Legislative Memo

Lev Ginsburg
Director of Government Afairs
T 518.465.7511 x207


S.3186-A (Hannon) /A.2474-A (Canestrari)



Permits Physicians to Collectively Bargain With Health Care Plans



June 11, 2012


The Business Council of New York State opposes this legislation which would permit health care providers, including physicians, to form unions for the purpose of collectively bargaining with health plans.  

At a time when changes resulting from implementation of the federal Affordable Care Act will substantially alter the landscape of health care delivery, this is not the time to introduce state-specific authorization to permit health care providers to organize for the purpose of collectively bargaining with health plans.  When the two largest payers in the country are Medicaid and Medicare, and neither reimburse health care providers at a sufficient level relative to providers’ true costs, a network of doctors collectively bargaining would likely seek to offset losses of Medicare and Medicaid revenue by charging more to privately insured patients – merely shifting costs rather than innovating and evaluating their own business practice models to wring efficiencies out of the system.  

The new federal Affordable Care Act encourages joint ventures, known as accountable care organizations (ACOs), in which doctors and hospitals take collective responsibility for the care of Medicare beneficiaries.   Hospitals around New York State have been preparing for this change acquiring physician practices and adding to their ranks of employee physicians. The theory – not yet tested on any realistic scale - is that when competitors collaborate, they can produce enormous efficiencies. A very real possibility, however, is that they may also be tempted to engage in monopolistic practices.  Experts note as well, that the risk tends to be greatest in small- and medium-size communities dominated by one or two hospitals or health care systems.

The cost for employer-sponsored coverage continues to rise and policy makers continue to avoid the very serious conversation on how to “bend the cost curve” for a health care system that nationally consumes 16% of GDP.  Allowing health care providers to organize for the purpose of collectively bargaining with health plans distracts from addressing the issues driving health care costs and utilization and will provide yet another way for the providers to shift costs to the employers and employees who are already struggling to maintain health coverage.

For these reasons, The Business Council opposes this bill.