Large Hospital Group SUED for lack of transparency!

As we alluded to in many of our previous posts and videos, one of the most important problems facing healthcare is absolute and total lack of transparency. A recent lawsuit filed by the State of California has exposed that practices that cost BOTH patients AND physicians as a result of a lack of transparency are very real in our healthcare system today. 

It is not uncommon for hospitals to be very vague when it comes to posting prices for its services, including physician services. To make the problem even worse, most doctors don't know how much certain services cost even their own!

One state, at least, is finally doing something about it. 

Last month, California filed a lawsuit against one of the largest hospital organizations in the state - Sutter Health. 

The main allegations in the court filing have included overcharging patients, not being transparent about prices, and engaging in unfair business practices when it comes to obtaining insurance contracts -- everything that we talked about in our videos in the past year. 

According to USA Today, "Sutter Health has gobbled up doctor practices across the Bay Area, gaining market muscle that has pushed costs upward. Obstetricians employed by Sutter Health, for example, are reimbursed about three times more for the same service than independent doctors, according to a KHN review of OB-GYN charges on several insurers’ online cost estimators. It’s a key reason why Northern California is the most expensive place in the country to have a baby."

This revelation hits physicians (and all healthcare professionals) on two fronts.

First, the practices that Sutter Health is alleged to have engaged in have skyrocketed the price of a typical medical service. While that seems bad, wouldn't independent physicians benefit from increased business due to competitive pricing?


In this current state of healthcare, patients are normally not privy to the actual prices of the medical services they are undergoing until they receive the bill, so they don't know if they are paying 3x for a procedure - especially one as stressful as childbirth. And if they are above their deductible, they really don't care what the reimbursed rate is, anyways. That's up to their insurance company. 

So, independent physicians only lose out in an arrangement like this. They don't get the market rate reimbursement for their services and can't make it up any other way. And employed physicians don't either.

You might say, at least it's good to be a obstetrician employed by Sutter Health making 3x as much in reimbursement rates, right?

Again, NO!

Sutter Health is getting the reimbursement rate, not the physician. So just because Sutter Health charges 3x for a procedure, they take as much as they have agreed to take from that and then pay the physician actually performing the procedure whatever is left. And in most cases, that is not much. 

Despite Sutter Health being a 'non-profit organization', they turned healthy nearly $1 billion profit in 2017, all while allegedly taking advantage of the lack of transparency in healthcare to increase that profit. 

One could argue that it's not Sutter Health's fault alone in their practices, because after all, in an industry that lacks transparency this much, could you fault one hospital group from taking advantage?

BUT, while this circumstance seems very bleak for physicians, it's actually NOT!

As we have stressed before, it's time now more than ever for physicians NOT BE AFRAID to ask questions!

Because while there is a crippling lack of transparency in healthcare costs today that creates a lack of transparency in physician compensation, physicians are also in HIGH DEMAND in the U.S..

There is a growing physician shortage in the U.S. so while it may seem like the medical groups have the upper hand, THEY DON'T!

So don't be afraid to ask perspective employers about every detail when it comes to getting paid, and if you are independent, don't be afraid to negotiate higher reimbursement rates with your contracted insurance companies.

They need you more than you need them! 

Reimbursement Rx will continue to bring you the latest and update on how healthcare professionals can still thrive in this environment. 

For more reading on this issue, check out the following articles:

California takes on health care giant over high costs

California sues hospital giant Sutter Health, where study found prices 25% higher

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