Lesley Stahl: They can't fight either? Lesley Stahl: I understand that the City and County of San Francisco spends roughly $800 million a year in health costs. An injection of cash from the state could help hospitals avoid or reduce pay cuts and layoffs, she said. The problem is it has not been achieved in these mergers. Xavier Becerra: This settlement is gonna change the life for hundreds of thousands of Californians. Elizabeth Mitchell: This is happening in Maine. The layoffs are spread across over a dozen Adventist Health hospitals in California. Palomar Health, which runs three medical centers in northern San Diego County, recently instituted 21-day temporary layoffs of 221 employees. Laying off and furloughing staff is a “recipe for disaster,” said Stephanie Roberson with the California Nurses Association. Elizabeth Mitchell: That's right. Lesley Stahl: Sutter was forcing big companies to cover hospitals in places where nobody worked for the company lived? Attorney general Becerra and Sutter are waiting to see if the tentative, out-of-court settlement they reached is approved. At the outset of the pandemic, the state asked hospitals to prepare for a surge and make room for about 40,000 more patients at once. Wow. 11 California employment law changes for 2020 Employers in the state may need to brush up on recent changes and prepare for those still to come. That means canceling surgeries and procedures and more,” she said. California Health Care Workers Test Positive In What Experts Predict Will Be ‘First Of Many’: Staff members of the UC Davis Medical Center, including one emergency room nurse, have tested positive for COVID-19. It's happening across the country, the largest health systems are buying up everything. The Kaiser Family Foundation (KFF) posted study results of CARES disbursement this spring in an analysis of 4,564 hospitals, including 3,242 short-term care facilities and 1,322 so … And you can't explain it away by the cost of living, cost of labor. California Sunday Magazine will go online only . Lesley Stahl: And there's one or two hospitals in a thousand square miles? The coronavirus pandemic has unleashed more than a flood of disease in this country. An injection of cash from the state could help hospitals avoid or reduce pay cuts and layoffs, she said. For once in their life the insurance company is not the worst actor in the room, it's Sutter. From March 1 to March 25, 139 companies in California reported laying off 18,998 employees. Broadcast associate, Claire Fahy. They were able to bully everyone else to conform; it was my way or the highway. The suit accuses Sutter of embarking on "…an intentional, and successful, strategy…" of cornering much of the market in Northern California, and then jacking up prices -- for example, on the price of delivering a baby. Currently, claims can take up to 90 days to process, but “we need to move those dollars more quickly,” Coyle said during an Assembly budget hearing last week. And some of these counties are 1,000 square miles. As of Tuesday, only five patients were being treated there. Adventist Health's other layoffs hit across the state, including at Adventist locations in Los Angeles and Northern California. It's happening in Texas. Xavier Becerra: They're like the bully on the block. Caring for a premature baby in Northern California, for example, costs about $605,000. The state accused Sutter of using its "windfall" from its "excessive pricing" to finance the acquisition of new hospitals and physicians groups. And at one hospital alone they're avoiding $20 million a year. That they use their size to reduce their prices. This week, California hospitals are planning to ask the state for $1 billion before June 30 to help with immediate revenue losses, said Carmela Coyle, the CEO of the California Hospital Association. This data is collected daily and the number of infected nurses and health care workers continues to … Did you take all that into consideration? It was all or nothing and no employer could do without all of the Sutter system. So they have monopoly powers in a number of these counties, right? Glenn Melnick: So we called it the "Sutter effect," where if you have a large, dominant system like this, they raise their prices high, all their competitors can raise their prices higher. Elizabeth Mitchell: As an example, they control the maternity care. Hillary Ronen: That's right. Glenn Melnick: They really pioneered this model of reducing competition to raise prices. COVID-19 cases top 200 at hospital as layoffs announced. The labor challenge for health systems, she said, is that not all positions transfer smoothly into surge preparedness. They can reduce duplication and they can cut costs. On Thursday, another union, SEIU-United Healthcare Workers West, will be protesting a 20% pay cut at Stanford Health Care. Paulson, the nurse practitioner, applied to the state’s Health Corps and was recently offered a position at a clinic in Berkeley. Lesley Stahl: When you did the investigation, did you look at other variables that might have been the reason for the higher prices? A group