By Richard M. Scheffler and Laura M. Alexander | Published July 20, 2021 in The Milbank Quarterly | Link to Full Article
On May 19, 2021, Senator Amy Klobuchar (D-MN), chair of the US Senate Subcommittee on Competition Policy, Antitrust, and Consumer Rights, held a hearing on hospital consolidation and the subsequent increase in hospital prices observed across the U.S. Most hospital markets meet the FTC/DOJ guidelines definition of being highly concentrated and, as a result, are not likely to exhibit competitive levels of prices, quality, or innovation. Yet, the COVID-19 pandemic is shaping the financial outlooks of large and small hospital systems in a manner that is expected to further fuel this consolidation trend. Coming out of the COVID-19 pandemic, private equity funds are sitting on enormous stores of “dry powder,” money they have amassed from investors and are required to spend or return within the next several years. Widespread expectations are that much of that dry powder will be deployed in health care, ultimately leading to vertical integration.
The article explores the harmful effects of post-COVID-19 consolidation through private equity in the healthcare space, emphasizing the damaging effects on local health care markets.
By Richard M. Scheffler, Laura M. Alexander, and James R. Godwin. | Published May 18, 2021 | Press Release | Link to Full Report
A decade’s worth of evidence supports troubling findings that private equity business practices have a negative impact on competition in healthcare and on patients. A new white paper, produced by experts at UC Berkeley and the American Antitrust Institute (AAI), calls for immediate attention to the role that private equity investment plays in harming patients and impairing the functioning of the healthcare industry. In this groundbreaking new white paper, Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk, AAI’s Laura Alexander and Professor Richard Scheffler of The Nicholas C. Petris Center on Health Care Markets and Consumer Welfare in the School of Public Health at UC Berkeley detail the emerging threat posed by private equity investment in healthcare markets.
The report details and measures private equity trends for the overall healthcare sector and provides a deep dive into four particular areas: hospitals and inpatient services, clinics and outpatient services, elderly and disabled care, and pharmaceuticals. However, the data do not tell the complete story. Several concerns are analyzed by presenting case studies of private equity involvement in healthcare and reporting evidence on the impact private equity investment has had on health and quality. Drawing on these data and examples, the major threats and risks to competition posed by the injection of private equity business practices into healthcare markets are identified and analyzed. The report summarizes what state and federal legislators have done to address the financial impacts of such behavior and presents suggested actions and potential policy solutions.
By James Godwin, Daniel R. Arnold, Brent D. Fulton, and Richard M. Scheffler | Published March 6, 2021 in INQUIRY | Link to Full Article
Hospital ownership of physician organizations has risen in recent years, so this paper explores the relationship between hospital-physician vertical integration and prices. They found this structure of care delivery was positively associated with physician prices for select specialties but was not associated with changes in the use of facility-fee billing. Future studies or regulatory reviews investigate if commensurate quality increases occur with price increases.
By Richard M. Scheffler and Surina A. Khurana | Published October 1, 2020 in Health Affairs Blog | Link to Full Article
Health policy, like most public policy, is autoregressive: The past is usually the best predictor of the future. Democratic vice presidential nominee Kamala Harris’ position on national health policy issues is well known from presidential debates and public statements; less is known about what she actually did while serving as the attorney general for the state of California from 2010 to 2017. Most of her record in health policy as attorney general was in three areas: antitrust (especially mergers and consolidation), pharmaceuticals, and support of the Affordable Care Act (ACA). It is fair to say that she has been very active and effective in all three areas.
