USA –A class-action antitrust lawsuit has been filed against Advocate Aurora Health, alleging that the system used its market power in eastern Wisconsin to suppress competition and drive “unreasonably high prices.”
The case was filed by Uriel Pharmacy, Wisconsin company with a self-funded health plan, alleging that the Midwest system overcharged for services and forced employers into “all-or-nothing” contracting, requiring all Advocate Aurora facilities to be in-network.
The lawsuit claims that Advocate Aurora Health engaged in a number of anticompetitive practices to raise healthcare prices at the expense of Wisconsin businesses.
The lawsuit, which seeks class action status, claims that restrictive contracting terms have prevented employers from cutting costs.
Advocate Aurora is said to have gone to “extraordinary lengths” to limit insurance products that seek to exclude specific Advocate Aurora Health facilities, potentially saving employers money.
Instead, Advocate Aurora requires all-or-nothing contracting, which means that if one Advocate Aurora facility is in-network, all Advocate Aurora facilities must be in an employer’s insurance network.
According to the lawsuit, as a result of these anticompetitive contracts, Advocate Aurora is able to charge higher prices than competitors.
The lawsuit alleges that the cost of a hip or knee replacement at an Advocate Aurora facility in Milwaukee is US$62,538, which is more than US$21,000 higher than a competitor’s price five minutes away.
Advocate Aurora’s outsized presence in local markets in turn leads to a “systemwide power that gives it market power over its entire service area,” according to the lawsuit. Advocate Aurora operates hospitals across Illinois and Wisconsin.
“Our complaint alleges that Advocate Aurora’s anticompetitive conduct has unlawfully taken huge sums of money from the pockets of Wisconsin employers to fund the hospital system’s never-ending expansion across the country,” said Jamie Crooks, managing partner of Fairmark Partners, LLP, which represents the litigants.
The lawsuit comes on the heels of Advocate Aurora’s announcement that it will merge with Atrium Health to form one of the nation’s largest health systems, with a combined revenue of US$27 billion.
The agreement would create a 67-hospital system spanning six states in the Midwest and South.
After Sutter Health was sued by a grocer’s union in 2014, the former California attorney general became interested in all-or-nothing contracting.
HHS Secretary Xavier Becerra, then the California Attorney General, reached a US$575 million antitrust settlement with Sutter in 2019 that prohibited the system from engaging in all-or-nothing contracting, among other conditions.
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