The
Department
of
Justice
is
taking
aim
at
two
large
health
systems
over
contracts
that
the
agency
says
stifle
competition
and
keep
patients
from
receiving
affordable
care.
The
lawsuits,
both
filed
earlier
this
year,
signal
a
broader
crackdown
on
how
hospitals
use
contracting
practices
to
shape
their
market
positioning.
The
complaints
claim
that
OhioHealth
and
NewYork-Presbyterian
Hospital
forced
payers
to
contract
with
their
entire
health
systems,
rather
than
allowing
them
to
pick
and
choose
individual
facilities.
The
Justice
Department
argues
that
these
“all-or-nothing”
contracting
tactics
block
payers
from
steering
patients
to
lower-cost
providers.
Federal
regulators
launched
the
first
antitrust
lawsuit
in
February
against
OhioHealth,
and
followed
with
a
second
one
in
March
against
NewYork-Presbyterian.
OhioHealth
is
one
of
the
largest
health
systems
in
Ohio,
spanning
16
hospitals,
three
joint
venture
hospitals
and
more
than
200
ambulatory
care
sites.
NewYork-Presbyterian
is
the
largest
health
system
in
New
York
City,
operating
eight
hospitals
and
dozens
of
outpatient
care
sites.
Essentially,
the
agency
is
saying
that
this
allegedly
anticompetitive
conduct
insulates
these
health
systems
from
price
competition
and
allows
them
to
maintain
high
prices.
The
Justice
Department
claims
that
payers
would
have
designed
narrower,
lower-cost
networks
if
they
had
the
option.
These
affordable
providers
are
not
identified
explicitly
in
the
complaints,
but
the
agency
generally
refers
to
alternative,
non-system
providers
and
independent
practices.
OhioHealth
and
NewYork-Presbyterian
are
cooperating
with
the
reviews
of
their
managed
care
agreements,
but
they
both
maintain
that
their
contracting
practices
are
lawful
and
benefit
patients
by
ensuring
broad
access
to
care.
However,
experts
—
including
an
antitrust
lawyer,
healthcare
economist,
patient
advocate
and
frontline
physician
—
believe
that
these
types
of
contracting
practices
do
drive
up
healthcare
costs
and
squeeze
independent
doctors,
as
well
as
leave
patients
with
fewer
choices.
And
they
say
the
stakes
go
far
beyond
New
York
and
Ohio.
Inside
the
complaints
These
cases
are
about
competition
suppression,
not
just
high
prices,
said
attorney
Cory
Talbot,
a
partner
at
Holland
&
Hart
specializing
in
healthcare
antitrust
law.
The
Justice
Department
is
arguing
that
all-or-nothing
contracts
prevent
patients
from
seeing
cheaper
or
higher-quality
providers,
alleging
that
this
practice
decreases
competition
on
both
the
price
and
quality
fronts.
Contrast
that
with
health
systems,
who
think
such
contracting
practices
could
expand
patient
access
across
facilities,
Talbot
noted.
“Somebody
doesn’t
have
to,
for
instance,
bypass
multiple
NewYork-Presbyterian
facilities
to
get
to
a
facility
where
they
have
coverage.
They
can
go
to
any
one
that
provides
the
services
that
they
need.
So
from
the
health
system
perspective,
that
provides
them
with
a
good
ability
to
provide
a
broad
range
of
services
at
a
number
of
facilities,
and
that
provides
a
benefit
to
the
patient,”
he
explained.
He
added
that
he
thinks
this
contracting
behavior
is
“pretty
common”
among
large
health
systems.
“This
is
not
something
that
NewYork-Presbyterian
and
OhioHealth
just
came
up
with
—
a
lot
of
health
systems
are
negotiating
like
this,”
Talbot
remarked.
While
these
practices
are
common,
he
and
the
other
experts
still
believe
that
the
tactic
does
in
fact
raise
costs
and
lower
competition.
In
order
to
prove
that
these
arrangements
can
violate
antitrust
law,
the
Justice
Department
will
have
to
show
that
the
health
system
defendants
have
enough
market
power
to
meaningfully
influence
local
prices
and
limit
competition,
he
said.
The
agency
has
already
begun
this
effort
in
its
two
initial
complaints.
The
first
lawsuit
stated
that
OhioHealth
accounts
for
more
than
35%
of
general
acute
care
hospital
stays
in
the
Columbus
area,
and
the
second
lawsuit
said
NewYork-Presbyterian’s
handles
more
than
25%
of
such
admissions
across
Manhattan,
Brooklyn,
Queens,
and
the
Bronx.
