NY hospital head explains rising costs to Congress: Blame basically everything

The CEO of one of New York City’s largest health systems told congressmembers on Tuesday that hospital prices are going up not because of consolidation, but rather because of the rising cost of labor, drugs and medical supplies, among other pressures.

Dr. Brian Donley, who became CEO of NewYork-Presbyterian in January, was one of four health system executives from across the country who faced questions about rising healthcare costs in a hearing held by the Ways and Means Committee.

National healthcare spending has increased dramatically over the past two decades, with hospital care accounting for about a third of that growth, according to the health policy nonprofit KFF.

Rep. Jason Smith, a Missouri Republican who chairs the Ways and Means Committee, argued Tuesday that the ongoing trend of healthcare consolidation — in which large health systems gobble up independent hospitals and doctors’ offices — is creating “megacorporations that put quarterly earnings over quality care.”

The hearing came just weeks after the U.S. Department of Justice filed a lawsuit accusing NewYork-Presbyterian of crafting insurance contracts that suppress competition in the New York market in order to keep its prices high.

Donley declined to comment on the federal charges at the hearing, but argued that New York City is one of the most competitive healthcare markets in the country, since several major hospital systems operate here.

He said NewYork-Presbyterian is working on efforts to keep costs down, including shifting more toward telehealth and investing in school health clinics and other preventive health programs.

“We stand ready to work together to make high-quality healthcare more accessible and affordable for all Americans,” Donley said.

Angela Karafazli, a NewYork-Presbyterian spokesperson, said the lawsuit is “without merit.”

Smith and other congressional Republicans pointed to specific reforms that could help rein in hospital prices — such as ending the practice of allowing a clinic owned by a hospital to charge more than an independent doctor’s office for the same services.

Donley and the other CEOs said they believed such payment differentials were justified.

Donley also faced questions about why NewYork-Presbyterian has a rural hospital designation, which makes the health system eligible for certain federal subsidies meant to keep rural hospitals afloat.

“No crops are growing on East 68th Street next to your supposedly rural hospital campus, correct?” said Rep. Richard Neal, a Massachusetts Democrat, referring to Weill Cornell Medical Center’s location on the Upper East Side.

Donley said that was correct, but said the health system is allowed to take advantage of a rural designation because it receives referrals from rural hospitals.

He said those patients account for about 8,000 of the 2 million patients NewYork-Presbyterian sees each year.

“We’re proud to take care of those patients,” Donley said.

Some Democrats on the Ways and Means Committee turned their attention away from the hospital executives, focusing instead on their Republican colleagues’ motives.

They argued that Republicans on the committee were using the hearing to distract from the impact of the federal healthcare cuts they pushed through Congress last year.

Policy analysts say the changes will result in a loss of insurance coverage for millions of Americans as well as massive funding losses for hospitals.

NewYork-Presbyterian cited the anticipated loss of federal funding in statements earlier this year that referred to striking nurses’ salary demands as “unreasonable.”

Donley and other hospital executives said at Tuesday’s hearing that widespread insurance coverage was crucial to help sustain the healthcare system.

Asked about the possibility of pushing forward a Medicare for All model, Donley said he supported insurance coverage for all but stopped short of making specific policy recommendations about what that should look like.

The lawsuit the DOJ filed against NewYork-Presbyterian last month alleges that NewYork-Presbyterian requires insurers to include all of its facilities in their networks or none of them, under the assumption that health plans can’t afford to exclude NewYork-Presbyterian entirely because of its market share.

The lawsuit says NewYork-Presbyterian’s prices are significantly higher than those set by competitors Mount Sinai and NYU Langone.

Karafazli said the hospital system’s contracting practices were “pro-competitive.”

She added that NewYork-Presbyterian doesn’t require more favorable treatment from insurers than other hospitals, nor does it seek to have other hospitals excluded from insurance networks.