Late last week, I ran across a number of news posts regarding a proposed class action lawsuit against the hospital/health system giant Advocate Aurora, alleging that the organization used its market mass to limit competition and in return, impose excessively high prices on commercial health plans and their insureds. The suit was filed in Wisconsin (where the allegations center), the U.S. District Court – Eastern District (basically, Milwaukee centered). The complaint is available here: bcFq
A quick confession for readers/followers: I spent twenty plus years as a CEO of a large (WI largest, top 50 nationwide) senior housing and post-acute system in the Milwaukee market. The company I was leading at the time, did a lot of business with then, Aurora, including acquiring a two-retirement community holding from them. We were in some ways, competitors, and, in some ways, partners.
I got into a bit of a beef with their corporate leadership on a similar matter involving high prices. At the time, the organization I was leading had a self-funded health plan and we built our own network. To try to provide clarity and transparency to our staff, we provided data and an incentive, for the staff to use certain providers (hospitals typically) versus others, based on price. Aurora being the priciest in some cases, was unhappy as staff still could use their hospitals, but at a higher cost share. When I saw the news about the class action claim and then grabbed the claim and read it, well, memories quickly returned.
Since my time, Aurora merged with Advocate Health (Illinois, Chicago area) and recently (2022), merged with Atrium Health (North Carolina) creating a 67-hospital system called Advocate Health. As a result, Advocate became the fifth-largest U.S. nonprofit system.
The core of the complaint, taken from the actual filing is below. Note, I have emboldened language that caught my eye, in light of my experience with them on the health insurance end. AAH is Advocate Aurora Health.
For the past several years, AAH has engaged in anticompetitive methods to restrain
trade and abuse its market dominance for the purpose of foreclosing competition and extracting
unreasonably high prices from Wisconsin commercial health plans and their members.1 These
abuses include unlawfully forcing commercial health plans to include in their networks all of
AAH’s overpriced facilities even if they would rather include only some, and aggressively
blocking commercial health plans from directing their members to higher value care at non-AAH
facilities. AAH has gone to extraordinary lengths to suppress innovative insurance products, such
as tiered plans, that would reduce costs for commercial health plans and their members alike. And
it has used a combination of acquisitions, referral restraints, non-competes, and gag clauses to
suppress competition from other healthcare providers and expand its monopoly over acute
inpatient hospital services into other, separate markets.
The lawsuit alleges that without intervention, the Advocate Aurora will continue to use “anticompetitive contracting and negotiating tactics to raise prices on Wisconsin commercial health plans and their members and use those funds for aggressive acquisitions and executive compensation.” The suit further seeks to compensate the Plaintiffs (health plan participants) for their share of costs related to having to use Advocate Aurora facilities at higher prices. Advocate Aurora claims the suit has no merit and that the claims of Plaintiffs are baseless.
The suit against Advocate Aurora Health highlights an issue that I have written and spoken about for years – the need for price transparency and quality transparency. Consumers of healthcare in the U.S. have, even with government interventions and mandates, incredible difficulty accessing current, real time pricing and quality data. Unlike most consumer options for purchasing everything from products to services (cars, trips, restaurants, etc.) where competitive scores, reviews, data on reliability and warranty, and critically, pricing are a browser click away, healthcare is nowhere close to transparent on these elements.
While the allegations against Advocate Aurora are just that, allegations, the lawsuit serves as another conversation prompt about competition, quality data, and pricing in healthcare. As the trial unfolds, additional information should provide more light on the transparency issues and hopefully, prompt some additional movement on hugely needed reform.