Sutter posts large Q3 loss due to settlement of antitrust lawsuit

By | January 2, 2020

Dive Brief:

  • California hospital chain Sutter Health reported a $ 689 million loss for the third quarter ending Sept. 30. Much of that is due to a $ 575 million set-aside in anticipation of settling an antitrust lawsuit sometime next year. A state court judge will preliminarily finalize the settlement in February with a final settlement scheduled for June.
  • Sutter also disclosed in financial filings a potential class-action lawsuit alleging it shared medical information of patients without authorization. Sutter noted that if the suit moves forward and is certified as a class-action it could also have a “material adverse effect” on its finances in the future.
  • The health system also saw a decline in its investment income. However, revenue from its hospitals and clinics grew compared to a year ago.

Dive Insight:

Sacramento-based Sutter Health, the dominant hospital operator in the Bay Area and many other parts of Northern California, saw a $ 630 million loss on operations for the third quarter of 2019. Revenue was up slightly for the quarter to $ 3.17 billion, compared to $ 3.13 billion a year ago.

For the first nine months of 2019, the nonprofit reported a loss of $ 242 million on revenue of $ 9.7 billion. It reported a surplus of $ 253 million on revenue of $ 9.3 billion for the first nine months of 2018. For calendar 2018, it reported a loss of $ 127 million on revenue of $ 12.5 billion, although operating income was $ 127 million. A large part of that red ink was attributed to a $ 383 million loss on investments.

Sutter agreed earlier this month to settle a high-profile lawsuit initially brought by labor unions but later joined by California Attorney General Xavier Becerra accusing of it engaging in anti-competitive practices. The settlement was reached in October, just as the case was going to trial.

Read More:  Why weight loss overnight

In addition to the payout, Sutter also agreed to stop engaging in a variety of business practices, including ceasing contracts that require all of Sutter’s facilities be in-network with payers, or none of them will. It also agreed to cap out-of-network charges and stop bundling services without offering them for a lower price as a standalone product.

While Sutter appears to be on the way toward settling one large legal headache, it suggested another lawsuit filed earlier this year alleging a large-scale breach of patient data could represent another sizable hit to its bottom line. It noted its earnings report that “there can be no assurance that the resolution of this matter will not have a material adverse effect on Sutter’s consolidated financial position or results of operations.”

Healthcare Dive – Latest News