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Mount Sinai Health System–run hospital but an average of $7,356 at a New York-Presbyterian system hospital—more than 16 times as much. ere were substantial price differences even between hospitals owned by the same health system. A patient who gets a CT pelvic scan at Monte ore Health System’s Nyack Hospital will be charged $220 without insurance. If that patient were instead to go to Monte ore’s White Plains Hospital, just a 20-minute drive away, the cash price would almost quadruple, to $848.
Adding insurance into the mix points to seemingly arbitrary di erences in rates between plans, with negotiated fees sometimes even exceeding the price a patient would pay without insurance. A colonoscopy at NYC Health + Hospitals/Elmhurst, part of the city’s public hospital system, costs about $318 with a Health rst plan, $1,200 with a MetroPlus Medicaid plan and nearly $2,200 with Aetna commer-
cial coverage—more than double the $895 rate without insurance.
Brian Walsh, client success leader at Turquoise Health, said Crain’s ndings t into a national trend of volatility in hospital pricing.
“Overall, this is par for the course,” he said.
Pulling back the curtain e federal government’s price-transparency rule promised for the rst time to pull back the curtain on one of the most opaque corners of health care: negotiations between insurance companies and hospitals. e rule mandates that hospitals publish the prices they have agreed upon with each of the health plans they accept. Unlike cash prices, which the U.S. Centers for Medicare and Medicaid Services started requiring hospitals to disclose in 2019, these are the numbers that often have the most bearing on what a patient actually owes for hospital care. ( e vast majority of New Yorkers are insured either privately or through Medicare or Medicaid.) e reality is much less clear. Each hospital uses disparate naming conventions that can complicate e orts to compare and contrast prices. Many use highly technical medical billing codes to identify services . If a patient were to gure out the right code for the service they need, they’d still have to go through tens of thousands of rows of data to make a comparison.
Some systems, such as Mount Sinai, break out the cost of service by insurance, while Monte ore’s 50,000 rows of data disclose only cash prices—which few patients actually pay.
“ e data isn’t exactly perfect, and this is the rst time hospitals are taking a whack at putting this data together,” said Walsh . Hospitals are not entirely to blame. e price-transparency legislation offered limited guidance on what exactly facilities need to provide and in which format, which ultimately poses a hurdle for patients trying to make sense of the numbers.
Some procedures, for example, are commonly priced as part of a bundle of services, noted Elisabeth R. Wynn, executive vice president of health economics and nance for the Greater New York Hospital Association. Facilities also sometimes tack on additional charges based on quality metrics , further complicating matters. e U.S. Centers for Medicare and Medicaid Services said that, as of the end of October, it had issued 329 warning letters to hospitals for noncompliance and requested 76
corrective action plans from those that had not yet corrected de ciencies. e agency has repeatedly declined to name the sco aws and would not disclose New York–speci c gures. Fines for noncompliance were originally set at just $300 a day. e government has since announced plans to raise the penalties to as “THIS IS THE FIRST TIME much as $5,500 per day, or more than $2 million per year, starting HOSPITALS ARE TAKING A next year. WHACK AT THIS DATA” e enlarged nes still may not be enough to coax data disclosures from giant health systems, which report billions of dollars in revenue per year—and have an incentive to keep their rates under wraps.
Average cash prices charged across hospital systems
Monte ore Health System Mount Sinai Health System New York City Health + Hospitals Corp. New York-Presbyterian Healthcare System
$290
n/d $345 $644
60-minute new patient visit $1,122 $1,017
n/d n/d
Diagnostic colonoscopy $33 n/d $11 $181
Kidney function blood-test panel
SOURCE: Turquoise Health and Crain's analysis; n/d: not disclosed $292 $132 $748 $1,786
Ultrasound of abdomen $534 $216 $433
CT scan, pelvis, with contrast
Bargaining power
In 2016, years before the federal price-transparency rule was instituted, a group of experts got an initial glimpse at the rates New York hospitals and insurers had long kept quiet. e New York State Health Foundation, a Midtown-based grantmaking organization, had commissioned an actuarial rm to study hospital pricing in three regions of the state. e study’s authors obtained what was then unprecedented access to contracts between hospitals and insurance companies from the state Department of Financial Services, which regulates insurers. e 151-page report included pricing and reimbursement data from more than 100 hospitals—including 75 in downstate New York—and nine commercial insurers.
