“Our proposal and our plan here is unique in the sense that it builds on the foundation of the delegated model in California, where providers accept full or partial risk, and they are paid to do that—they accept a capitation rate, which is generally risk adjusted,” Scheffler said.
Read the full article here.
By Richard M. Scheffler, Stephen M. Shortell, and Daniel R. Arnold | Published April 21, 2022 | Link to Full Report
California’s challenge and opportunity is to provide accessible, affordable, equitable, and
continuously improving quality of care to its entire population. Governor Newsom has expanded
Medi-Cal to cover undocumented adult immigrants, which when combined with the Biden
administration’s premium subsidy increases, will result in near universal coverage for all in
California. Nonetheless, the affordability of such coverage remains a major challenge for the
state. A recent CHCF / NORC survey of Californians reported that just over half (52%) of
respondents said they skipped or postponed care due to costs. Additionally, more than 1 in 3
(36%) reported having medical debt, with 1 in 5 (19%) of those with medical debt owing $5,000
or more. Just over half (52%) of people with lower incomes surveyed reported having medical
debt, compared to 30% for those with higher incomes. Furthermore, Latino/x (52%) and Black
(48%) Californians were more likely to have medical debt than White (28%) and Asian (27%)
Californians. Between 2008 and 2018, Californians’ health care spending experienced a 68%
increase, compared to only a 16% increase in median household income. The growth in health
insurance premiums has far exceeded that of wages over the last two decades.
Building on the success of Covered California (the state’s innovative health insurance
exchange) and the presence of organized/integrated medical groups and independent practice
associations (IPAs) with experience in providing care under risk-adjusted per member per
month payments, the state has the potential to develop a public option that increases
competition in the health insurance market, which would lower price and can improve quality. A
public option plan (POP) is a state plan to offer health insurance for the purpose of increasing
competition, consumer choice, and affordability of coverage. Improvements in affordability
would be particularly important for low-income and minority populations, as their wages are
lower. We test the viability of our POP on Covered California and CalPERS. Furthermore, we
show how the L.A. Care county-based plan was successful in attaining enrollment while
lowering premium growth for all plans in the LA Regions of Covered California. At this time, we
are not recommending that a POP be offered on Covered California or by CalPERS. This
decision will need to be made by them, legislators, or the governor. Nonetheless, our analysis
shows that our POP would have lower premiums than many of the plans currently on the
This study was funded by the Commonwealth Fund (Grant No. 20223713).
The NIHCM Foundation is a nonprofit, nonpartisan organization dedicated to transforming health care through evidence and collaboration. Read more about the work and the full press release here.
“New research by the University of California-Berkeley has identified ‘hot spots’ where private equity firms have quietly moved from having a small foothold to controlling more than two-thirds of the market for physician services such as anesthesiology and gastroenterology in 2021.”
“Private equity has done so much buying that it now dominates several specialized medical services, such as anesthesiology and gastroenterology, in a few metropolitan areas, according to new research made available to KHN by the Nicholas C. Petris Center at UC-Berkeley.”
Read the full article here.
Becker’s Hospital Review published an article detailing our study’s design and findings.
Read the full feature here.
“’During the past decade, over one-half of the 1,500 hospitals targeted for a merger were in another geographic market than the acquiring hospital or system,’ said Fulton. ‘But these mergers were rarely scrutinized by regulators because they were considered to be across markets.’
“However, large employers and insurers span these markets, potentially enabling these systems to exert market power across markets,” Fulton said.”
Read the full feature here.
“‘Generally speaking, cross-market hospital mergers get a pass by the FTC. But since more than half of the mergers from 2010 to 2019 were located in a different commuting zone than the acquirer, we can’t ignore it,’ said Brent Fulton, lead author of the study and an associate research professor of health economics and policy at University of California, Berkeley.”
Read the full article here.
By Brent D. Fulton, Daniel R. Arnold, Jaime S. King, Alexandra D. Montague, Thomas L. Greaney, and Richard M. Scheffler | Published November 11, 2022 in Health Affairs | Link to Full Article
Although hospital consolidation within markets has been well documented, consolidation across markets has not, even though economic theory predicts—and evidence is emerging—that cross-market hospital systems raise prices by exerting market power across markets when negotiating with common customers (primarily insurers). This study analyzes hospital systems using the American Hospital Association Annual Survey Database and defines hospital geographic markets as commuting zones that link workers to places of employment. The share of community hospitals in the US that were part of hospital systems increased from 10 percent in 1970 to 67 percent in 2019, resulting in 3,436 hospitals within 368 systems in 2019. Of these systems, 216 (59 percent) owned hospitals in multiple commuting zones, in part because 55 percent of the 1,500 hospitals targeted for a merger or acquisition between 2010 and 2019 were located in a different commuting zone than the acquirer. Based on market-power differences among hospitals in systems, the number of systems in urban commuting zones that could potentially exert enhanced cross-market power increased from thirty-seven systems in 2009 to fifty-seven systems in 2019, an increase of 54 percent. The increase in cross-market hospital systems warrants concern and scrutiny because of the potential anticompetitive impact of hospital systems exerting market power across markets in negotiations with common customers.
By Laura Alexander, Ola Abdelhadi, Brent Fulton, and Richard Scheffler | Published October 27, 2022 in the Competition Policy International (CPI) Antitrust Chronicle | Link to Full Article
The large and increasing amount of money under private equity (“PE”) management and the huge push by PE into healthcare, raises concerns and challenges for healthcare policy, but also for competition policy. Emerging evidence about the adverse impact of PE investment in healthcare on competition, prices, quality of care, and patient health is a serious concern. These troubling findings raise the question of how, if at all, antitrust law and antitrust enforcers should treat conduct and deals involving PE owners. While one of the virtues of the antitrust laws is their broad applicability, application of those laws to particular markets and companies is only effective when it is rooted in the realities of competition in those market and the competitive incentives that those companies face. PE’s impact on healthcare reveals significant gaps in the tools and methods for using the antitrust laws to protect competition. We conclude, however, that competition laws applicable only to PE are not generally needed; rather, when policymakers, regulators, and enforcers are applying competition laws to PE-owned companies, they need to take account of the unique incentives facing PE managers, the competitive implications of the PE ownership structure, and types of competition concerns that tend to arise surrounding PE deals. In markets that already face limited competition, such as healthcare, the incentives and ownership structures of PE may exacerbate existing competition concerns and anticompetitive impacts, potentially necessitating PE-specific policies.
Health economic researchers from the University of California, Berkeley on Thursday shared their analysis of Indiana’s healthcare markets — determining that the concentration of insurers and hospitals has contributed to higher costs over the last decade. Prices at non-merged hospitals, for instance, remained relatively flat over the time period they analyzed, while those entities that had been involved in a merger or acquisition had prices increase by roughly 50%.
The presentation was at a joint meeting between interim committees on finance and public health, and dozens of policymakers reviewed the state-commissioned studies. Read about it here.