Major NYC hospital accused of using market power to force higher insurance costs: feds

Profits over patients. 

The NewYork-Presbyterian Hospital system is allegedly using its heavyweight status among city healthcare providers to force insurers to accept “substantially higher prices” — blocking New Yorkers from affordable health insurance, according to the Department of Justice.

In an anti-trust lawsuit filed in Manhattan federal court, the DOJ said NY Presbyterian has been striking “unlawful contracts” with insurers to prevent patients from being shown less expensive health plans.

“Americans deserve the benefits of vigorous competition,” the lawsuit states, arguing that the hospital system’s “anticompetitive conduct” has left families with fewer choices and higher costs.

The lawsuit aims to cease their restrictive plans and restore “access to budget-conscious health insurance plans.”

NYP holds a 30% market share in Manhattan — and over 4,000 impatient beds across eight campuses citywide, the suit states.

Due to their presence, insurers “cannot viably do business in New York City” without including access to at least some of their facilities, according to the lawsuit.

But instead of allowing insurers to negotiate which facilities to include, the hospital system demands an “all-or-nothing” contract, meaning that all insurance plans are forced to include every facility — even the most expensive options — if they want to do business with NYP at all, the suit claims.

That’s despite the fact that the hospital system charges far more than competitors at NYU, Mount Sinai and Northwell, government lawyers allege.

Those restrictions helps insulate the system from “price competition,” resulting in “reduced choice of insurance plans, higher healthcare costs and less competition for high-quality healthcare for employers and patients who purchase healthcare in New York City,” the suit claims.

“Rather than offer consumers choice, New York-Presbyterian uses its market power to protect its margins, impede competition from rival hospitals, and prevent employers and unions from creating these plans,” said Omeed A. Assefi, acting assistant attorney general from the DOJ’s anti-trust office.

DOJ lawyers included one example where NewYork-Presbyterian allegedly “stopped” an insurer from moving outpatient colonoscopies from the hospital to a more affordable provider.

“NYP observed that even stopping a single payor from moving outpatient colonoscopies out of NYP’s hospitals was ‘worth ~250k [dollars] to [a physician group in NYP’s system] and multiples more to [NYP],’” the suit claims. 

The filing even cites a “recent strategic planning document,” where NewYork-Presbyterian allegedly voiced concern that, if patients had access to cheaper options, they could experience “pricing pressure,” which could “impact [NYP’s] margins.”

NewYork-Presbyterian said it was “disappointed” that the DOJ filed the lawsuit — calling it “without merit” — because they were already engaged in “productive discussions” with the DOJ over their contracting practices.

“We do not seek to exclude any other hospital from any insurer’s network,” said hospital spokesperson Angela Karafazli. “Nor do we require more favorable treatment than any other hospital.”

“The obligation of insurance companies is to their shareholders, while ours is to our patients,” she said. “We believe all New Yorkers should be able to choose their health care provider.”