It found that market leverage, or bargaining power, rather than quality, was key to the prices that hospitals charged for privately-insured patients. Hospitals with the biggest market share, such as those in the New York-Presbyterian, Northwell Health and Monte ore systems, tended to charge higher prices. And the di erence was signi cant, the researchers found: e highest-priced hospitals downstate were 2.2 to 2.7 times more expensive than the region’s lowest-priced facilities.
Prices were also higher at downstate hospitals that serve smaller shares of Medicare and Medicaid patients, countering “a widely held belief that a hospital negotiates for higher commercial prices to o set lower reimbursements received for their publicly insured patients,” the authors wrote.
“Hospital prices are not transparent, and perhaps if they were, we wouldn’t see this much variation," Bela Gorman, the study’s project lead, told Crain’s at the time. e 2016 study was the most comprehensive attempt at transparency until now.
Dr. Mark Zezza, director of policy and research at the New York State Health Foundation, said Crain’s ndings indicate the same patterns in hospital pricing have persisted in the years since.
Importance of transparency
Transparency alone will not lower the cost of care, experts say, but it is an important precursor. e new Coalition for A ordable Hospitals, convened by Local 32BJ of the Service Employees International Union, is pushing state lawmakers to pass a bill during the next legislative session, in 2022, that would prohibit certain anti-competitive contracting provisions between hospitals and insurers. Among the provisions cited in the bill, called the Hospital Equity and A ordability Law, or HEAL, is an all-or-nothing clause that requires payers to contract with all facilities in a health system if they want to include any in their health plan.
Other advocates tout the New York Health Act, which would switch the state to a single-payer system, as the only real solution to procuring lower prices. ■
$7,356 THE COST of an MRI brain scan without insurance at a New York-Presbyterian hospital $446 THE COST of an MRI brain scan without insurance at a Mount Sinai hospital
STATE OF HEALTH CARE Costs of attracting and retaining workers are raising expenses for hospitals, physician practices
BY SHUAN SIM
New York hospitals and physician practices have noted upticks in expenses in recent months, largely led by sta ng challenges, stakeholders say.
According to the latest reports from Kaufman Hall, a Chicago-based hospital and higher education consultancy rm, total expenses for hospitals in the Northeast increased by more than 7% in September, compared to the same month last year. In its physi-
cian report, although a regional breakdown was not available, overall expenses nationwide for practices went up more than 13% in the third quarter, compared to the same quarter last year.
A spokesman from the Greater New York Hospital Association said that, for hospitals, the issue lies with prices associated with hiring and retaining workers.
Competition for clerical and support sta has been erce, said Dr. omas Madejski, past president of the Medical Society of the State of New York. As workers left his upstate practice, lured away by higher wages elsewhere, his group has had to increase compensation by up to 10% to retain sta and use expensive temporary workers, he said. “Our practice will pay a 50% premium [for temps] over what we’d normally pay our sta , and that has created animosity within those who are getting normal pay,” Madejski said. “It’s been challenging on our morale and on our margins.”
Reexamining bene ts
For local players trying to attract sta , some say they are reexamining their wage and bene t o erings.
“At our practice, we’re generous on bene ts but not so much salary, and new hires aren’t as interested in that,” said Dr. Charles Rothberg, also a past president of MSSNY; he runs an independent practice in Su olk County. He said that o ering retirement bene ts isn’t bringing younger workers through the door, and his practice is considering increasing the salary of open positions instead. ere are, however, limits to how much more a practice can o er, Madejski said. Labor accounts for 80% of practice costs, leaving slim margins to play with, he noted.
Especially for clerical and support sta , medical o ces will have to compete with other industries on the wage front to attract and keep workers, said Matthew Bates, managing director and physician enterprise service line lead with Kaufman Hall.
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Supply-chain issues
Although labor cost concerns remain top of mind, stakeholders said they are keeping abreast of the recent supply-chain bottlenecks. eir equipment stockpiles have not been signi cantly a ected, although that could change should supply chains remain disrupted over a prolonged time, they said.
Rothberg said nonessential supplies, such as tissue paper, for his practice have certainly gotten more expensive. He noted that prices, especially for items sourced on Amazon, have risen about 30% in recent months.
