Our Publications

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.

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

Posted on By jordan

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.

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

Posted on By jordan

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.

The Public-Private Option in Germany and Australia: Lessons for the United States

Posted on By jordan

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.