Pasadena Hospital d/b/a Cedars-Sinai Health System (Cedars-Sinai) and Huntington Memorial Hospital (Huntington) announced their intended affiliation in March 2020. The California AG’s office was concerned about potential anticompetitive effects of this “cross-market” merger. According to the state’s competition impact analysis report, the providers have substantial market power and might engage in “all-or-nothing” or tying negotiations with insurance companies, resulting in healthcare price increase at Huntington by as much as 32 percent. In December 2020, then California Attorney General Xavier Becerra conditionally approved the affiliation with a number of “competitive impact” conditions to address competition concerns from the affiliation.

In March 2021, the hospitals jointly filed suit to challenge the conditions imposed, calling them “unprecedented” and alleging that they would place Huntington at a disadvantage competitively. Prior to the trial scheduled in July 2021, the hospitals and the AG’s office came to a settlement agreement that replaced existing competitive impact conditions with a set of revised conditions to the affiliation. Most notably, the parties agreed to a 10-year prohibition of all-or-nothing contracting, and instead of a default firewall, the revised conditions allow a payer to request separate negotiating teams with firewalls to remedy any violations of the condition. Additionally, price caps are adjusted to annual increase of 4.8% per year for five years.