When Is a Win Not Really a Win?

Note: This piece was originally published over the weekend in our Sunday newsletter. Want content like this delivered to your inbox before it hits our blog? Subscribe here.

The Big (?) Story: Jury sides with Sutter Health in federal antitrust case

“A jury sided with Sutter Health on Friday in the long-running federal lawsuit accusing the health system of anticompetitive business practices that drove up healthcare costs by more than $400 million.”

What it Means for Health Systems

(3-minute read)

The short version of what the Sutter result means: One specific health system won one specific legal battle.

That’s it.

Time for more? Read on.

The California health system’s case is making waves in the healthcare trades and among industry insiders. Understandably so. A large system received a favorable jury verdict regarding alleged anticompetitive practices in an environment where that outcome was far from a foregone conclusion.

But while Sutter can take a breath, the provider side of the industry can’t. Or at least shouldn’t. Because this legal result does nothing to change the big-picture issues that are facing hospitals and health systems. Remember that this case began a decade ago and has focused on insurer contracts and antitrust issues, which have direct implications for the cost of care and patient access. Those topics are as hot today as they were 10 years ago.

A few key points stand out when looking at the decision. Note: We’re not making any statements about the legal issues. For that, we’ll recommend this concise piece from our friends at Bass Berry & Sims.

  • “It’s complicated.” In coverage of the jury’s decision, the words “technical” and “complex” came up repeatedly. It was clearly (and rightfully) a challenge for the experts to break down for the jury. The implication is that the complexity of the case made it difficult to clearly determine that Sutter had done wrong. So the default, when faced with a binary choice, was to side with Sutter. Another Modern Healthcare article that discussed this case and its “cousin” case – which Sutter settled – makes this very point. It’s that subtle philosophical difference between “innocent” and “not guilty.”
  • The narrative continues. What happened in the courtroom isn’t likely to mean much in the court of public opinion. The fortunes of one health system aren’t likely to alter the ongoing barrage by critics who maintain that hospitals are Big Business focused on profit over mission, they engage in willful anticompetitive practices, they harm patients through financial malfeasance.

So, yes, the case may have an effect on contracts in California going forward. But this verdict is a sidenote when it comes to the overall trends in healthcare and public perception thereof.  The critics are simply reloading.

So how should providers react?

  1. Unless you’re Sutter, don’t relax. Talk to your legal team. Appreciate that the federal case was an overreach and perhaps too detailed for the plaintiffs to win. Certainly don’t assume that the FTC, DOJ, insurers or anticompetitive activists will back off.
  2. Evaluate the opposition. A single legal loss in a high-stakes and very large scale, systemic dispute won’t deter those siding with the plaintiffs. If anything, hospital critics now have more information about what works and what doesn’t when it comes to pushing the anticompetitive narrative. They’ll use their notes to build a stronger and, presumably, clearer case for next time. Frankly, we’ve consistently seen that hospital critics do a pretty good job of telling a compelling story. Expect this setback to both encourage them and provide them with new resources to further refine their narrative.
  3. Prepare for more. Continue reviewing both your operations and your communications. As always, get everyone in the room for discussions about how your organization is approaching the myriad financial issues raised by critics. Look for gaps and misalignment between clinical, ops, marketing and comms, government relations, community outreach, legal and payer relations. Then, for the marcom team specifically, double down on telling your organization’s story.
  4. Speaking of payer relations… the Sutter case with several other recent high-profile public provider-payer disputes, show how quickly things can escalate once that tension first appears. Avoid escalation. Have your GR team engaged and building relationships with policymakers. Same thing for your payer relations team. That way, if – when – things get tense, you’re starting with a base of personal relationships and mutual understanding. We’re not naïve enough to suggest that occasional drinks with a payer rep is enough to stave off a contentious negotiation, but a bit of human connection won’t hurt. Additionally, even if you “win” a nasty battle, the critics will have had plenty of chances during the process to put dents in your reputation. Over time, dents can become cracks and, well, that’s not ideal.

This piece was originally published over the weekend in our Sunday Quick Think newsletter. Fill out the form to get that in your inbox every week.

David Shifrin
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