Antitrust settlement pushes Sutter Health to $613M operating loss

Sacramento, Calif.-based Sutter Health reported a year-over-year increase in revenues in the third quarter of 2019, but the system ended the period with an operating loss, according to unaudited financial documents.

Sutter's operating revenues totaled $3.25 billion in the third quarter of this year, up nearly 2 percent from the same period of 2018. The boost was largely attributable to higher patient service revenues and premium revenues.

After factoring in operating expenses and other costs, including a $575 million antitrust settlement, Sutter ended the third quarter of this year with an operating loss of $613 million. In the third quarter of 2018, the health system posted operating income of $49 million.

The $575 million settlement resolved allegations that Sutter violated California's antitrust laws by using its market power to overcharge patients and employer-funded health plans. The health system is expected to pay the settlement in June 2020, but it accounted for the expense in its most recent quarter.

The settlement must be approved by the court. A hearing on preliminary approval of the settlement is scheduled for Feb. 25, 2020, and final approval is expected in June.

"There can be no assurance that the court will approve the settlement or that the resolution of these matters, including certain injunctive relief, will not have a material adverse effect on Sutter's consolidated financial position or results of operations," reads the health system's earnings release.

Looking at the first nine months of 2019, Sutter's operating revenues increased 4 percent, and its operating loss totaled $539 million. In the first nine months of 2018, Sutter reported operating income of $149 million.

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