Talbot
said
those
figures
are
central
to
the
Justice
Department’s
argument,
but
not
sufficient
on
their
own
without
showing
they
translate
into
real-world
pricing
power.
“Is
that
enough
of
a
market
that
a
patient
would
be
able
to
say,
‘Can
I
go
elsewhere?’
At
the
same
time,
is
a
patient
limited
by
what
the
payer
can
do
or
what
the
payer
can
negotiate?
Can
a
patient
get
services
more
cheaply,
or
is
the
patient
stuck
with
what
the
payer
negotiated
with?
I
think
the
first
thing
[the
Justice
Department]
needs
to
prove
is
how
[the
defendants]
fit
in
the
market,”
Talbot
declared.
Beyond
proving
the
health
system’s
market
dominance,
the
Justice
Department
will
also
need
to
provide
evidence
that
the
all-or-nothing
contracts
actually
result
in
higher
prices
and
severed
access
to
better
and
cheaper
care,
he
stated.
Sending
a
message
The
lawsuits
against
OhioHealth
and
NewYork
Presbyterian
signify
a
shift
in
the
nation’s
healthcare
antitrust
enforcement.
Historically,
the
focus
has
been
on
hospital
mergers,
but
these
two
cases
are
scrutinizing
contracting
behavior.
Health
systems
have
adapted
to
merger
scrutiny,
so
regulators
are
now
targeting
what
happens
after
consolidation,
Talbot
said.
He
thinks
both
the
lawsuits
will
likely
end
up
in
some
kind
of
a
settlement.
“I
think
that
you’ll
probably
see
both
OhioHealth
and
NewYork-Presbyterian
take
a
shot
at
getting
these
cases
dismissed
early
on.
And
if
that
fails,
I
think
you’ll
see
them
negotiate
with
the
DOJ
and
with
the
state
to
try
to
come
up
with
a
resolution,”
Talbot
remarked.
He
said
the
lawsuits
are
“designed
to
send
a
message”
and
are
likely
to
push
health
systems
to
rethink
or
abandon
their
all-or-nothing
tactics
in
negotiations.
Another
expert
—
Katie
Keith,
founding
director
at
Georgetown
University’s
Center
for
Health
Policy
and
the
Law
at
the
O’Neill
Institute
—
agreed,
saying
that
hospitals
using
these
tactics
“should
be
on
notice
that
this
might
not
be
a
sustainable
strategy
under
this
Department
of
Justice.”
Keith
thinks
the
back-to-back
cases
signal
a
serious
focus
on
contracting
practices
at
the
Justice
Department.
She
noted
that
this
is
especially
true
in
New
York,
allegations
have
been
public
for
years
and
complaints
from
union
health
plans
have
helped
drive
scrutiny.
For
years,
union
health
plans
have
raised
concerns
that
dominant
health
systems
force
them
into
all-or-nothing
contracts,
making
it
difficult
to
steer
their
members
to
affordable
providers
—
a
dynamic
they
say
contributes
to
rising
premiums
and
out-of-pocket
costs
for
workers.
Keith
also
pointed
out
that
there’s
a
notable
amount
of
internal
documents
and
communications
in
the
Justice
Department’s
lawsuits,
pulling
back
the
opaque
veil
of
contract
negotiations.
“I
feel
like
we
don’t
normally
see
that
stuff
in
a
complaint.
Normally
you
see
it
after
discovery,
for
example,
but
it
seemed
like
the
department
already
had
its
hands
on
a
bunch
of
inside
information
to
make
its
case,”
Keith
said.
For
instance,
one
lawsuit
cited
data
showing
that
preventing
one
payer
from
shifting
colonoscopy
procedures
to
another
provider
could
be
worth
about
$250,000
in
retained
revenue
for
NewYork-Presbyterian.
Citing
this
data
shows
that
hospitals
are
financially
motivated
to
restrict
patient
movement
and
that
the
Justice
Department
is
building
a
data-driven
case,
Keith
explained.
More
importantly,
the
Justice
Department
is
likely
expanding
investigations
beyond
these
two
health
systems,
she
added.
Like
Talbot,
Keith
thinks
OhioHealth
and
NewYork-Presbyterian
will
file
motions
to
dismiss,
and
then
settlement
is
likely
after
that.
