With cost-of-living concerns in sharp focus as the November midterm elections near, both the executive branch and Congress are homing in on hospital rates as a driver of higher healthcare costs.
In late March, the Department of Justice charged New York-Presbyterian Hospital with antitrust violations. Next week, the House Ways and Means Committee has scheduled a hearing to investigate the practices of big hospitals.
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This scrutiny of anti-competitive practices by big hospitals is necessary and overdue, though Congress should be careful not to treat it as a result in and of itself. Congress must also examine government policies, such as certificate of need laws, that facilitate anti-competitive practices.
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According to the DOJ, NYP imposes restrictions on its contracts with insurance companies “that prevent payors from offering budget-conscious insurance plans.” The restrictions usually “forbid payors from offering plans that exclude NYP or offer more generous benefits (e.g. lower copays) when patients choose a rival provider.” This deprives the market of lower-cost insurance options and prevents patients from being able to “decide for themselves whether going to NYP for care is worth NYP’s high prices.”
NYP can be ruthless with groups that try to remove it from their networks. In 2024, the 32BJ Health Fund, which covers members of the Service Employees International Union in New York, sought coverage with insurer Aetna that excluded NYP. However, Aetna’s contract with NYP required permission from NYP before the insurer could omit the hospital from any plan. NYP demanded a $25 million payment from 32BJ before it would grant permission, claiming that 32BJ owed it for past services. In the end, 32BJ decided not to go with Aetna.
Health plans want to exclude NYP from their networks or give policyholders incentives to choose lower-cost providers because of NYP’s prices. One analysis shows that NYP charges, on average, 330% more than the average Medicare price. By comparison, the average among hospitals in New York is 310%, and nationwide it is 253%. NYP has the highest revenue among hospital systems in the Empire State, over $10 billion in 2025. However, the funds sometimes go to items that might not, in a traditional sense, be considered “healthcare.” For example, new mothers at NYP’s Alexandra Cohen Hospital for Women and Newborns received gift bags worth hundreds of dollars that included facial cleanser, lipstick, and Chanel perfume. VIP patients are treated to fine Italian linens and expensive toiletries. The Washington Heights location features a piano player and a waterfall, while the behavioral health center in White Plains boasts tennis courts, a pool, and a golf course.
NYP is able to engage in these practices because of its market power. It has over 4,000 beds and treats over 2 million patients annually in 10 hospital campuses in and around New York City. It accounts for 25% of inpatient hospital discharges in the Big Apple. If insurers don’t concede to NYP’s demands, then their policyholders lose access to a major hospital.
NYP wouldn’t be able to get away with this if it faced more competition. With more competitors, insurers would have more options for their policyholders to seek treatment. That would reduce NYP’s power to demand contracts that prevent insurers from rewarding policyholders for choosing less expensive healthcare providers. A key reason why large hospitals such as NYP are able to gain enormous market power and more easily engage in anti-competitive practices is CON laws.
A CON law requires healthcare providers to obtain approval from a state regulatory agency before building new facilities or expanding existing ones. Under New York’s CON law, providers must seek permission from the state Department of Health. That is followed by a 60-day public comment period. During that time, established hospitals can oppose additional competition by submitting comments to the Department of Health, making the case that new healthcare facilities are not needed. New York’s CON law, enacted in 1964, is the oldest in the nation. It is long past due for repeal.
Research shows that CON laws limit hospital competition. A recent review article stated that “a substantial body of evidence from various settings mostly shows that CON laws are associated with fewer service providers.” Recent studies have found that states that repealed CON laws saw increases in long-term acute care hospitals and hospitals with cardiac care programs.
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New York’s CON law also prevents the construction of more ambulatory surgery centers. These facilities provide surgery and other procedures and get patients back home within 24 hours. They are also less expensive than hospitals. A study of six states — Missouri, Nebraska, New Hampshire, New Jersey, Ohio, and Pennsylvania — found the number of ambulatory surgery centers increased by 44%-47% per capita following the repeal of the parts of their CON laws that applied to such centers. Thanks to its CON law, New York is in the bottom fifth of states for the number of ambulatory surgery centers per 100,000 Medicare beneficiaries.
The House Ways and Means Committee has scheduled its hearing examining hospital practices for April 28. It is long overdue. Yet neither DOJ actions against nor congressional hearings on antitrust practices are sufficient. Thirty-five states and the District of Columbia still have CON laws. Unless Congress also examines regulations that impede hospital competition, it will ultimately miss the mark.
David Hogberg is a writer living in Washington, D.C. Sign up for his Substack, Beyond Stage One, where he applies the thinking of economist Thomas Sowell to current issues.
