Hospital CEO blames labor, drugs for rising U.S. healthcare costs
NEW YORK, UNITED STATES — The Chief Executive Officer (CEO) of one of New York City’s largest health systems told Congress that hospital prices are climbing because of labor, drugs and medical supplies — not consolidation, as lawmakers from both parties have argued.
According to a report from Gothamist, Dr. Brian Donley of NewYork-Presbyterian was one of four health system executives questioned by the House Ways and Means Committee about a national healthcare spending surge in which hospital care alone accounts for about a third of growth as reported by KFF.
The hearing landed weeks after the Department of Justice sued NewYork-Presbyterian, alleging it crafted insurance contracts that suppress competition and inflate prices.
Operational costs are squeezing hospital margins
Donley pointed to telehealth expansion, school health clinics and preventive care programs as cost-control efforts at NewYork-Presbyterian.
“We stand ready to work together to make high-quality healthcare more accessible and affordable for all Americans,” Donley said.
But the operational reality for hospitals nationwide is harsher than press statements suggest — labor costs alone now consume more than half of most U.S. hospital budgets, while drug prices and supply chain volatility continue to climb.
For hospital chief financial officers (CFOs) and clinic operators, that math is unsustainable without major back-office restructuring. Every dollar spent on administrative overhead is a dollar pulled from clinical staffing, equipment or facility upgrades — the exact areas where margin pressure shows up first.
Regulatory pressure is reshaping the provider landscape
Republicans on the committee pushed reforms targeting site-of-service payment differentials, where hospital-owned clinics charge more than independent practices for identical services. Donley defended the practice, but the political momentum suggests changes are coming.
Democrats redirected attention to last year’s federal healthcare cuts, which policy analysts say will strip insurance coverage from millions of Americans and slash hospital funding — a hit NewYork-Presbyterian itself cited when calling striking nurses’ salary demands “unreasonable.”
The DOJ lawsuit adds another layer of risk.
“NewYork-Presbyterian’s prices are significantly higher than those set by competitors Mount Sinai and NYU Langone,” the federal complaint stated, alleging the system forces insurers to include all its facilities in-network or none.
Whether that case succeeds or fails, hospitals across the country are watching their contracting practices get rewritten in real time.
That’s why more U.S. health systems are turning to outsourcing partners for revenue cycle management (RCM), medical coding,prior authorization processing and back-office support. With labor costs climbing and federal reimbursement tightening, providers that streamline operations now will protect clinical capacity when the next round of regulatory changes hits.
