|
|
Press Release August 10, 1999 |
Contact: |
|
|
|
San Francisco - California Attorney General Bill Lockyer filed suit today in federal court to stop the proposed merger of nonprofit Sutter Health with nonprofit Summit Medical Center in Oakland and Sutter affiliate Alta Bates Medical Center in Berkeley. Consumers Union commends the Attorney General for his vigorous action, especially after the Federal Trade Commission declined to object to the proposed deal. Sutter is northern California's largest nonprofit integrated health-care system, and the independent nonprofit Summit Medical Center is one of the East Bay's largest hospitals.
The lawsuit filed by the Attorney General alleges that the proposed merger may substantially lessen competition among acute care hospitals in Oakland, Berkeley, and other East Bay communities. The suit is filed under Section 7 of the Clayton Act, a federal law that prohibits anti-competitive mergers in any section of the country.
By some accounts, the merger, coupled with the planned partial closure of Kaiser Oakland next year, would leave Oakland with only two acute care hospitals and give Sutter Health control of 60 percent of the beds in Oakland. Sutter Health affiliate Alta Bates Medical Center is the only acute care hospital in Berkeley, and the merger would give Sutter control of 70 percent of the hospital beds in Berkeley.
"We care about this transaction because it could diminish competition in the Berkeley/Oakland hospital market and negatively affect price, service quality, and accessibility of health care in these communities," said Julio Mateo, Jr., a Consumers Union attorney.
According to a report recently released by Consumers Union, the national trend is toward the consolidation of nonprofit health care systems. In 1997, 75% of the hospital buyers nationally were nonprofit organizations, compared to 67% in 1996 and only 36% in 1994.
"With consolidations, increases in prices and reductions in charity care and other hospital services are likely," said Mateo, co-author of the report. "A merger proposal must include tight and legally enforceable guarantees for the provision of charity, emergency room, and other hospital services to mitigate the adverse health impact and anti-competitive effects of this merger. Price increases must also be limited to the rate of inflation for a period of time until the market adjusts to these changes. The current proposal does not satisfactorily address any of these concerns."
"Sutter and Summit say they are proposing this merger to save money and protect health care in the East Bay," Mateo said. "Under law, it is possible for hospitals to pass the potential savings achieved by mergers back to consumers in the form of charity care and other commitments in the sales agreement. Regrettably, however, it looks like the hospitals would rather litigate than enter into an agreement with the Attorney General that is in the best interests of the community."
Four years ago, Consumers Union began a national effort known as the Community Health Assets project. The project seeks to protect nonprofit charitable assets and to limit the potential adverse health impacts that may result from hospital consolidations. Consumers Union's report, "White Knights or Trojan Horses? A Policy and Legal Framework for Evaluating Hospital Consolidation in California" may be obtained by calling (415) 431-6747 or accessing the Consumers Union web site at http://www.consumersunion.org/resources/publications.htm#wc.
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