of Palomar Health employees lined the sidewalk along Pomerado Road in front of Palomar Medical Center Poway on Monday morning to object to a 21-day layoff of 221 district employees. Xavier Becerra: I think it's a game changer. At the same time, hospitals have had to pour resources into protecting both its employees and incoming patients from COVID-19 infection, Ku said. – The new field hospital with 125 beds will help ease the burden on the local hospital system amid the growing COVID-19 Coronavirus crises. Lesley Stahl: It's just Sutter hiking prices. With coronavirus spread, California layoff notices surge … So there's kind of this second-order effect: that this type of behavior leads to much higher prices across the board. It is just the prices. It-- it's unbelievable. A nurse in a primary care office or one who specializes in orthopedic care, for example, perhaps wouldn’t be the best fit to care for a coronavirus patient on a ventilator, she explained. And to pay its outgoing CEO $13 million in 2016, and a year later, paid its new CEO $6 million. The state's attorney general, Xavier Becerra, filed a civil lawsuit against Sutter in 2018. And business taxes that they don't pay are added on top of that. We've got some facilities that are behaving the same way. Of these Health Corps members, 233 are on call to staff the Sleep Train Arena, the former Sacramento Kings playing venue which was prepped for up to 400 patients with mild or moderate cases of COVID-19. Last month, for instance, about 150 registered nurses in San Jose and San Diego were temporarily laid off because of department closures and the cancellation of elective procedures, Roberson said. Her organization has been protesting these layoffs. KQED in northern California laid off 20 people and reduced hours for other employees. She called her patients, many of whom followed her from her previous workplace, and told them she hoped to be back by June. Meghan McCarty Carino Dec 31, 2020. Citing a revenue drop of 60 percent due to the COVID-19 pandemic, Rutland City, Vt.-based Rutland Regional Health System has furloughed 150 employees, according to WCAX. Copyright © 2021 CBS Interactive Inc.All rights reserved. A recent survey of more than 3,200 physicians by the California Medical Association, for example, found that 49% of practices have had to lay off or furlough staff. May 26, 2020 Registered nurses at 15 HCA hospitals in six states will participate in actions Thursday and Friday to protest demands by the nation’s largest hospital chain for widespread layoffs and economic cuts that nurses say will also put patients in danger. Lesley Stahl: But what about this idea of coordinated care? A reason their health costs were so high, she says, is because Sutter was able to block the city and its insurer, Blue Shield of California, from steering employees to hospitals with lower prices. Lesley Stahl: So here you have these giant companies. Hiring is based on need and geography, according to the agency. For the record: 5:41 PM, May. Lesley Stahl: Do you think that this is the main reason that health costs are going up? We interviewed him before the pandemic and before he was nominated for secretary of Health and Human Services. ", Lesley Stahl: Now they control the maternity care in Northern California--. And so we can't comparison shop. Edited by Jorge J. García. That's just a fraction of the real total. We're not getting, you know, healthier people. A temporary hospital which is been settled up by members of the California National Guard is seen in Indio, California on March 29, 2020. And yet the opposite has been true in health care. Updated 4:53 pm EST, Thursday, December 17, 2020 Till they amassed a conglomerate of 24 hospitals, 12,000 physicians, and a string of cancer, cardiac and other health care centers. Hillary Ronen is a member of San Francisco's city and county board of supervisors and sits on its budget committee. Hillary Ronen: Sutter won't allow us to see how much they charge for their services. They merge and then they use their market leverage to increase prices. Xavier Becerra: They were gobbling up hospitals. It is the largest driver of health care cost increases. In late April, Gov. Support Times of San Diego's growthwith a small monthly contribution. Lesley Stahl: I actually heard that it costs more to deliver a baby here in Sacramento than anywhere else in the entire country. And they could not control Sutter? This consolidation, economists say, is one of the main reasons the cost of health care in this country is going through the roof. Xavier Becerra: You live in Sacramento, you can expect to pay twice as much to deliver that baby here than in your hometown of New York City. And they do it because they can. “My rationale is they’re going to go on unemployment, and then we turn around and pay someone else,” Wood said. Sutter is a sprawling health care system that's the largest and most dominant provider in Northern California. But this is, even at this stage, a landmark case because it pulled back the curtain on what has rarely been seen or so thoroughly documented