Joe Nelson

March 26, 2025

The recently released Healthcare Accountability Report from the New York City Department of Health and Mental Hygiene, produced in compliance with NYC Local Law 78 of 2023, provides compelling evidence of what we've been saying all along: our healthcare system is fundamentally broken, particularly for self-funded plans. As the first comprehensive analysis of its kind for NYC, this report validates the very problems OpenNetworks was built to solve.

The Crisis Reaches New Heights

According to the report, the healthcare affordability crisis has "reached new extremes," with healthcare spending continuing to outpace both inflation and wages. New York State now has the second-highest per capita healthcare spending in the nation, trailing only Massachusetts.

Perhaps most tellingly, the report confirms that "prices, not utilization, are recognized as the largest driver of increased healthcare spending." This directly validates our long-standing concern about opaque pricing practices that artificially inflate costs.

Price Disparities Defy Logic

The numbers are staggering. The report reveals massive variations in commercial prices across NYC's healthcare systems, with 2022 data showing average commercial prices ranging "from 170% of Medicare (NYC Health + Hospitals) to 403% of Medicare."

Price transparency data paints an even more alarming picture:

• Inpatient prices ranged from 256% to 520% of Medicare
• Outpatient prices soared even higher, from 348% to 767% of Medicare
• A colonoscopy costs anywhere from $940 to $12,000
• A cesarean section ranges from $7,000 to $58,000
• A moderate-intensity ER visit varies from $2,097 to $5,376

These aren't minor differences; they represent a fundamental lack of consistent and justifiable pricing, the very definition of "spread pricing" where self-funded plans pay wildly different amounts for identical services.

Market Concentration Limits Competition

What's more concerning is the significant market concentration identified in the report. Several large health systems consistently rank among the highest-priced providers. The analysis of the City's Comprehensive Benefits Plan spending shows a concentrated market with a small number of dominant systems. This market concentration is precisely what we've observed nationwide: a healthcare landscape dominated by powerful health systems and payors that stifle competition and innovation.

Employers Bear the Crushing Financial Burden

For employers, the impact is severe. The City of New York itself has seen expenditures for active employees and pre-Medicare retirees balloon to $9.3 billion in FY 2024, up from $5.1 billion in FY 2015, an 82% increase in just nine years.

Despite these massive expenditures, employers continue to struggle with accessing and truly understanding their own claims data, making it nearly impossible to make informed decisions about their healthcare spending.

System Failures: Data Gaps and Questionable Practices

The report highlights several critical system failures:

• New York lacks an All-Payor Claims Database, putting it at a "severe disadvantage" for effective cost containment
• Even federally mandated price transparency data faces "large questions about accuracy and usefulness"
• The healthcare payment ecosystem relies on outdated technology, which impedes efficiency, increases administrative costs, and contributes to consumer dissatisfaction

OpenNetworks: Building the Solution

These findings aren't just isolated problems; they're symptoms of our fundamentally broken healthcare payment system. OpenNetworks was created specifically to address these systemic issues through our core principles of transparency, predictability, and simplicity.

Our approach directly counters the problems identified in the NYC report:

1. True Price Transparency

While the NYC report shows how difficult it is to obtain reliable pricing information despite federal mandates, OpenNetworks makes pricing completely transparent. We've built a marketplace that is open to any payor seeking transparently-priced healthcare services and any provider willing to deliver them. This transparency isn't optional—it's the foundation of our platform.

2. Eliminating Anti-Competitive Practices

The report highlights hospital consolidation and market concentration as key drivers of higher prices and limited competition. OpenNetworks directly addresses these market failures through our commitment to open competition. Unlike traditional models, we don't use exclusivity clauses, gag clauses, or "favored nation" arrangements that limit market flexibility. By creating a level playing field, we foster genuine competition based on quality and value.

3. Direct Connections Without Costly Intermediaries

The report shows how traditional insurance plans create barriers that drive up costs. Our platform enables direct business relationships between purchasers and providers, eliminating expensive middlemen while giving both sides more control over their healthcare relationships. This reduces administrative complexity, cuts out wasteful overhead, and creates more efficient healthcare delivery.

4. Data Empowerment for Better Decisions

While the report laments the lack of comprehensive data for analysis and decision-making, OpenNetworks addresses this through robust data-sharing capabilities. We provide actionable analytics to all participants, enabling payors to see real costs and providers to benchmark their performance. This data transparency is critical for informed decision-making and market efficiency.

Join Us in Creating Change

If you're facing these same frustrating and costly healthcare challenges, whether in New York City or elsewhere, we invite you to join us in building something better. The findings of this comprehensive report underscore both the scale and urgency of the problem.

Let's move beyond simply acknowledging what's broken. Together, through OpenNetworks, we can create a healthcare payment system that truly works for everyone. Contact us today to learn how you can be part of this crucial transformation.