Hospitals used illegal tactics to prevent patients from seeking low-cost radiology services: DOJ
The Department of Justice is accusing a prominent New York hospital system of using anticompetitive tactics to keep patients from utilizing lower-cost radiology services.
Authorities first filed their civil antitrust lawsuit against eight-hospital NewYork-Presbyterian on March 26 in a U.S. District Court. They claim the “largest and most powerful hospital system in New York City” has imposed “contractual restrictions” that preclude insurers and employers from offering “budget conscious” insurance plans.
In one example, NewYork-Presbyterian allegedly invoked its plan restrictions in 2022 to stop an insurer from charging patients lower co-pays for certain outpatient radiology services. This was meant to steer beneficiaries to less expensive hospitals or other healthcare facilities, rather than NYP, according to the complaint.
“Millions of New Yorkers pay more for healthcare because of these anticompetitive practices,” Attorney General Pamela Bondi said in a statement March 26. “At the direction of President Trump, this Justice Department will fight relentlessly to ensure that Americans get the healthcare they need without facing exorbitant costs.”
Authorities contend that NewYork-Presbyterian’s actions “effectively prevent” rival providers or new market entrants from competing based on price. The DOJ said the system has allegedly used these tactics across a “wide range” of outpatient services that do not require an overnight stay. These include imaging, infusions, lab services and minimally invasive surgeries.
Bondi and colleagues are accusing NewYork-Presbyterian of violating Section 1 of the Sherman Antitrust Act. Their lawsuit seeks to enjoin the hospital system from imposing contractual restrictions that preclude payers from offering plans that incentivize patients to go elsewhere for care. Authorities charge NewYork-Presbyterian also has prevented insurers from offering reduced co-pays when receiving care at “often lower priced rivals.”
“These unlawful restrictions insulate NewYork-Presbyterian from price competition…and prevent the development of budget-conscious plans for New Yorkers that are available in other parts of the United States,” the DOJ said in its announcement.
Authorities contend that NewYork-Presbyterian charges “substantially higher prices than its competitors such as NYU Langone and Mount Sinai. It has purportedly aimed to leverage its “scale, breadth and configuration of its providers,” along with “strong brand and reputation” to pressure payers. NewYork-Presbyterian purportedly seeks to contract with payers on an “all or nothing basis,” with insurers either including the entire network, or none of it at all.
The DOJ said the health system has previously shared concerns about pricing in its own internal communications.
“In a recent strategic planning document, NewYork-Presbyterian acknowledged that there is ‘consumer price sensitivity’ among patients,” the lawsuit states. “If consumers could act on this sensitivity through budget-conscious plans, NewYork-Presbyterian may experience ‘pricing pressure’ because of its high prices, which may ‘impact [NewYork-Presbyterian] margins”—that is, the profits it garners from treating patients.”
For its part, the hospital system denied the allegations in a statement shared with the news media.
“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,” a NewYork-Presbyterian representative said.
“Insurance companies hold the market power and use it to restrict patient choice,” they added.
The DOJ also filed a similar lawsuit in February against 16-hospital OhioHealth. The organization denied the accusations, Health Exec, our sister news website, reported.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.