By Richard M. Scheffler and Taylor L. Wang | Published September 21, 2020 in Milbank Quarterly Opinion | Link to Full Article
There is little doubt that the cost of health care and universal coverage will be a major topic discussed at the upcoming presidential debates. A key debate will likely center on the Biden-Sanders Unity Task Force’s recommendations released earlier this year proposing a public option to compete against existing private insurers. The recommendations only outline a public option framework, so the details, both logistical and financial, will be key to moving forward. While recent articles have assessed the state-level public options in Washington State and New Mexico, we look internationally to Germany and Australia to evaluate how their health care systems have achieved universal coverage by delivering public health insurance. Both countries have a private component in the health insurance system: Germany allows individuals to purchase substitutive private insurance based on income, and Australia takes it a step further by creating incentives for all citizens to enroll in supplemental private insurance. We examine the framework of each system, how the public-private insurance dichotomy is organized, and some key takeaways for the United States.
By Richard M. Scheffler and Taylor L. Wang | Published September 21, 2020 | Link to Full Article
Presidential candidate Joe Biden’s proposal for a public option is likely to be a major topic in the upcoming presidential debate. While the proposal certainly isn’t the first of its kind, in light of the recent COVID-19 pandemic it is especially significant due to the rapid increase in the number of people without insurance. To better understand the arguments for this proposal and other public option or opt out proposals, we discuss the following: (1) Jacob Hacker’s original ideas and arguments for a public option and why it was left out of the ACA, (2) A review of the cost and coverage impacts of various public option reforms conducted by the Urban Institute, (3) An examination of the only state-based public option passed by Washington State, (4) The current version of Biden’s public option, and (5) Final thoughts.
By Daniel R. Arnold, Surina Khurana, and Brent D. Fulton | Published August 3, 2020 | Link to Report
This report provides a summary of the loans that the largest health systems in California received through Medicare Accelerated and Advance Payment Program. The financial health of these health systems should continue to be monitored during the duration of this pandemic.
By Richard M. Scheffler, Daniel R. Arnold, Surina Khurana, and Brent D. Fulton | Published July 9, 2020 | Link to Report
California Governor Gavin Newsom issued an executive order on March 19, 2020 that effectively prevented hospitals from performing elective procedures to free capacity for a possible surge of COVID-19 patients (order lifted on April 22, 2020). This report examines the financial status of the largest health systems in California, with a particular focus on their liquid assets for financial solvency. It then reports the amount they have received in CARES Act provider relief payments. Overall, 24% of the estimated reduction in net patient revenue was offset by direct CARES Act grants, but the offset varied widely by hospital. The report then presents the correlation between provider relief payments and a hospital’s private insurance share of patient revenue, operating margin, and the hospital market concentration of the county in which it resides. We find hospitals with a larger share of net patient revenue from private insurers and hospitals residing in highly concentrated hospital markets received larger payments per adjusted patient day. The results suggest that careful monitoring of future relief payments is needed.
By Richard M. Scheffler, Daniel R. Arnold, Brent D. Fulton, Alexandra Peltz, Taylor L. Wang, and John Swartzberg | Published June 25, 2020 | Link to Report
Based on recent antibody studies that report about a 5% prevalence in California, we estimate the health care costs of treating coronavirus disease 2019 (COVID-19) to be $2.4 billion in California — six times the annual cost of influenza in the state. Costs vary dramatically across counties due to significant differences in population size, health care prices, and payer mix. Estimated costs are $617 million in Los Angeles, $64 million in San Francisco, and $204 million in San Diego. The cost per infected person is $1,326, $1,774, $289, and $629 for commercial, Medicare, Medi-Cal/CHIP, and uninsured enrollees, respectively. We also calculate the costs under scenarios of 15%, 30% and 60% prevalence — the latter being a lower threshold of the prevalence generally assumed to be needed before herd immunity is achieved. Our costing model will be updated as new information about the prevalence and health care utilization and costs are reported for California.
By Stephen M. Shortell, Richard M. Scheffler, Shivi Anand, and Daniel Arnold | Published May 8, 2019 | Link to Report
This Brief highlights 1) California’s comparative advantage in having a large number of integrated care model physician organizations; 2) provides evidence on their ability to provide lower cost, higher quality value-based care; and 3) proposes a plan for expanding such models across the state to meet the ongoing needs and preferences of all Californians that will have universal health insurance coverage.