This
follows
a
pattern
present
in
the
other
two
high-profile
lawsuits
challenging
all-or-nothing
contracting
in
the
past
decade:
Atrium
Health’s
case
in
2018
and
Sutter
Health’s
case
in
2021.
Atrium
settled
its
lawsuit
with
the
Justice
Department
with
no
financial
penalty.
Sutter,
on
the
other
hand,
had
to
pay
the
state
of
California
$575
million.
Consolidation
leads
to
higher
costs
The
lawsuits
come
as
part
of
a
larger
affordability
push
by
the
presidential
administration.
Dr.
David
Eagle,
a
hematologist-oncologist
at
New
York
Cancer
&
Blood
Specialists,
applauded
these
efforts
for
going
after
hospital
consolidation
and
contracting
practices,
which
he
said
are
directly
raising
costs
and
diminishing
patient
access
every
day.
Dr.
Eagle
noted
that
independent
practices
are
being
pushed
out
or
absorbed,
which
reshapes
the
market
in
ways
that
hurt
patients.
He
described
a
before-and-after
scenario
from
his
oncology
practice.
It
involved
the
same
doctor,
same
location
and
same
care.
Before
joining
a
large
health
system,
the
doctor’s
patients
typically
paid
$50
to
$70
per
visit
—
but
after
the
practice
was
acquired,
those
same
visits
often
came
with
$300
co-pays
and
additional
facility
fees.
Despite
receiving
care
from
the
same
doctor
in
the
same
location,
some
patients
could
no
longer
afford
to
return
and
were
forced
to
seek
care
elsewhere
or
go
without.
Dr.
Eagle
pointed
out
that
independent
practices
typically
have
lower
co-pays
and
often
accept
more
insurance
plans.
His
independent
physician
group
accepts
all
insurance,
unlike
many
large
systems.
Yet,
it
lacks
hospital
negotiating
leverage
and
financial
advantages.
“We
don’t
get
the
benefit
of
340B.
We
don’t
have
the
same
commercial
contracts.
We
don’t
get
programs
like
Medicaid
1115
waivers.
But
we’re
the
only
major
cancer
provider
[in
the
area]
that
accepts
all
Medicaid
plans
and
accepts
all
insurance
plans.
I
think
that’s
part
of
the
perspective
too,”
Dr.
Eagle
remarked.
He
said
the
disparity
shows
how
market
dynamics
—
not
differences
in
care
—
are
what
is
causing
costs
to
climb
and
hurting
access
for
patients.
Chipping
away
at
the
affordability
crisis
These
cost
pressures
ultimately
land
on
patients
navigating
an
increasingly
restricted
and
confusing
insurance
landscape,
pointed
out
Caitlin
Donovan,
senior
director
of
the
Patient
Advocate
Foundation.
She
said
all-or-nothing
contracting
adds
another
layer
to
an
already
constrained
system.
Donovan
thinks
the
lawsuits
target
one
piece
of
a
broader
affordability
problem.
“There’s
a
lot
of
factors
that
go
into
this,
but
the
average
American
isn’t
aware
of
them.
They’re
aware
of
the
repercussions.
And
if
this
lawsuit
can
go
after
one
of
those
factors
that
make
things
so
unworkable
for
the
average
American,
then
I
will
consider
it
a
good,”
she
declared.
While
she
doesn’t
foresee
these
cases
being
able
to
lower
prices
on
their
own,
she
thinks
they
could
result
in
broader,
more
flexible
networks
for
patients,
with
better
chances
for
them
to
see
their
preferred
doctors
and
afford
care.
Donovan
also
noted
that
patients
are
increasingly
being
used
as
bargaining
chips.
It’s
becoming
increasingly
common
for
patients
to
receive
letters
from
hospitals
or
payers
asking
them
to
pressure
the
other
side
during
contract
disputes,
she
said.
“Constantly
patients
are
being
put
in
the
middle
of
these
struggles
between
providers
and
insurers,
and
yet,
somehow
I
doubt
that
either
of
them
are
really
looking
out
for
patients.
They’re
mostly
looking
out
for
their
own
bottom
line,”
Donovan
remarked.
For
patients,
the
impact
of
these
contracting
disputes
can
be
very
real
—
it
shows
up
in
narrower
networks,
higher
bills
and
fewer
real
choices
when
care
is
needed,
she
stated.
The
Justice
Department’s
cases
won’t
solve
these
problems
completely,
but
they
could
mark
another
step
in
increasing
how
much
control
patients
actually
have
in
a
consolidated
system.
Photo:
Westy72,
Getty
Images
Kathryn
