The U.S. Department of Justice is investigating NewYork-Presbyterian, one of New York’s leading health systems, for potential antitrust violations related to its contracts with insurance companies.
Why it matters: The investigation could lead to increased competition among hospitals and potentially slow the rise of healthcare prices in the city.
The details:
- The civil investigation is examining whether NewYork-Presbyterian persuaded insurance companies to agree to conditions that insulated the hospital system from competition, allowing it to charge higher prices for common procedures.
- The subpoena, addressed to the health fund of a large New York labor union, Local 32BJ of the Service Employees International Union, seeks to determine if there has been a “potential unlawful agreement between NewYork Presbyterian Health Care System and health insurance companies relating to steering restrictions and contracting conduct.”
- NewYork-Presbyterian includes two of the city’s most storied medical institutions: Columbia University Medical Center and Weill Cornell Medical Center, which are affiliated with the medical schools of Columbia University and Cornell University.
- The union claims that NewYork-Presbyterian repeatedly tried to thwart its efforts to steer its members to other lower-cost hospitals, impeding competition and contributing to high hospital costs across the city.
The investigation could reveal the complex and secret negotiations that occur as employers and unions secure health coverage for their workers.
What they’re saying:
- “We will hold big hospital chains like NewYork-Presbyterian accountable for its anti-competitive practices,” said Manny Pastreich, president of Local 32BJ of the Service Employees International Union.
- “This is a really big deal,” said Martin Gaynor, a former Justice Department antitrust official and an emeritus economics professor at Carnegie Mellon University. “We don’t know how common or pervasive these restrictions are because they are private contracts.”
The other side: NewYork-Presbyterian spokeswoman Angela Karafazli did not respond to questions about the investigation or the potential for anticompetitive provisions in the hospital’s contracts with insurance companies.
What’s next: The issuance of a subpoena can mark the start of an investigation and does not indicate that the hospital system has engaged in any wrongful conduct. The outcome of the investigation could impact some of the city’s largest hospitals and the health insurance companies that negotiate with them.
