Healthcare Markets

We delve into the health economics of private and public healthcare systems, analyzing the efficacy of these markets. We provide empirical, objective information to regulators on the sustainability of healthcare spending initiatives.

Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk

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.

The Association between Hospital-Physician Vertical Integration and Outpatient Physician Prices Paid by Commercial Insurers: New Evidence

By James Godwin, Daniel R. Arnold, Brent D. Fulton, and Richard M. Scheffler | Published March 6, 2021 in INQUIRYLink 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.

What Does Senator Kamala Harris’ Record As California’s Attorney General Tell Us About Her Health Policy?

By Richard M. Scheffler and Surina A. Khurana | Published October 1, 2020 in Health Affairs BlogLink 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.

The Distribution of Medicare Accelerated and Advance Payment Program Loans Among California Health Systems

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.

Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums

A Report by the Petris Center | Published March 26, 2018 | Link to Full Report

This report details the rapid consolidation of the hospital, physician, and insurance markets in California from 2010 to 2016. It finds that the vast majority of counties in California warrant concern and scrutiny according to the DOJ/FTC Guidelines. It also finds that consumers are paying higher health care prices and ACA premiums as a result of market consolidation.  The significant variation in prices and ACA premiums across the state  – particularly the large discrepancy between Northern and Southern California – suggests regulatory and legislative solutions need to be implemented to address health care market concentration in California.

Proposal to Use Three Initiatives to Lower Healthcare Spending and Finance Universal Health Insurance Coverage in California

By Richard M. Scheffler, Brent D. Fulton, Donald D. Hoang, and Stephen M. Shortell | Published March 28, 2018 | Link to Full Report

Health expenditures in California continue to grow with respect to the state’s gross domestic product, resulting in healthcare becoming more unaffordable to the state, employers, and individuals. In this report, we project health spending in the California from 2015 to 2022. We then estimate potential reductions in spending from the Berkeley Forum for Improving California’s Healthcare Delivery System’s initiatives to increase the use of global budgets/integrated care systems, patient-centered medical homes, and palliative care. By 2022, these initiatives generate an estimated $15.4 billion in health spending reductions, an amount sufficient to provide universal health insurance coverage in the state at a cost of $7.2 billion. The State of California, the federal government, and the private sector should consider accelerating their programs related to these initiatives to help achieve these health expenditure reductions. A companion article “Financing Universal Coverage in California: A Berkeley Forum Roadmap” to this report was published on the Health Affairs Blog on March 29, 2018.

Health Care Market Concentration Trends In The United States: Evidence And Policy Responses

By Brent D. Fulton | Published September 2017 in Health Affairs | Link to Full Article

This paper analyzes market concentration trends in the United States from 2010 to 2016 for hospitals, physician organizations, and health insurers, finding that hospital and physician organization markets became increasingly concentrated over this time period. Concentration among primary care physicians increased the most, partially because hospitals and health care systems acquired primary care physician organizations. The paper finds that a large number of Metropolitan Statistical Areas (MSAs) are highly concentrated – in 2016, reaching 91% for hospitals, 65% for specialist physicians, 39% for primary care physicians, and 57% for insurers. The paper concludes that public policies that enhance competition are needed, such as stricter enforcement of antitrust laws, reducing barriers to entry, and restricting anticompetitive behaviors.

Insurer Market Power Lowers Prices In Numerous Concentrated Provider Markets

By Richard M. Scheffler and Daniel R. Arnold | Published September 2017 in Health Affairs | Link to Full Article

Consolidation of health systems has rapidly increased in the last two decades: from 1998 to 2015, there were 1412 hospital mergers in the United States; 40% of those came after 2009. The paper uses prices of hospital admissions and visits to five types of physicians to analyze how this growing provider and insurer market concentration—as measured by the Herfindahl-Hirschman Index (HHI)—interact and are correlated with prices. The paper finds that insurers have the bargaining power to reduce provider prices in highly concentrated provider markets for cardiologist, radiologist, and hematologist/oncologist visit prices. This leads to a policy dilemma: there are no insurer market mechanisms that will pass a portion of these price reductions on to consumers in the form of lower premiums. The study concludes by discussing how large purchasers of health insurance, such as state and federal governments, as well as the use of regulatory approaches, could provide a solution.

Differing Impacts of Market Concentration on Affordable Care Marketplace Premiums

By Richard M. Scheffler, Daniel R. Arnold, Brent D. Fulton, and Sherry A. Glied | Published May 2016 in Health Affairs | Link to Full Article

Recent increases in market concentration among health plans, hospitals, and medical groups raise questions about what impact such mergers are having on costs to consumers. We examined the impact of market concentration on the growth of health insurance premiums between 2014 and 2015 in two Affordable Care Act state-based Marketplaces: Covered California and NY State of Health. We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth. Our results for health plan concentration differed between the two states: it was positively associated with premium growth in New York but negatively associated with premium growth in California. The health plan concentration finding in Covered California may be the result of its selectively contracting with health plans.

World Scientific Handbook of Global Health Economics and Public Policy

Edited by Richard M. Scheffler | Published January 2016 by World Scientific | Link to Full Book

This Handbook covers major topics in global health economics and public policy and provides a timely, systematic review of the field, featuring academics and practitioners from more than a dozen countries. The Handbook spans across three volumes: Volume 1 – The Economics of Health and Health Systems, Volume 2 – Health Determinants and Outcomes, Volume 3 – Health System Characteristics and Performance. Chapters deal with key global issues in health economics, are evidence-based, and offer innovative policy alternatives and solutions, making the Handbook’s approach toward global health economics and public policy a useful resource for health economists, policymakers, private sector companies, NGOs, government decision-makers and those who manage healthcare systems.