Our Publications

Indiana’s Soaring Hospital Prices and Unaffordable Insurance Premiums: Causes and Potential Solutions

Posted on By crystal-haryanto

By James R. Godwin, Brent D. Fulton, Daniel R. Arnold, Ola A. Abdelhadi, and Richard M. Scheffler | Published October 6, 2022 | Press Release | Link to Full Report

The residents of Indiana receive healthcare from poorly functioning markets that need immediate attention. Our study of Indiana’s healthcare markets builds on the work of others that found hospital prices in Indiana are among the highest in the country. We provide empirical evidence that shows hospital mergers are an important contributor to these high prices, yet hospital mergers in the state have not been challenged in court by federal or state antitrust regulators. Moreover, the higher prices from these mergers lead to higher health insurance premiums paid by employers, causing a reduction in wages. We examined measures of healthcare quality but found no evidence that mergers produced higher quality. At the same time, the major hospital systems have amassed significant financial reserves, far higher than most hospitals in the rest of the country. On the payer side, insurer markets are highly concentrated, including some markets that became significantly more concentrated over the past decade. Collectively, these factors contribute to health insurance premiums being less affordable in Indiana as compared with neighboring states and the country. Based on these findings, we suggest policies that the state legislature and regulators could implement to ameliorate the situation, so that residents of Indiana will have better access to more affordable and higher quality healthcare.

This study was funded by Arnold Ventures (Grant No. 20-05350).

Unified Financing of Health Care in California: The Road Ahead

Posted on By crystal-haryanto

By William Hsiao, Richard M. Scheffler | Published August 11, 2022 in Health Affairs Forefront | Link to Full Article

The inequitable, ineffective, and wasteful health care system in the US has been extensively analyzed and documented. In the last presidential election cycle, Senator Bernie Sanders (D-VT) proposed a single-payer system, Medicare for All, to solve our health care system deficiencies. He aroused wide public support for it. In early 2022, Congresswoman Pramila Jayapal (D-WA) led 120 congresspersons to introduce the Medicar for All Act of 2022 in the House (H.R. 1976). However, the passage of any federal single-payer bill seems dim because of the strong opposition of powerful vested interest groups and lack of a political majority. Hence, it’s more likely that states may take major initiatives in the intermediate future. What can states do?

Challenges with Defining Pharmaceutical Markets and Potential Remedies to Screen for Industry Consolidation

Posted on By crystal-haryanto

By Robin Feldman, Brent D. Fulton, James R. Godwin, and Richard M. Scheffler | Published May 6, 2022 in the Journal of Health Politics, Policy, and Law | Link to Full Article

Dramatic increases in pharmaceutical merger and acquisition activity since 2010 suggest we are currently in the midst of a third wave of industry consolidation. Reviewing 168 economic, legal, medical, industry, and government sources, we examine the effects of consolidation on competition and innovation and explore how industry attributes complicate M&A regulation in a pharmaceutical context.

Do State Bans of Most-Favored-Nation Contract Clauses Restrain Price Growth? Evidence From Hospital Prices

Posted on By crystal-haryanto

By Daniel S. Arnold, Katherine L. Gudiksen, Jaime S. King, Brent D. Fulton, and Richard M. Scheffler | Published May 11, 2022 in The Milbank Quarterly | Link to Full Article

Decades of consolidation in both health care provider and insurer markets has resulted in highly consolidated health care markets throughout the United States, leading to higher prices for patients and employers. In some instances, dominant health insurers have used their market power to demand clauses in contractual agreements that drive up the cost of health care in anticompetitive ways. As a result, antitrust enforcers and policymakers have begun scrutinizing contracting practices between health insurers and providers as one way to promote competition in consolidated markets.Most-favored-nation (MFN) clauses (sometimes called “pricing parity” or “price protection” clauses) were some of the first provisions challenged in court and prohibited by state laws, but the economic impact of these laws remains unknown. This study estimated the effect that laws banning MFN clauses in health insurance contracts have had on hospital prices.

Physician Compensation In Physician-Owned and Hospital-Owned Practices

Posted on By crystal-haryanto

By Christopher M. Waley, Daniel R. Arnold, Nate Gross, and Anupam B. Jena | Published December 8, 2021 in Health Affairs | Link to Full Article

Physician practices are increasingly being acquired by hospitals and health systems. Despite evidence that this type of vertical integration is profitable for hospitals, the association between these acquisitions and the incomes of physicians in the acquired practices is unknown. We combined national survey data on physician practice ownership with data on physician income to examine whether hospital or health system ownership of physician practices was associated with differences in physician income during 2014–18. During the study period, hospital and health system ownership of physician practices increased by 89.2 percent, from 24.1 percent to 45.6 percent of all physicians in our sample. Among physician practices overall, vertical integration with hospitals or health systems was associated with, on average, 0.8 percent lower income compared with independent physicians after multivariable adjustment. In analyses by physician specialty, vertical integration of physician practices with hospitals or health systems was associated with lower income for nonsurgical specialists, no difference in income for primary care physicians, and slightly higher income for surgical specialists. Although vertical integration of physician practices is a rapidly growing trend, physicians might not directly benefit financially.

States’ Merger Review Authority Is Associated With States Challenging Hospital Mergers, But Prices Continue To Increase

Posted on By crystal-haryanto

By Brent D. Fulton, Jaime S. King, Daniel R. Arnold, Alexandra D. Montague, Samuel M. Chang, Thomas L. Greaney, and Richard M. Scheffler | Published December 6, 2021 in Health Affairs | Link to Full Article

States can challenge proposed hospital mergers by using antitrust laws to prevent anticompetitive harms. This observational study examined additional state laws—principally charitable trust, nonprofit corporation, health and safety, and certificate-of-need laws—that can serve as complements and substitutes for antitrust laws by empowering states to be notified of, review, and challenge proposed hospital mergers through administrative processes.

Health Equity: California Style

Posted on By crystal-haryanto

By Richard M. Scheffler and Olivia T. Shane | Published December 6, 2021 in The Milbank Quarterly | Link to Full Article

Health equity has become a familiar buzzword in public health. There is, however, little consensus about what it means and how to measure it. California, the most diverse of all states, recently used principles of health equity in its response to the COVID-19 pandemic.

This article details the need for structural changes in the state that take health equity into account.

Improving the Health of Rural Americans

Posted on By crystal-haryanto

By Stephen M. Shortell, Brent D. Fulton, and Leeann N. Comfort | Published October 13, 2021 in Health Affairs Blog | Link to Full Article

People living in rural America have lower incomes, less education, and are in poorer health than those living in other areas of the United States. For more than a century, these measures have been “sticky” with little change despite many efforts to do so.

This article explores methods of supporting the development of these communities.

Consolidation of Hospitals During the COVID-19 Pandemic: Government Bailouts and Private Equity

Posted on By alyssa-birchfield

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.

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

Posted on By alyssa-birchfield

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.