“Right now it might be too early to say all of these increased costs are due to supply-chain issues,” he said, “but I’m certainly not impressed, and I’m keeping a close watch on things.” ■
Five local health-tech unicorns putting patients rst
BY JUDY MESSINA
Partially thanks to the explosion of remote therapies and virtual doctor visits that became necessary during the early days of the pandemic, health care is undergoing a major transformation as startups enlist technology for everything from drug delivery to physician-patient interactions.
Attracted by the rms’ rapid growth and positive results, investors are piling on, pushing a few to become unicorns, or venture-backed companies valued at $1 billion or more. A July report by CBInsights found that global health care deals in the third quarter were the highest on record, up 15% from the previous quarter, and the number of $100 million–plus mega rounds is already ahead of the gure
UNITE US BRILLMAN KINARIWALA
for 2020.
“ e ones we typically consider smart money health care investors are pushing the environment forward and investing in companies that are demonstrating that, through digital technology, they can deliver higher-quality care at lower cost,” said Marissa Schlueter, managing analyst for health care at CBInsights.
Putting patients in the driver’s
seat appears to be the impetus for virtually every health-tech player in the city. In the case of Garment District–based Capsule, that means replacing the pharmacy system founder Eric Kinariwala calls “o line and archaic” with an app-based service that streamlines drug delivery—and provides continuing information to both patients and doctors. Capsule receives prescriptions from physicians digitally; patients log in to check the price and arrange same-day delivery. INVESTORS ARE FOCUSED ON “Pharmacy is the best-positioned place FIRMS THAT DELIVER QUALITY in the health care sysCARE AT A LOW COST tem to build longlived, high-trust relationships with consumers,” said Kinariwala. Launched in 2015, Capsule today has 1,200 employees and operates in 20 cities across the country. It had raised $570 million as of April and is reportedly valued north of $1 billion. For Dan Brillman, co-founder and CEO of Lower Manhattan’s Unite Us, a disconnect showed up when he tried to help veterans like RO FOUNDERS Rob Schutz, Saman Rahmanian and Zachariah Reitano
MICHELLE SUCONICK
himself access health care and social services—and couldn’t gain ground with any of the providers he called. “I had to tell the story over and over again to each organization,” he said.
He wrote a paper about his experience for a class at Columbia Business School. A venture capitalist saw it and thus was born Unite Us, a platform for government o cials, health care providers and insurers to collaborate and connect patients to social services. Founded in 2013, the company operates in 43 states and, Brillman predicts, will have a network in every county in the country by the end of next year. It had raised $195 million as of March and is reportedly valued at more than $1.6 billion.
Chelsea-based startup Ro touts its consumer-driven mission, o ering direct-to-patient care, including lab tests, diagnostics and pharmacy services. O ering treatment for 20 conditions, Ro connects patients with physicians via telehealth or, if necessary, can provide services and testing at home using its software platform WorkPath. Ro doesn’t accept insurance, and patients pay cash— $15 for an online visit.
Today the company operates in every county in the U.S. and has 10 ful llment pharmacy centers around the country. Last year the company generated just over $200 million in revenue and in 2021 has already surpassed $300 million. e rm had raised $876 million as of March and is reportedly valued at $5 billion.
A few blocks north, irty Madison, founded in 2017, focuses on four conditions: men’s hair loss, allergies, gastrointestinal issues and migraine headaches. e subscription-based business provides patients with online access to specialists and personalized treatments.
With its telemedicine service available in more than 40 states and pharmacy products available throughout the country, its rst-quarter sales this year reportedly exceeded an annual run rate of $100 million. e company had raised $210 million as of June, and its reported value is above $1 billion.
Another local unicorn, Noom (moon spelled backwards), was founded in 2008 as a digital platform to help people manage their weight. Its app-based service uses a psychology-based approach to help users build healthy habits, addressing conditions including diabetes, hypertension, and stress and anxiety.
Today it has more than 300 employees in its New York City headquarters. Its subscription service, which costs $59 per month on average, has reportedly been downloaded as many as 4 million times in the past year in the United States alone and generated $400 million in sales for the company in 2020, a 68% increase over 2019’s $237 million. It had raised $657.3 million as of May and has a reported valuation of $3.7 billion.
Spotlight on ef ciency
ough the city’s health tech unicorns have di erent models, they share common themes.
“ ey are either making processes more e cient or making better use of larger sets of data or, for tech-enabled providers, they’re actually the ones that are producing clinical outcomes, showing measurable improvements,” said CBInsights’ Schlueter. ■
