In a provocative flex of executive power, the state Health Department is requiring a hospital system to spend $50 million on health care in Brooklyn and Queens if it wants to open an $8.4 million heart transplant center in Manhattan.

The department outlined the requirement in a July 14 letter to NewYork-Presbyterian’s Weill Cornell Center, which applied to open the transplant center last year.

On June 2, the department’s Public Health and Health Planning Council had voted to recommend approval of the project subject to certain conditions, such as obtaining approval of construction documents and working with community groups to encourage organ donation. 

The department’s July 14 approval letter added a major new condition – that NewYork-Presbyterian must demonstrate “its commitment to health equity in the boroughs of Brooklyn and Queens.”

The commitment includes forming a partnership with the One Brooklyn Health hospital system or another local provider “to expand access to primary care and cardiology specialty care.”

NewYork-Presbyterian must also invest $50 million over five years “in primary care physician and advanced practice provider recruitment, program development and network expansion” in Brooklyn and Queens.

That expenditure will be almost six times the cost of the transplant center itself, which is estimated at $8.4 million.

There was no public announcement of these last-minute requirements. While the council votes on such projects in open session, the department does not routinely publish its final actions. The Empire Center obtained the July 14 letter by filing a request under the Freedom of Information Law.

The action has has stirred concern among some in the health-care industry that demands for open-ended amounts of money will become a routine part of the regulatory process.

The department’s letter references social and economic inequities in the health-care system, which the department’s commissioner, Dr. Mary Bassett, has identified as a priority of her administration. However, the letter gave no formal explanation for imposing the additional requirement nor any guidelines for how it set the $50 million amount or chose One Brooklyn Health as the suggested recipient.

Some may view this outcome as rough justice, since NewYork-Presbyterian is the state’s largest and deepest-pocketed hospital, with more than $12 billion in assets as of 2018, while OneBrooklynHealth is a system of safety-net providers serving lower-income neighborhoods. In the absence of clear standards, however, the ruling sets a precedent that could be abused, giving officials an additional way to punish political enemies, reward friends or drum up campaign donations.

Another concern is the impact on health-care consumers. The process of obtaining a “certificate of need” to open or expand a health-care facility is already time-consuming and expensive, which tends to discourage projects that would expand consumer choice and healthy competition. If sponsors face the additional risk of having to write a big check to secure approval, that could have a further chilling effect.

Traditionally, certificate of need review is supposed to focus on whether the project is necessary to meet consumer demand, as well as the character, qualifications and resources of the project’s sponsors.

A law enacted last year also requires each applicant to submit a health equity impact statement assessing how a project will affect “medically underserved groups,” such as members of racial, ethnic and sexual minorities, people with disabilities and the poor and uninsured.

This law had not yet passed the Legislature when the application for the Weill Cornell transplant center was filed in early 2021. However, officials argued that the project “would enhance cardiology services and health equity in the New York City region, with a special focus on Kings and Queens counties” and pointed out that NewYork-Presbyterian’s existing heart transplant unit, located at its Columbia University Irving Medical Center campus, has treated more Black and Hispanic patients than any other in the state.

This is not the first time in recent history that state officials have demanded large payments from companies seeking regulatory approval.

In 2018, CVS and Aetna agreed to pay the state $40 million as part of a deal in which the Department of Financial Services signed off on a merger between the two companies. Earlier that same year, the state’s approval of the $3.75 billion sale of Fidelis Care to Centene Corp. resulted in $2 billion in payments to the state.

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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