The Petris Center and American Antitrust Institute (AAI)’s joint report on rising private equity investment in the healthcare industry was cited during the May 19 hearing of the U.S. Senate Committee on the Judiciary’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights as part of the discussion about hospital consolidation and competition. The Petris Center’s Richard Scheffler and AAI’s Laura Alexander were recognized by name as the authors of this report.
Senator Blumenthal (D-CT) expressed concern over the impact of private equity investment on hospital consolidation and quality of patient care. He asked witness Professor Martin S. Gaynor of Carnegie Mellon University for his assessment of the role of hospital debt burden in necessitating hospital closures or mergers. Professor Gaynor then cited Richard Scheffler and Laura Alexander’s recent private equity report, noting that there is significant concern about private equity activity leading to consolidation and potentially diminishing quality of care due to misaligned incentives between private equity investors and patients and physicians.
Hear Senator Blumenthal and Professor Gaynor’s discussion of hospital consolidation and the private equity report during the May 19 hearing, beginning at about 1:25.
The Petris Center article, “What Does Senator Kamala Harris’ Record As California’s Attorney General Tell Us About Her Health Policy?” was cited in The New York Times on October 6, 2020. This analysis delves into her history in health policy as attorney general in three areas: antitrust (especially mergers and consolidation), pharmaceuticals, and support of the Affordable Care Act (ACA). Richard Scheffler was quoted in The New York Times on Harris prioritizing health care as an attorney general.
Read the full New York Times article here.
Read the full Petris Center article here.
On Thursday, September 10, Professor Richard Scheffler served on an online panel discussing the topic: Antitrust Implications of Healthcare Provider Consolidation. Hosted by the California Lawyers Association, the webinar discussed antitrust issues that result from vertical integration, the impact of the COVID-19 pandemic on antitrust and economic analysis, and the ongoing Sutter case. The two other panelists were Laura Alexander (VP of Policy at the American Antitrust Institute) and Michelle Lowery (Partner at McDermott Will & Emery).
The American Medical Association (AMA) appreciates the opportunity to provide our views regarding the proposed merger of CVS Health Corporation (CVS), the largest retail pharmacy chain and specialty pharmacy in the United States and one of the two largest pharmacy benefit managers (PBM), and Aetna, Inc. (Aetna) the third largest U.S. health insurer. We commend the California Department of Insurance (the Department) for scrutinizing this massive proposed merger and the potential negative impact it poses to Californian health care consumers.
The full statement is linked here
The American Medical Association (AMA) addressed the U.S. Department of Justice (DOJ) regarding the Aetna-CVS merger, using research from Professor Scheffler and the Petris Center:
This merger is popularly described as vertical when, in fact, horizontal concerns are also substantial. Aetna and CVS compete in the Stand-Alone Medicare Part D Prescription Drug Plan (PDP) market that covers 25 million people nationally. Whether this merger of rivals in the PDP market runs an appreciable risk of substantially lessening competition is easily determined by a straightforward application of the DOJ and Federal Trade Commission (FTC) 2010 Horizontal Merger Guidelines (Merger Guidelines). University of California, Berkeley, health economics professor Richard Scheffler, PhD, has done that analysis. He finds that under the Merger Guidelines, in all but four of the 34 PDP regional markets, this merger would either be “presumed to be likely to enhance market power” or would “potentially raise significant competitive concerns and often warrant scrutiny.” Professor Scheffler concludes that this merger would raise PDP premiums in markets across the country, including California.
The full report is linked here
May 31, 2019
by Richard M. Scheffler
The purpose of this testimony is twofold. First, I will provide background information on the Medicare Part D stand-alone prescription drug plan (PDP) market and present recent market concentration trends. Second, I will demonstrate how Aetna’s proposed divestiture of its PDPs to WellCare would increase PDP market concentration.
*This paper was revised and reposted on June 17, 2019
On June 19th, Petris Center Director Dr. Richard Scheffler testified at the California Department of Insurance’s public hearing regarding the proposed Aetna-CVS merger. The hearing’s purpose was to examine the potential competitive effects of the proposed merger. Dr. Scheffler’s testimony focused on the horizontal overlap between CVS and Aetna in the California prescription drug plan (PDP) market, specifically measuring market concentration before and after the proposer merger and the potential impact on the PDP market.
You can watch Dr. Scheffler’s testimony here. His comments begin at the 2:22:40 mark.
The Los Angeles Times published an article covering the potential impacts of California Attorney General Xavier Becerra’s complaint against Sutter Health for “anticompetitive business practices.” The article, entitled “California Hospital Giant Sutter Health Faces Heavy Backlash on Prices,” discusses the complexities of the legal response alongside the possibilities of state-level and national repercussions. The lawsuit relies on a newly released Petris Center report on consolidation in California’s health care markets, showing higher prices in Northern California for employers and patients.
You can read the full Los Angeles Times article here.
You can read the recently released Petris Center report “Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums” here.
The Los Angeles Times published an article covering California Attorney General Xavier Becerra’s moves to sue Sutter Health alleging “anticompetitive business practices” leading to higher prices for employers and patients. The lawsuit relies on a newly released Petris Center report on consolidation in California’s health care markets. The article, entitled “California Sues Sutter Health, Alleging the Hospital System Unfairly Inflated Costs for Patients,” discusses Becerra’s response to the report’s key finding that people living in areas where there is greater consolidation among hospitals, physician groups and insurance companies pay more for health care.
You can read the full Los Angeles Times article here.
You can read the newly released Petris Center report “Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums” here. You can also listen to the audio of the press conference with California Attorney General Xavier Becerra, announcing the release of the report, here.
On Friday, March 30th, the Office of the California Attorney General announced it was suing Sutter Health, the largest hospital system in Northern California, for anti-competitive practices that increase healthcare prices for Californians. The announcement and complaint that was filed both heavily cite the Petris Center’s newly released report “Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums.” As the Attorney General writes, “Earlier this week, Attorney General Becerra called for action in light of a new report by University of California Berkeley’s Petris Center on Health Care Markets and Consumer Welfare. The report documents how the rapid consolidation of healthcare markets in California has led to rising healthcare costs for consumers throughout the state. Market consolidation in Northern California was especially glaring. The cost of the average inpatient hospital procedure in Northern California $223,278 exceeded that in Southern California $131,586 by more than $90,000.”
You can read the press release from the Office of the California Attorney Genreal regarding the lawsuit here.
You can read the full Petris Center report here.