Hospital Systems

The Petris center provides empirical reviews on hospital systems and hospital service changes. We inform regulators, consumer advocates, and health care providers of differences in service offerings and of synthesized information on the financial health of hospitals.

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.

The Distribution of Provider Relief Payments Among California Health Systems

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.

What are the Health Care Costs of COVID-19 in California?: State and County Estimates

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.

Hospital Service Changes in California: Trends, Community Impacts and Implications for Policy

By the Staff of the Nicholas C. Petris Center | Published April 2005 by the Petris Center | Link to Full Report

While hospital closures have generated a great deal of media attention and community concern, hospitals have other possible responses to the difficult financial environment. This report focuses on one such response. Are hospitals changing their inpatient service offerings in order to improve their financial health? This study is a systematic look at the changes in services offered by California hospitals from 1995 to the 2002. It shows that over the study period there were several significant shifts in service patterns.  This report documents these changes and provides a systematic exploration of the possible explanations for what has happened in California’s hospital system.

California’s Closed Hospitals, 1995-2000

By the Nicholas C. Petris Center | Published in April 2001 by the Petris Center | Link to Full Report

In October 2000, The Petris Center on Health Care Markets and Consumer Welfare, a research organization at the University of California, Berkeley, School of Public Health, took on the job of creating a taxonomical list of all general acute care hospitals in California that closed between 1995 and 2000. Thus, we have put together the only effort that we know of to collect and synthesize standardized information about the California hospitals that closed in the second half of the 1990s. For the first time, we can now document and describe the 23 general acute care (GAC) hospitals that closed, 11 of which took place at for-profit facilities. The vast majority took place in urban areas, and they were most often in southern California. More than half of the closed hospitals had fewer than 100 licensed beds. Ten of the closed hospitals had changed ownership within three years prior to their closure. All the closed hospitals claimed, and demonstrated, financial distress prior to closing.