Our Publications

New evidence on the impacts of cross-market hospital mergers on commercial prices and measures of quality

Posted on By jordan-wolf

By Daniel R. Arnold, Jaime S. King, Brent D. Fulton, Alexandra D. Montague, Katherine L. Gudiksen, Thomas L. Greaney, Richard M. Scheffler| Published in Health Services Research in April 2024 | Link to full report.

“As hospital systems have expanded, they’ve extended into regions where they previously had no presence. A recent study found 55% of the 1500 hospitals targeted for a merger or acquisition from 2009 to 2019 operated in a commuting zone that the acquirer did not previously operate in. The price and quality effects of these “cross-market” hospital mergers and acquisitions (M&A) are the focus of this paper.”

What this study adds: 

  • Serial acquirers are significant contributors to estimated cross-market price effects.
  • We find no discernible impact of cross-market mergers on mortality and readmission rates for heart failure, heart attacks and pneumonia.
  • Overall, this study provides further evidence that cross-market hospital mergers lead to price increases and novel findings of no quality effect and the impact of serial acquirers on the price effect. More antitrust scrutiny of these mergers—particularly those of serial acquirers—appears prudent given the current state of highly concentrated hospital markets in the United States.

Questions should be addressed to Daniel Arnold, danielarnold@berkeley.edu

Private Equity–Acquired Physician Practices And Market Penetration Increased Substantially, 2012–21

Posted on By jordan-wolf

By Ola Abdelhadi, Brent D. Fulton, Laura Alexander, Richard M. Scheffler | Published March 2024 in Health Affairs | Link to full report.

“Private equity (PE) firms have been acquiring physician practices at an increasing rate, raising concerns about such firms’ penetration at the physician level into local markets and the impact on health care quality and prices. However, limited knowledge exists about the extent of PE firms’ control in local markets. By linking data on PE acquisitions to physician data and using full-time-equivalent physicians as the base of assessment, we estimated the local market share of each PE firm within ten physician specialties at the Metropolitan Statistical Area (MSA) level.”

Monetizing Medicine: Private Equity and Competition in Physician and Practice Markets Addendums

Posted on By jordan-wolf

“The addendums provide additional data and more detailed information regarding metropolitan statistical areas (MSAs) that had a private equity (PE) firm with 30+% or 50+% market share in 2021 for one or more of the ten physician specialties analyzed in the report. Addendum 1 provides the physician specialty, the name of the physician practice, and the PE firm with the 30+% or 50+% market share for most of the MSAs mentioned in the original report. Addendum 2 presents the MSA-level three year post-PE price increase for the affected specialty.”

Addendums authored by Richard M. Scheffler and Daniel R. Arnold | Link to the addenda and full report.

Monetizing Medicine: Private Equity and Competition in Physician and Practice Markets

Posted on By jordan-wolf

Check out the Petris Center’s recent report on the rise of private equity firms in acquiring physician practices, in collaboration with AAI and the Washington Center for Equitable Growth. The study covers ten medical specialties across the United States, offering insights into private equity’s impact on market concentration and healthcare expenditure. Lead author Richard Scheffler expresses concerns over shifts towards prioritizing profits over patient care, with far-reaching implications in the practice of medicine.

By Richard M. Scheffler, Laura Alexander, Brent D. Fulton, Daniel R. Arnold, Ola A. Abdelhadi | Link to the full report here. 

Comments of Professors of Law and Economics, Economists, and Health Policy Researchers on the Draft Merger Guidelines

Posted on By jordan-wolf

By Thomas L. Greaney, Richard M. Scheffler, Katherine L. Gudiksen, Jaime S. King, Amy Y. Gu, Brent D. Fulton, Paul B. Ginsburg, and Daniel R. Arnold | Link to Full Comment

The Draft Merger Guidelines (DMGs) constitute a major step forward in providing economically sound guidance to practitioners and courts for evaluating the potential competitive impact of mergers and acquisitions. These comments are offered by a group of law professors, economists, and policy experts who have devoted most of their professional careers to issues concerning market and regulatory issues involving health care providers and payors. The comment focus on several proposed changes that are of particular importance to improving oversight of consolidation in the health care sector.

The Better Care Plan: a blueprint for improving America’s healthcare system

Posted on By jordan-wolf

By Stephen M Shortell, John S Toussaint, George C Halvorson, Jon M Kingsdale, Richard M Scheffler, Allyson Y Schwartz, Peter A Wadsworth, Gail Wilensky | Published June 20, 2023 in Health Affairs Scholar | Link to Full Article

The United States falls far short of its potential for delivering care that is effective, efficient, safe, timely, patient-centered, and equitable. We put forward the Better Care Plan, an overarching blueprint to address the flaws in our current system. The plan calls for continuously improving care, moving all payers to risk-adjusted prospective payment, and creating national entities for collecting, analyzing, and reporting patient safety and quality-of-care outcomes data. A number of recommendations are made to achieve these goals.

