A City Council hearing in Manhattan on Thursday promises a rare scene in New York politics: hospitals playing defense.

The council is debating whether to establish a watchdog agency focused on the high price of hospital care in New York, with a goal of helping the city and other employers contain the rapidly rising cost of health benefits for workers.

The proposed Office of Healthcare Accountability would be charged with:

  • Gathering and analyzing data on hospital prices from the city’s benefit funds and other publicly available sources.
  • Publishing comparisons of hospital prices in a consumer-friendly format.
  • Monitoring hospitals’ compliance with pricing transparency laws.
  • Gauging hospitals’ charitable services for the poor and uninsured.
  • Auditing the city’s expenditures on health-care benefits for employees and retirees.
  • Making recommendations on how to control the city’s health-care and hospital costs.

The bill, sponsored by Council Member Julie Menin of Manhattan, has driven a wedge between two of the state’s most formidable political forces: hospitals and organized labor.

The Greater New York Hospital Association calls the measure “bad public policy.” But a coalition in favor – spearheaded by the 32BJ Health Fund, which covers 200,000 unionized building service workers – includes an array of the city’s biggest and most influential unions, whose members directly and indirectly foot the bill for health benefits.

Supporters appear to have the upper hand: Menin’s bill is cosponsored by 44 of the council’s 51 members.

Hospital costs in New York City and the rest of the state are both unusually high and rising fast. According to federal data for 2020 – the most recent year available – the state’s per capita hospital spending was 43 percent above the national norm, up from 22 percent a decade earlier (see chart).

 

On the whole, those exorbitant prices do not appear to be buying better care. In the federal government's quality grading system, the state hospitals get an average of 2.5 stars out of 5, the fourth lowest of any state. The average for private-sector hospitals in New York City is 2.4 stars.

A 2022 report by the 32BJ Health Fund, based on analysis of its own claims data, identified hospital charges as the "leading driver" of soaring health costs for its members.

"Unless dramatic action is taken to rein in hospital pricing, access to affordable care for our participants, as well as millions of others who depend on hospitals to provide critical care, is in jeopardy," the study said.

The fund's analysis found that six of the city's biggest not-for-profit hospital systems – NewYork-Presbyterian, NYU Langone, Northwell, Mount Sinai, Montefiore and Maimonides – charged dramatically more for common procedures than hospitals owned by the city or by major medical centers in Boston.

For example, delivery of a baby by Cesarean section typically cost more than $45,000 at NewYork-Presbyterian, compared to $27,000 at Boston Medical Center and $18,000 at a New York City Health + Hospitals facility.

On average, the report found that the private-sector hospitals were charging three times more than the rates established by Medicare, which it said were "calculated to allow a reasonably efficient system to function effectively."

If the city's health benefit plans paid for hospital care at Medicare rates, it would save about $2 billion a year, the report said.

Federal regulations adopted in 2019 require hospitals to publish basic information about their prices – including the actual amounts charged to insurance companies – on their websites. However, a survey by 32BJ in 2021 found that only about two-thirds of New York City hospitals were complying.

Supporters said the new watchdog office would enable city officials to contain costs by, for example, negotiating better deals with high-priced facilities or steering their members to more affordable alternatives.

If nothing else, the measure would shine light into the murky world of hospital pricing – and focus public attention on institutions that are charging exorbitant rates without delivering better quality. That alone could be a powerful tool for public accountability.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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