Sutter Health reports 2019 income of $114M despite legal settlement, building costs

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Sutter Health posted operating losses of $548 million in 2019, after investing hundreds of millions of dollars in new facilities and a $575 million settlement to resolve a lawsuit over anti-competitive practices filed by the California Department of Justice.

Still, the health care giant said Thursday that it posted overall revenue gains of $114 million because of returns in its investment portfolio. The company reported a year-end financial loss in 2018 of $198 million, the first time the company had reported a loss since it merged with San Francisco’s California Healthcare System in 1995.

Overall, Sutter’s investments netted $737 million in realized and unrealized gains in 2019, making a comeback from the prior year when the company had losses in its portfolio of $267 million.

Sacramento-based Sutter said it invested $662 million in building or updating new facilities and new technology. In San Francisco, for instance, the company opened a new Van Ness campus for its California Pacific Medical Center, and that marked the completion of a number of modernization and seismic upgrades in that city. The company also expanded access to care with projects in Contra Costa, Marin, Placer, Sacramento, San Francisco, San Jose, San Mateo, Santa Clara, Santa Cruz, Sonoma and Yolo counties.

“Caring for our patients and for their communities drives the work we do across Sutter Health every day,” said Sutter Health Chief Executive Officer Sarah Krevans. “When we draw on the benefits of our integrated network, we’re able to give patients more doors to access care, develop more tools and spread innovative practices that expand access to affordable, safe and personal healthcare.”

Because Sutter is a nonprofit, it’s obligated to fund for the most vulnerable in the communities it serves. In 2019, the company spent $125 million on charity care, compared with $89 million in 2019. In addition, the company said, it invested $499 million in providing care to Medi-Cal patients whose services are not fully covered by state and federal payments.

Sutter settled several outstanding legal actions in 2019. California Attorney General Xavier Becerra filed an antitrust lawsuit against the company in March 2018, and just before the trial was to begin last year, Sutter agreed to settle the court case. Becerra said the company would make changes in its business practice, submit to monitoring and pay out $575 million that will go to compensate parties who had sued over pricing. That includes an employee benefit trust run by the United Food and Commercial Workers, a grocery workers’ union.

In two other legal settlements with the U.S. government, Sutter agreed to pay out a combined $75.6 million to settle allegations about its patient referral practices and Medicare billing.

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