“Our proposal and our plan here is unique in the sense that it builds on the foundation of the delegated model in California, where providers accept full or partial risk, and they are paid to do that—they accept a capitation rate, which is generally risk adjusted,” Scheffler said.
Read the full article here.
“New research by the University of California-Berkeley has identified ‘hot spots’ where private equity firms have quietly moved from having a small foothold to controlling more than two-thirds of the market for physician services such as anesthesiology and gastroenterology in 2021.”
“Private equity has done so much buying that it now dominates several specialized medical services, such as anesthesiology and gastroenterology, in a few metropolitan areas, according to new research made available to KHN by the Nicholas C. Petris Center at UC-Berkeley.”
Read the full article here.
California’s ban on the corporate practice of medicine is tested with a lawsuit against Envision Healthcare. Dr. Richard Scheffler calls it a “landmark case” with the first real pushback. Read more here.
The detrimental effects of private equity are recently exemplified in a dermatologist’s practice in Michigan, USA.
“The private equity business model is fundamentally incompatible with sound health care that serves patients,” concluded a paper in May co-authored by Richard M. Scheffler, professor of health economics and public policy at the University of California, Berkeley; Laura M. Alexander, the vice president of policy at the American Antitrust Institute, a nonprofit organization; and James R. Godwin, a Ph.D. candidate at the UCLA Fielding School of Public Health.
Read more here.
Blue Cross and Blue Shield of North Carolina has partnered with investment firm Deerfield Management Company in a joint venture aimed at helping independent physicians grow and strengthen their practices. The company will offer management infrastructure, technology support and marketplace information. Modern Healthcare sought comments from Dr. Richard Scheffler on the effects of this joint venture on independent physician practices, with Scheffler noting that this could help these physicians “ease the difficulty of managing their own small practice in today’s healthcare environment.”
Read the full article and all of Dr. Scheffler’s insights here.
Modern Healthcare interviewed Richard Scheffler for an article discussing the growing trend of private equity investment in the healthcare sector. They also cite his recent report on the topic. The interview took place after the noteworthy buyout of medical supply company Medline by a trio of private equity firms—Blackstone Group, Carlyle and Hellman & Friedman. As Dr. Scheffler puts it, this may be “the start of an explosion of private equity deals in healthcare.”
Read the full article here.
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.
Daniel Arnold and Christopher Whaley’s paper, “Who Pays for Health Care Costs? The Effects of Health Care Prices on Wages“, was presented at the Thirteenth Annual FTC Microeconomics Conference. It explores the relationship between rising health care costs and slower wage growth for employer-sponsored insurance.
Using hospital market structure and price assessed for Metropolitan Statistical Areas, they find hospital mergers lead to a $521 increase in hospital prices, a $579 increase in mean hospital spending, and a $638 reduction in wages. The results support that hospital mergers affect consumers through lower wages. Both the direct cost of medical care and the indirect cost to wages and should be considered in health care reforms.
Hear Chris Whaley present the paper on Day 1 (PM) of the conference.
Richard Scheffler speaks in an episode of Tradeoffs, a podcast that focuses on research and policy in the health industry. Having conducted a major study regarding costs of healthcare services in California, Richard would come to encounter the importance of this data in addressing anti-competitive practices. The episode explores the role he played in California Attorney General Xavier Becerra’s significant case and settlement with Sutter Health.
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Richard Scheffler and Surina Khurana analyze California Attorney General Xavier Becerra’s experience in health policy as The Senate confirms his nomination for Secretary of Health and Human Services. His record includes defense for the Affordable Care Act, litigation for Sutter Health’s antitrust practices, and persecution for pay-for-delay practices. For his new role in the government’s insurance programs and pays for prescription drugs, he is qualified and well prepared.
