The mainstream news media is very adept at creating both heroes and villains.  The reason is simple – it is good business to promote stories that elicit strong emotions from their audience.  For the past nine months, hospitals and all frontline healthcare providers have earned a well-deserved “heroes” status from the media by persevering through the never-ending COVID-19 pandemic without regard to their own personal safety or well-being.

CBS’s iconic 60 Minutes show occasionally produces a segment about “heroes”, but it is an iconic show because of its ability to expose and embarrass “villains”.  On December 13th, 60 Minutes focused on its latest “villain”, Sutter Health in a lengthy segment titled “The High Cost of Healing”.  The segment described a 2014 class action lawsuit brought against Sutter Health, a large health system in Northern California, by the United Food & Commercial Workers and Employers Benefit Trust (UEBT).  The lawsuit alleged antitrust violations and related practices that resulted in inflated prices for those employers included in the class action.

The 60 Minutes segment also introduced to America, Xavier Becerra, who is President-elect Biden’s choice to be the next Secretary of Health and Human Services.  Mr. Becerra is currently California’s Attorney General, where he joined the class action lawsuit against Sutter Health in 2018. A year ago, the parties announced an out-of-court settlement, which included $575 million in damages and numerous required changes to Sutter Health’s insurance contracting practices.  It is still pending a judge’s approval due to motions for delays caused by the negative financial impact of COVID-19 on Sutter Health. 

Mr. Becerra and Elizabeth Mitchell, CEO of the Pacific Business Group on Health, both called the tentative settlement a “game-changer” not only for Northern California, but for all other states struggling with the high cost of healthcare.  Ms. Mitchell also indicated that it informed some of America’s largest companies who have employees in UEBT, not only of the alleged monopolistic pricing practices in this lawsuit, but also that similar practices were likely being used in other states.

During the segment, 60 Minutes also interviewed Hillary Ronen, a member of the San Francisco Board of Supervisors.  Ms. Ronen decried the lack of price transparency in Sutter Health’s insurance contract for city employees, while also highlighting the fact that the tax-exempt status of Sutter Health resulted in millions of dollars of San Francisco property taxes being foregone.  This complaint should sound very familiar to hospital administrators as members of Congress have attacked the tax-exempt status of hospitals in the past.

The COVID-19 pandemic has shone a bright light on healthcare’s very complicated and increasingly inequitable financing system.  In past blogs, we have argued that price transparency is here to stay.  We have strongly advocated for the healthcare industry (both providers and insurers) to “self-regulate” by acknowledging the current system’s failings and taking the lead in price transparency reforms or otherwise risk governmental intervention, market disruption or both.  

If Mr. Becerra is confirmed as the next Secretary of Health and Human Services, it is likely that the issue of healthcare pricing regulation will be high on his agenda.  Healthcare leaders could be viewed by the public as “heroes” instead of “villains” by addressing this issue before that occurs.