San Francisco City Attorney David Chiu announced a settlement that mandates U.S. News & World Report to disclose on its website the financial relationships with hospitals it ranks and how the company benefits monetarily from them. This move, revealed today, comes after the City Attorney’s Office found that U.S. News was accepting hospital payments without adequately notifying consumers, according to a city press release.
"Consumers use these hospital rankings to make consequential health care decisions, but at the outset of our investigation the company did not disclose as required by U.S. law that it received payments from the hospitals it ranked, including licensing fees for permission to display a ‘Best Hospitals’ badge," City Attorney Chiu said. His office has been tasked to decisively protect consumers and ensure that companies like U.S. News are transparent about their revenue streams, particularly when they may influence consumer choices.
The backdrop to this settlement stems from a discovery that U.S. News was accepting various forms of payment, such as licensing for "Best Hospitals" badges at a cost that could be as high as $42,000 per year for a single hospital, subscriptions to access detailed ranking data, website and guidebook advertising, and placement fees for "Featured Hospital" status. This funding model raised concerns about the influence of these financial ties on hospital rankings, which are supposed to guide patients seeking top-tier healthcare.
City Attorney Chiu initiated an investigation into U.S. News in June 2023, suspecting that its practices might be misleading and potentially illegal under California law. After the company initially refused to respond to inquiries adequately, Chiu sent two subpoenas in January 2024 to obtain necessary information. However, U.S. News filed a lawsuit claiming the investigation threatened their First Amendment rights. In May 2024, the courts dismissed the company's claims, allowing the City Attorney to continue his office’s consumer protection efforts unabated.
As part of the settlement, agreed upon on April 25, U.S. News has agreed to clearly state on its Best Hospitals home page and on the pages that list hospital rankings that some hospitals may provide revenue to the company. This disclaimer will link to a full disclosure of U.S. News’s revenue model. Moreover, U.S. News has also agreed to publish an op-ed by the City Attorney, which can be found on their website. The entire City Attorney’s Office staff contributed to this significant consumer protection effort, including Rhonda Andrew, George Cothran, Katie Dunn, and many others.
