DOJ files antitrust suit against ‘powerful’ NewYork-Presbyterian hospital system

MANHATTAN (CN) — The Department of Justice on Thursday filed a federal antitrust complaint against NewYork-Presbyterian, a prominent New York City hospital system, accusing it of reaching anticompetitive deals with insurers to keep health care costs high for New Yorkers.

In a 21-page complaint filed in the Southern District of New York, the DOJ claims NewYork-Presbyterian has “chosen to prevent competition from rival providers” for the past several decades.

It’s done this, according to the DOJ, by using its market power as “the largest and most powerful hospital system in Manhattan” as leverage over commercial health insurers, blocking them from selling insurance plans that include hospitals and providers that offer lower prices. The practice has insulated NewYork-Presbyterian from competitors, allowing it to maintain high prices without a level playing field for other providers, the government says.

“The result is reduced choice of insurance plans, higher health care costs and less competition for high-quality health care for employers and patients who purchase health care in New York City,” the DOJ claims.

NewYork-Presbyterian calls itself “one of the nation’s most comprehensive, integrated academic health care systems.” It features more than 450 locations in Manhattan, Queens, Brooklyn, Westchester and Putnam counties, including Columbia University Medical Center and Weill Cornell Medical Center.

But despite offering a comparable product to its two largest rivals, NYU Langone and Mount Sinai, according to the DOJ, NewYork-Presbyterian “has substantially higher prices than its competitors.”

The government takes aim at NewYork-Presbyterian’s so-called “all-or-nothing” contracts, in which the system supposedly pressures insurers to include either all of its hospitals in its networks or none at all.

“Payors cannot resist this exercise of market power because they cannot viably do business in New York City without at least one plan that includes access to NYP’s hospitals,” the DOJ claims. “NYP’s market power is further evidenced by its ability to impose on payors the anticompetitive plan restrictions that are the focus of this complaint.”

The government argues NewYork-Presbyterian’s conduct violates the Sherman Act. It’s seeking an order enjoining the system from engaging in anticompetitive behavior and retaliating against any insurer for offering “budget-conscious plans.”

“Health care is a vital sector of our nation’s economy that touches the life of every single American,” acting Assistant Attorney General Omeed A. Assefi of the Justice Department’s antitrust division said in a statement. “New York-Presbyterian has known for years that the American consumer wants budget-conscious health plans that reduce health care costs. But 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.”

In a statement to Courthouse News, a spokesperson for NewYork-Presbyterian said it is disappointed in the DOJ’s decision to file the lawsuit, “which we think is without merit.”

“We have been cooperating with the department’s inquiries into our contracting practices and had begun what we thought were productive discussions with the department’s leadership,” the spokesperson added. “As we have explained to the department, NewYork-Presbyterian complies fully with all applicable federal and state laws and regulations. We stand behind our policies and processes, which we believe are pro-competitive.

“We do not seek to exclude any other hospital from any insurer’s network. Nor do we require more favorable treatment than any other hospital. In our contract negotiations with insurers, we seek to maximize access to the highest quality of care. Insurance companies hold the market power and use it to restrict patient choice. The obligation of insurance companies is to their shareholders, while ours is to our patients. We believe all New Yorkers should be able to choose their health care provider."

The case is the second this year brought by the DOJ’s antitrust division against a major health system. In February, it brought a lawsuit against OhioHealth, the largest health care system in central Ohio, similarly scrutinizing deals with insurers.

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