Sutter Health, a large hospital system in Northern California, charged 30% more than comparable hospitals after implementing anticompetitive contracting practices in the early 2000s, new research from the University of Southern California alleges.

Before that time, Sutter's prices were similar to those of other hospitals, according to the study, published in the Journal of Hospital Management and Health Policy. Prices surged, however, when the system began adopting a contracting practice known as "all or nothing" in which a large health system that owns most hospitals in a region can compel insurers to contract with all of its hospitals or none at all. This contracting tactic prevents insurers from being able to negotiate with individual hospitals for lower prices.

"What we show is that these contracting practices do in fact release the health systems from competitive pressures," said Glenn Melnick, a professor in USC's Sol Price School of Public Policy and the study's lead author. "In doing so, they are able to raise their prices above market levels. That is typical monopoly behavior — you get control of the market and do what you can to protect your power in the market."