Federal regulators are ramping up scrutiny of health system contracting practices, escalating the debate over healthcare costs, competition and market power.
The Justice Department recently filed antitrust lawsuits against major health systems, including OhioHealth and NewYork-Presbyterian, alleging they used payer contracts to limit competition and drive up prices. Additionally, the Federal Trade Commission last month launched a task force aimed at strengthening oversight and identifying anticompetitive behavior across healthcare.
The Justice Department’s February lawsuit against Columbus-based OhioHealth alleges the 16-hospital system used its market dominance to require insurers to include its hospitals in all commercial networks, while restricting their ability to offer lower-cost, “budget-conscious” plans or steer patients to competitors.
Regulators aim to block OhioHealth from enforcing contract provisions that restrict payers from offering plans that provide financial incentives or information encouraging members to use competing providers. The complaint also asks the court to prohibit OhioHealth from retaliating against insurers that attempt to introduce such plans.
A spokesperson for Ohiohealth told Becker’s the system has been cooperating with the Justice Department’s review of its managed care agreements. “We are confident in our position and remain committed to full compliance with all applicable laws and regulatory requirements,” the system said in a statement.
A similar pattern appears in the March case against New York City-based NewYork-Presbyterian, where federal officials allege the system negotiated on an “all-or-nothing” basis, preventing payers from building narrower, lower-cost networks.
According to court documents, NewYork-Presbyterian’s alleged contracting strategy allowed the health system to charge more for routine medical procedures without the fear of losing patients to its two main competitors, Mount Sinai and NYU Langone.
In a statement provided to Becker’s, the NewYork-Presbyterian said that payers “hold the market power and use it to restrict patient choice,” and that the organization is in compliance with federal and state laws and regulations.
A third major health system, Charlotte, N.C.-based Advocate Health, has also confirmed that its contracts came under Justice Department investigation, according to The Wall Street Journal. However, a spokesperson for the 69-hospital system told the publication that probe closed and predated the merger that created the current Advocate Health entity.
In these recent cases, regulators allege the providers’ practices limit consumer choice, suppress price competition and contribute to rising healthcare costs — a concern that has become central to federal enforcement priorities.
The FTC’s newly formed healthcare task force reinforces that shift. The agency has explicitly tied consolidation and anticompetitive behavior to higher prices, reduced quality and stalled innovation, signaling a more aggressive, coordinated regulatory approach going forward.
This shift is becoming not just a legal issue, but a strategic inflection point for hospital leaders.
For years, scale and negotiating leverage have been core to health system strategy. Larger systems have used their size to secure favorable reimbursement rates, broaden network inclusion and stabilize margins in an increasingly challenging financial environment.
However, the same strategies that drove this growth are now being reframed as potential antitrust liabilities.
“All-or-nothing” contracting, anti-steering provisions and limits on price transparency tools — long-standing features of payer-provider negotiations — are now squarely in regulators’ crosshairs.
This shift is particularly concerning for dominant regional systems, with regulators alleging market power has been used to impose terms that disadvantage competitors and restrict payer flexibility. Health systems counter that payers hold the real leverage and that their contracts aim to protect access and care quality.
That tension underscores a broader industry reality: both payers and providers are consolidating, and each side is seeking leverage in an increasingly zero-sum negotiation environment.
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