health care industry

Sutter Health sued; socialized medicine needed

The State of California is suing Sutter Health Care for price fixing. The statistics behind the suit show that, while “Medicare for all” would be a positive step, what’s really needed is socialized medical care – take Sutter and their ilk under public ownership.

Sutter has become the health care giant in Northern California, operating 24 hospitals and 35 outpatient facilities. According to the SF Chronicle (3/31/18), the lawsuit alleges that Sutter uses its marked domination to engage in a variety of uncompetitive practices, one of which is an “all or nothing” policy. What Sutter does is demand that an insurance company contract with all Sutter hospitals everywhere or with none of them. Given Sutter’s dominance in some areas, the insurers have to use them. So Sutter can jack up its prices even in areas where it isn’t dominant. (Other large hospital chains use the same practice.)

The statistics in the article certainly seem to back it up:

  • Medical procedures in hospitals in Northern California are 20-30% higher than in Southern California even after accounting for differences in cost of living, and “research suggests research suggests that increased consolidation in health care markets” (SF Chron. 3/31/18) is the reason.
  • After Sutter acquired Summit Hospital in 1999, prices rose between 28% to 44%.
  • Between 2004 and 2013, “prices grew 113% at hospitals that were part of the largest health systems – compared with 70% across all hospitals in the state.” (In other words, the smaller hospitals took advantage of the market domination by jacking up their rates too!)
  • Charges at hospital chains that use the all-or-nothing system average $7,000 higher per patient than at those who do not.

Corporate consolidation has been the way of the world under capitalism. It’s happened in everything from the airline industry to auto manufacturing, and it’s inevitable in the health care industry. However, what’s helped accelerate this has been the consolidation in the insurance industry. This encouraged the sellers to those insurance companies – the hospitals – to consolidate even more.

A lawsuit will not stop this nor the resulting practices. There are too many bookkeeping tricks and other methods of hiding what they’re doing, and in any case the courts will end up siding with the private corporations. Socialists should support “single payer” or nationalized health insurance, but we should also be pointing out that that is nowhere near enough. What’s really needed is socialized medical care – take the entire health industry (including the pharmaceuticals) under public ownership, and under the control and management of the workers and the patients themselves.

Anything less is simply tailing after the liberal reformers.

Sutter Health Care:
They use their market dominance to jack up prices.

Categories: health care industry

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