing its own insurance arm.

The complaint alleges that Sutter violated the Cartwright Act by:

  • Preventing insurance companies from negotiating with it on an anything other than “all-or-nothing” system-wide basis. This means that health insurers are required to negotiate with all of Sutter Health system or face termination of their contract;

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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