Federal Prosecutors Target NYC Hospital Giant for Blocking Cheaper Health Plans

Antitrust Battle Over Healthcare Costs

Federal prosecutors have launched a major legal assault against NewYork-Presbyterian, the largest hospital system in New York City, accusing it of wielding its massive market power to block insurers from offering budget-friendly health plans to millions of New Yorkers. The complaint, filed in the U.S. District Court for the Southern District of New York, charges New York-Presbyterian with violating Section 1 of the Sherman Act in what marks the second major hospital antitrust case this year.

New York-Presbyterian is the largest and most powerful hospital system in New York City. In 2024, the nonprofit made up more than 30% of the inpatient general acute care discharges in Manhattan and more than 25% in the four boroughs of Bronx, Brooklyn, Manhattan and Queens . The Justice Department alleges this dominance has enabled the hospital system to impose what prosecutors call "all-or-nothing" contracts that effectively eliminate price competition.

"New York-Presbyterian has known for years that the American consumer wants budget-conscious health plans that reduce healthcare costs. But rather than offer consumers choice, New York-Presbyterian uses its market power to protect its margins, impede competition from rival hospitals, and prevent employers and unions from creating these plans" , said Acting Assistant Attorney General Omeed Assefi.

How the Alleged Scheme Works

The complaint alleges that New York-Presbyterian imposes plan restrictions in its contracts with payors that prevent payors from offering plans that, for example, do not include New York-Presbyterian or do not feature New York-Presbyterian in the most favored tier of the plan. Insurers must include all of NewYork-Presbyterian's facilities in nearly every network or forgo including them at all . This creates what the government describes as an impossible choice for insurers operating in the nation's largest city.

New York-Presbyterian even forbids payors from offering lower copays when patients chose to receive care at New York-Presbyterian's — often lower priced — rivals. By forcing insurers to include NewYork-Presbyterian in all plan networks, NewYork-Presbyterian degrades plans' "steering" features, which insurers design to nudge patients to less expensive providers . The result, prosecutors argue, is that cheaper alternatives become financially unviable.

These unlawful restrictions insulate New York-Presbyterian from price competition, limiting its rival hospitals from competing for patients based on lower prices or better value, and prevent the development of budget-conscious plans for New Yorkers that are available in other parts of the United States .

Hospital System Pushes Back

NewYork-Presbyterian has mounted a vigorous defense, calling the lawsuit meritless and arguing that it actually promotes competition rather than stifling it. "NewYork-Presbyterian complies fully with all applicable federal and state laws and regulations. We stand behind our policies and processes, which we believe are pro-competitive" , the hospital said in a statement.

"We do not seek to exclude any other hospital from any insurer's network. Nor do we require more favorable treatment than any other hospital. In our contract negotiations with insurers, we seek to maximize access to the highest quality of care. Insurance companies hold the market power and use it to restrict patient choice" , the health system argued, essentially flipping the government's narrative.

Broader Enforcement Campaign

The lawsuit could mark an apparent crackdown on hospitals' payer contracting practices, given the Justice Department filed a similar antitrust lawsuit against OhioHealth five weeks ago. In February, it brought a lawsuit against OhioHealth, the largest health care system in central Ohio, similarly scrutinizing deals with insurers . These cases signal a renewed federal focus on whether dominant health systems are artificially inflating healthcare costs.

"Millions of New Yorkers pay more for healthcare because of these anticompetitive practices," Attorney General Pamela Bondi said in a release. "At the direction of President Trump, this Justice Department will fight relentlessly to ensure that Americans get the healthcare they need without facing exorbitant costs" .

The case represents a significant test of whether federal antitrust law can effectively address healthcare affordability through contract regulation rather than direct price controls. If successful, the government's approach could reshape how dominant hospital systems negotiate with insurers nationwide, potentially opening the door for the kind of budget-conscious health plans that have proven elusive in America's most expensive healthcare markets.