Private Equity and Your Doctor: Profits Before Patients | Public Policy & Aging Report

Posted on By jordan-wolf

By Richard M. Scheffler, Ola Abdelhadi | Published April 21, 2023 in Oxford Academic | Link to Full Article

Older Americans have unique health needs that require specialized care and support. As people age, they are more likely to develop multiple chronic conditions such as cancer, diabetes, heart disease, and arthritis, which can greatly affect their quality of life (Boyd et al., 2019). Additionally, older adults may also experience physical and cognitive declines, which can make it difficult for them to manage their own healthcare. Access to healthcare and supportive services is crucial for older Americans to maintain their health and independence. Services such as home healthcare, nursing homes, and hospice care play a vital role in helping older adults lead fulfilling lives and maintain their quality of life for as long as possible. The majority of hospice patients are diagnosed with one or more chronic conditions, with cancer being the most common (29.6%), followed by circulatory or heart disease (17.4%) and dementia (15.6%) (Hospice Facts & Figures, 2020). Meanwhile, as the American population of persons aged 65 years and over will soon outnumber those under 18 year of age, there are concerns about the quality of care for older Americans as the healthcare industry shifts towards private equity (PE) ownership (Braun, Stevenson, et al., 2021).

Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California

Posted on By jordan-wolf

By Arjun Teotia, Daniel R. Arnold, Richard M. Scheffler | Published April 21, 2023 in JAMA Health Network | Link to Full Article

Is a low-cost, county-based public insurance option associated with slower premium growth on the California Affordable Care Act exchange?

On Covered California (CC), the state-run Affordable Care Act (ACA) exchange in California, gross annual premiums for members have increased by 41% since CC started in 2014 ($9612 in 2022 vs $6804 in 2014).1 Through CC, individuals and their families can purchase private health insurance plans. Exchange coverage is generally intended for those who do not have access to health insurance through their employer, Medicare, or Medicaid. Nearly 90% of CC enrollees receive subsidized coverage in the form of reduced (often 0) premiums and reduced cost sharing.1 California is one of the few states that uses an active purchaser model for its exchange, which allows it to standardize benefits and cost sharing, selectively contract with insurers, and negotiate premiums.2 Premiums and insurers vary across the 19 regions of CC. Los Angeles (LA) has some of the lowest premiums and premium growth rates on CC. It is also the only region with a public plan—LA Care—which competes with 6 private insurers on the exchange.

Our work extends this research and is the first known study to empirically evaluate how a county-based public option performs in the ACA Marketplace in California. Specifically, we statistically evaluated whether LA Care was associated with reduced premium growth in LA compared with premium growth in other regions of CC.

A Proposed Public Option Plan to Increase Competition and Lower Health Insurance Premiums in California

Posted on By jordan-wolf

By Richard M. Scheffler, Stephen M. Shortell | Published April 21, 2023 in The Commonwealth Fund | Link to Full Article

A public option is a government-established health insurance plan designed to inject more competition into the market and improve coverage affordability over time. Despite widespread support, little progress has been made at the federal or state level toward creating such a plan. We propose a public option plan for California, Golden Choice, that would be based on the state’s “delegated model” of health care under which provider organizations accept the financial risk for delivering health care services.

Even though a “public option” health plan has support from the Biden administration as well as the majority of voters, little progress has been made in creating one at the federal level.1 At the state and county levels, public options — simply, health insurance plans established by governmental entities — have been introduced to increase competition in the insurance market and improve affordability of health coverage over time. Governmental authorities can either directly administer these plans or establish a public–private partnership whereby the state sets requirements for private health plans to offer coverage.

Absent federal action, several states like Washington, Colorado, Nevada, and Minnesota have developed their own public option plans, with many other states in the process of developing plans.2 These plans rely on price caps or regulations, such as a requirement that insurers offer a public option plan to participate in Medicaid.3 To date, however, they have had little success in attracting enrollment or increasing competition among insurers to lower premiums.4

We propose a different type of public option plan for California. It would be based on the state’s “delegated model” of health care: provider organizations accept the financial risk of delivering health services, and their earnings are linked to their ability to keep patient care costs within a budget. Below we describe this new approach to a public option, which we call Golden Choice, and evaluate its potential impact on consumers’ health insurance premiums.

Golden Choice: California’s Public Option

Posted on By crystal-haryanto

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
Covered California.

This study was funded by the Commonwealth Fund (Grant No. 20223713).