before: how and why hospital prices have been skyrocketing. Layoffs involving excluded (supervisory, managerial, and confidential) employees and rank-and-file employees in nearly all bargaining units are based on the employees' total State service. The hospitals have much in common. Sutter Health is in the midst of a lawsuit for business practices that drove up health care prices for Californians. Hillary Ronen:  Sutter avoids tens of millions of dollars a year in local property taxes. And they figured out, "Wow, this really works! Lesley Stahl speaks with  Elizabeth Mitchell, California Privacy/Information We Collect. They were the first one to do it. And the prices continually grew faster and faster than other comparable hospitals. >> Subscribe to Times of San Diego’s free daily email newsletter! “So you have furloughs happening in community health centers and in certain departments of hospitals, while at the same time there is concern about a surge and we’re hearing these calls for things like a health corps,” she said. Xavier Becerra: That's why this investigation took years, because you have to eliminate all the other reasons that might be out there. Out of the approximately 94,000 people who have applied to the state’s backup medical reserve, 551 have been accepted into the program. injuries. In late March, Gov. Elizabeth Mitchell: Well, that is true in every other industry. CalMatters is a nonprofit, nonpartisan media venture explaining California policies and politics. Coyle said hospitals have done their best to keep their staff, but furloughs and layoffs have begun. Coronavirus, layoffs and cutbacks have nurses at Baystate Noble Hospital concerned about future Updated Mar 11, 2020; Posted Mar 11, 2020 Nurses Dennise Colson and … ", Lesley Stahl: You might look at that and say, "That's monopolistic." What they came up with is a model that allowed them to acquire market power, and get higher prices without doing any of those good things for consumers. Elizabeth Mitchell: We have seen the data. They were gobbling up physicians through these physician practices. 02, 2020 This article has been updated to clarify that Stanford Health Care cook Sarah Jane Von Wettberg chose a … Glenn Melnick: That's right. It's also expected to accelerate a wave of hospital mergers and acquisitions – with big hospitals buying up smaller ones. Glenn Melnick: If Sutter is able to raise their prices by improving quality, value, and service, that's fine. Good for them!". Maybe equipment was better? Elizabeth Mitchell: They could not. Meanwhile, clinics and doctors’ offices continue to struggle with a drop in revenue as patients are advised to avoid non-emergency in-person visits. Lesley Stahl: Sutter says that when you have a system as big as theirs, what they can offer is coordinated care. Gavin Newsom allowed hospitals to resume some elective surgeries, which is the bread and butter for many facilities. Produced by Richard Bonin. This week, the Legislature’s Latino Caucus sent a letter to the Newsom administration also warning that many of the state’s health centers will not be able to remain open much longer “without significant financial support from the state.”. Cash-strapped hospitals lay off thousands of health workers despite COVID-19 staff shortages ... 2020 2:00PM (UTC) ... it would lay off at least 300 workers at a Detroit-area hospital … There's a lawsuit over this in COVID-ravaged California, with the state attorney general claiming that Sutter Health, a hospital chain based in Sacramento, got so big it had essentially become a monopoly. They were just munching away, getting bigger and bigger. Patient visits in the San Ramon office had gone down by almost 80% as the coronavirus outbreak kept people at home. Hospitals Lose Money During Pandemic; Healthcare Workers Face Layoffs, Cut Hours Faced with lost revenue from canceled elective procedures, hospitals laid off … Xavier Becerra: It's domination of the market. That money comes from the same pot of money that we use to build new homeless shelters to hire firefighters, to pave our streets, to repair our parks. Martha Bellisle, Associated Press. And the quality isn't increasing. Lesley Stahl: So you think this-- what you did'll become a model. Elizabeth Mitchell: And sometimes they would have to include hospitals that were in regions that the employers didn't even have employees in. Quality might have been better? Lesley Stahl: You called this case a "big effing deal." And they did this very strategically. That's- that's really clever. But as of last week, UMass Memorial Medical Center … It was abusing of its power. ... 2020, 2:40pm PST “But as we begin to assess the damage, the toll is enormous.”. We asked Sutter for an interview, but the hospital declined and instead sent us a statement saying, in part, that it's committed "…to high-quality, affordable care…" and that its coordinated health care network "delivers healthier patient outcomes at a lower total cost of care," something that "…has proven even more critical during the COVID-19 pandemic.". 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