September 16, the U.S. House Ways and Means Committee held a hearing entitled “Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals Are Spending Your Tax Dollars.” For New Yorkers, the issue hits close to home.
Just months after signing a multi-year agreement with Healthfirst, New York-Presbyterian abruptly cancelled the contract - an alarming reminder that many nonprofit hospitals put profits ahead of patients. These tactics, including pressuring insurers into deals that preserve sky-high prices, have already prompted a proposed class action lawsuit from a United Food and Commercial Workers health fund.
Healthfirst, which provides Medicaid coverage to one-third of enrollees in downstate New York, has approximately 200,000 members who received services at New York Presbyterian. Canceling this contract without cause means that thousands of Medicaid patients – some of our most vulnerable residents – will be forced to pay full price for services at one of the most expensive hospitals in the country.
Some might look at this situation and see a business dispute between a hospital system and an insurance company and wonder why they should care. For close observers of health care in our state, while New York Presbyterian is hardly alone, it does serve as a case study in how our system is failing the people it was built to serve.
As 501(c)(3) charitable organizations that benefit from generous tax breaks from the state and federal government, non-profit hospitals are supposed to provide a set amount of community benefits. According to an analysis by the Lown Institute, a nonpartisan think tank, New York Presbyterian is falling far short of its obligations.
They calculated the difference between hospital spending on substantive community investment and the value of their tax exemptions for over 2400 private nonprofit hospitals. In 2019, New York-Presbyterian took in $359 million more in tax breaks than it invested in New York communities, the largest of all nonprofit hospitals in New York City, and more than twice the next closest system. Two years later, it received more than $415 million in tax breaks, yet allocated a mere 1.7% of its revenues to charity care and spent only $142 million on community benefits—approximately a $247 million gap.
Their stinginess in doling out community benefits comes despite the fact that New York Presbyterian is generating billions of dollars in revenue each year. In 2023 alone, the hospital reported $10.3 billion in revenue, nearly $500 million in profit, and an additional $100 million in private charitable donations.
Those profits may not be trickling down to the community, but they certainly are raining down on C-suite executives. According to an analysis by my organization – the Center for Medicine in the Public Interest (CMPI) – CEO Steve Corwin was paid $14.5 million in total compensation in 2023. That year, executive compensation passed $54 million.
While paying lavish executive salaries, New York Presbyterian has also been laying off critical front-line healthcare workers. In May, they announced an across-the-board layoff of two percent of its workers—eliminating around 1000 employees. The layoffs included pediatric and palliative nurses, which will likely lead to the closure of healthcare services for children and terminally ill patients at their Columbia campus.
Our study also found that New York Presbyterian spent outrageous sums of money on marketing: their advertising and promotion costs doubled from $42,810,431 in 2021 to $93,594,172 in 2023.
How can they afford such extravagant spending? By charging outlandish rates for core services.
A simple colonoscopy there costs $13,000 compared to $3,400 at Lennox Hill Hospital. A Cesarean section will set parents back $18,000 at a New York City Health + Hospitals facility, but a whopping $45,000 at New York-Presbyterian.
New York Presbyterian is certainly not the only non-profit hospital that is lining its pockets at the expense of patients, but it is the poster child for most of the worst practices.
Those costs are passed on to every New Yorker in the form of higher insurance rates and out-of-pocket expenses. New Yorkers are facing a number of affordability challenges. From the high cost of living to the increase in food prices, they are being stretched financially thin. A state-wide survey released earlier this year found that an overwhelming 80% of New Yorkers are concerned about their ability to afford health care in the future.
The practices at these hospitals are exacerbating the problem and driving up costs across the healthcare system.
Fortunately, people are beginning to take notice. The Department of Justice has launched an antitrust investigation, while plaintiffs have filed a federal class action lawsuit accusing New York-Presbyterian of engaging in “some of the most flagrantly anticompetitive contracting and negotiating tactics of any hospital system in America.”
The time has come for New York’s non-profit hospitals to stop putting patients last, and if it takes legislative action to force them to do so, then so be it.
Peter Pitts is President and co-founder of the Center for Medicine in the Public Interest. He also serves as a Visiting Professor at University of Paris School of Medicine. Pitts lives in New York City
