On March 26, the U.S. Department of Justice (DOJ) and the U.S. Attorney’s Office for the Southern District of New York filed a civil antitrust lawsuit against The New York and Presbyterian Hospital (NYP). The Complaint alleges that NYP violated Section 1 of the Sherman Act by requiring restrictive anti-competitive language in its commercial contracts with health insurance companies (payors). The government contends that such actions have resulted in increased costs to the healthcare system and eliminated competition.
The government emphasized that NYP is the dominant and most powerful hospital system in New York City and has used that dominance to maintain its high pricing. The Complaint alleges that due to NYP’s market dominance, it can charge considerably higher rates than two reputable competing hospital systems – NYU Langone and Mount Sinai. Each competitor includes an academic medical system where the quality of care is comparable to that offered by NYP. NYP’s two main hospitals, New York-Presbyterian/Columbia University Irving Medical Center and New York-Presbyterian/Weill Cornell Medical Center, are in Manhattan, and NYP’s other six hospitals are located throughout New York City.
The government claims that NYP used this dominance to force upon payors anti-competitive contractual provisions. One such provision requires payors to include all of NYP’s hospitals and providers in a payor’s commercial network, or have none of them. Payors are forced to accept this as they cannot exclude NYP. The government further alleges that NYP restricts payors from offering other innovative budget-based insurance products that provide patient choice among care providers with more competitive rates. Such products could include narrow networks in which care providers may be willing to reduce their rates in exchange for greater patient volume.
The 21-page Complaint seeks to enjoin NYP from continuing such practices, and to have the U.S. District Court adjudge that all restrictions on budget-conscious commercial plans in the contracts between NYP and commercial payors violate Section 1 of the Sherman Act. As a result of this newly filed litigation, other providers and systems will likely review their existing contracts for similar offending language and restrictions.
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