Sutter Health’s antitrust case matters. Here’s why.

In case you missed it: Sutter Health, the Northern California health system titan was recently sanctioned for intentionally destroying 192 boxes of material relating to its anticompetitive actions and alleged overcharges. The material, which amounted to 10 years’ worth of evidence, was initially slated to be destroyed in 2035. Sutter’s Vice President, Melissa Brendt, authorized her executive assistant, Sita Santagata, to destroy the material in 2015. Santagata testified that “in her 17 years at Sutter, she was not aware of any other time when the Managed Care Department authorized destruction of records in storage.” Furthermore, in an email in 2015, Santagata wrote: “I pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding … ’Fingers crossed’ that I haven’t authorized something the [Federal Trade Commission] will hunt me down for.” The Federal Trade Commission is a governmental entity responsible for enforcing antitrust laws. These laws were created to protect citizens from practices that prevent competition in the market. Lack of competition in any market can lead to excessively high prices and reduced quality of services.

Curtis Karnow, Judge of The Superior Court, ruled that Sutter must produce email documents from backups pertaining to 2002-2005. He also indicated that he will review the plaintiff’s request for an adverse jury instruction, a severe penalty for destroying information pertaining to the trial, which is scheduled for June 2019.

The Sutter Health system was the second most profitable health care system in the entire United States in 2013. Let me set it straight: profits are not a bad thing. They signal a healthy and thriving organization. But once it seems that this may be due to eliminating competition and price gouging (for which the plaintiff is suing), then we enter the antitrust world. This becomes even more confusing when considering that Sutter Health is a non-profit organization. Why are they gouging prices? What is Sutter Health doing with this income? If they were reinvesting this income as most would expect, wouldn’t it lead to lower prices, greater community involvement, and improved health outcomes?

This problem is by no means restricted to Sutter Health. We all know that the United States has the greatest health expenditures yet some of the poorest health outcomes of the world’s wealthy nationals. But I would argue that Sutter is paragon as to why this is: In the words of the recently passed Uwe Reinhardt, “It’s the prices, stupid.” Contrary to popular belief, in many categories, the United States does not lead the world in utilization of services. We have shorter hospital stays, fewer doctors, nurses, CT and MRI scanners than many countries with significantly less spending but better health outcomes. This can be broken down into simple arithmetic: Cost=Price of Service * Quantity. We fall in the middle of the quantity pack for many services, so the only way that our costs could be so massive is with excessively high prices. Admittedly, the U.S. does perform some procedures at higher rates than most of the world including joint replacements and heart stents. Not only do we perform these procedures more often, but we also see that they cost more in the U.S. As far as cost to the government, this doubly penalizes us. At 17.6 percent of our GDP and growing, our current health care spending is unsustainable.

Under the Affordable Care Act and even with its uncertain future, there has been a shift in medicine to pursuing high-value care: providers are rewarded for pursuing cost-effective care and penalized for pursuing more expensive care without clear benefits. Intuitively, this makes sense: we should do the things that give us the most bang for our buck. There is just one wrinkle in this solution: What mother will give up their severely preterm baby even if it costs 2 million dollars to save her? Simply on a population-based level, that money could potentially save more lives by giving individuals access to preventative care for cardiovascular disease, the number one killer in the United States.

Some would argue, “We should prioritize children because they don’t have any bad habits that made them sick. What about giving up the experimental $100,000 drug that might give your mother who used to smoke six more months to live?”

Pushing individuals to high-value care is indeed important, but to fix the health spending crisis, we must fundamentally reshape how we pay for our medical care. Drugs get a bad reputation as the primary cause of high medical costs. Interestingly, hospital care, physician, and clinical services accounted for 52 percent of medical expenditures compared to drugs at only 10 percent of expenditures. A biochemical engineer by training and current fourth-year medical student, I have no personal interest in reducing the amount that anyone makes. But something must give.

This antitrust case with Sutter Health may have huge implications as a marker of where our legal system stands on the corporation versus public good. At some point, money must no longer be king. Hospital mergers often allow for improved efficiency; we should pass that efficiency to the consumers instead of charging customers even more.

Justin Bullock is a medical student.

Image credit: Shutterstock.com

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