By Richard M. Scheffler, Ola Abdelhadi | Published April 21, 2023 in Oxford Academic | Link to Full Article
Older Americans have unique health needs that require specialized care and support. As people age, they are more likely to develop multiple chronic conditions such as cancer, diabetes, heart disease, and arthritis, which can greatly affect their quality of life (Boyd et al., 2019). Additionally, older adults may also experience physical and cognitive declines, which can make it difficult for them to manage their own healthcare. Access to healthcare and supportive services is crucial for older Americans to maintain their health and independence. Services such as home healthcare, nursing homes, and hospice care play a vital role in helping older adults lead fulfilling lives and maintain their quality of life for as long as possible. The majority of hospice patients are diagnosed with one or more chronic conditions, with cancer being the most common (29.6%), followed by circulatory or heart disease (17.4%) and dementia (15.6%) (Hospice Facts & Figures, 2020). Meanwhile, as the American population of persons aged 65 years and over will soon outnumber those under 18 year of age, there are concerns about the quality of care for older Americans as the healthcare industry shifts towards private equity (PE) ownership (Braun, Stevenson, et al., 2021).
“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.
Richard Scheffler was one of three guests invited to speak on KQED’s January 31 podcast. Entitled “How a Surge in Private Equity is Transforming Healthcare,” Dr. Scheffler’s work on private equity has proven far from irrelevant. Listen 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.
Richard Scheffler acted as a panelist at a webinar hosted by the Partnership to Empower Physician-Led Care, an advocacy group promoting value-based care as a path to sustainability for independent physicians and practices. The webinar discussed provider consolidation’s impact on health outcomes and how best to ensure provider competitive behavior instead. Specifically, Dr. Scheffler touched on issues related to increasing private equity investments and vertical integration in healthcare, effects on prices, and next steps at the legislative level.
The title is “Addressing Consolidation in Health Care Markets: The Impact of Provider Consolidation on Cost and Quality.” Take a look here — 10:10 to 27:20.
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.
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.