Healthcare Competition and Consolidation
Chang(ing) Health Care: Bigger May Not Be Better, Just Necessary (Health Affairs Forefront)
Atul Grover, Jonathan B. Jaffery
As the health care market increasingly trends towards consolidation, many have been left wondering whether the trend towards amalgamated efficiency truly is better. The authors of a new Health Affairs article are arguing that the answer is no. Specifically, they state that the trend towards larger, more consolidated entities is resulting in higher health care costs without marked improvements to quality. As health systems become larger, their power to negotiate higher prices increases, with patients bearing the brunt of that burden by way of increased premiums and out-of-pocket expenses. Despite these monetary increases, patients are not seeing corresponding improvements in patient outcomes or enhanced care quality. While regulatory bodies like the Federal Trade Commission (FTC) have been paying closer attention to health care mergers in recent years, the authors argue that they have yet to create a thoroughly meaningful impact due in part to limited resources and other enforcement challenges. Nevertheless, the authors argue that there is an urgent need for careful merger oversight with a focus towards serving public interest. Among their suggestions, the authors recommend a need for enhanced regulatory oversight, added promotion of value-based care models, more support for independent providers, and implementing policies to promote quality and price transparency.
Environmental Scan on Consolidation Trends and Impacts in Health Care Markets (RAND)
Jodi L. Liu, Zachary M. Levinson, Annetta Zhou, Xiaoxi Zhao, PhuongGiang Nguyen, Nabeel Qureshi
The No Surprises Act (NSA) is a federal law aimed at protecting patients from unexpected, high-cost medical bills from out-of-network providers. As part of its requirements, the 2022 bill compels the Department of Health and Human Services to prepare annual reports to Congress outlining the implications of the NSA, which are outlined in a newly published RAND report. The report summarizes the findings of a recent environmental scan on consolidation trends and impacts in health care practices by describing and discussing evidence on price, spending, quality of care, access, and wages, among other market trends. While there is insufficient evidence on the effects of the NSA on access to care and health care wages, researchers found that horizontal hospital consolidation was associated with higher prices paid to providers with no meaningful change in the quality of care. Moreover, health care spending was found to increase in tandem with these prices increases. Overall, the report outlines several key findings within the consolidation space while expressing some of the limitations to this type of research.
Price Transparency
The Incursion of Profit-Enhancing Middlemen in US Health Care (Health Affairs Forefront)
Linda J. Blumberg, Kenneth Watts
Regulators of the U.S. health care system do not generally have oversight over the prices charged by providers in the commercial market or private insurer claims. This lack of oversight allows many intermediary businesses to enter the market and raise prices. A number of intermediaries work with clinicians and insurers to help them navigate the market and manage utilization respectively, while upping everyone’s margins in the process. While certain intermediaries like pharmacy benefit managers (PBMs) and third-party administrators (TPAs) are often recognized for these types of behaviors, the authors of a new Health Affairs Forefront article turned their attention to three lesser-known players. Specifically, they looked to understand the intermediary roles of those in the profit-enhancing revenue cycle management, claims managements, and claims repricing industries. While the authors weren’t able to specifically ascertain the additional costs that each of these industries added to the health care market, they argue that understanding the role that each of these intermediaries play will allow stakeholders to pay closer attention to the potential damages caused by each player. Subsequently, a more thorough understanding of these consequences can help policymakers to create and implement better policies to mitigate these effects.
US Nonprofit Hospitals Have Widely Varying Criteria to Decide Who Qualifies for Free and Discounted Charity Care (Health Affairs)
Luke Messac, Alexander T. Janke, Lisa Herrup Rogers, Imani Fonfield, Jared Walker, Elijah Rushbanks, Nora V. Becker, Ge Bai
In 2022, a survey estimated that almost a third of the U.S. population had medical debt with nearly 80% of that debt being held by households with either zero or negative net worth. The Affordable Care Act has attempted to tackle medical debt for low-income patients by requiring all hospitals to put forth publicly available financial assistance policies. However, while hospitals are required to have charity care programs, the features of these programs are not broadly standardized. The authors of a recent Health Affairs article utilized a novel national database to study differences in charity care eligibility guidelines across the country. They found that hospitals differed widely on eligibility thresholds for free care with the median income for free care ranging from 1.3 to 3 times the federal poverty guidelines across different states. The authors also found that there were notable geographic disparities across states, and that these inconsistencies in policies disproportionately affected low-income individuals and vulnerable populations. Understanding and addressing the key disparities across hospital charity programs is a fundamental step to moving closer to more equitable and accessible care for patients from all economic backgrounds, particularly those who are most vulnerable.
Providers Paid Substantially Less by Marketplace Nongroup Insurers Than by Employer Small-Group Plans, 2021 (Health Affairs)
Caroline Hanson, Ian McCarthy, Eamon Molloy, Karen Stockley
Even though employer health plans remain the largest source of health insurance coverage in the United States, more than twenty-one million people enrolled in the health insurance marketplaces created by the Affordable Care Act (ACA) in 2024. While not a lot is known about the nongroup plans that are sold on and off the ACA’s marketplaces, premiums for on and off marketplace plans play a key role in determining health care affordability for people who are not eligible for subsidies. In the first study of its kind, the authors of a new Health Affairs article provide nationally representative price estimates and differences among marketplace nongroups, off-marketplace nongroups, and employer small-group plans. The study further assessed coverage for three types of services: professional, outpatient hospital, and inpatient hospital. Overall, the study found that even though marketplace plans achieved lower prices than off-marketplace and small-group plans in 2021, marketplace plans were still less cost-effective than Medicare.
Healthcare System Reform
Caregiver-Reported Quality in Hospices Owned by Private Equity Firms and Publicly Traded Companies (JAMA)
Alexander E. Soltoff, Mark Aaron Unruh, David G. Stevenson
In recent years, the hospice industry in the United States has increasingly shifted from a not-for-profit ownership model towards for-profit ownership with more and more being acquired by private equity firms (PEFs) and publicly traded companies (PTCs). The shift towards PEFs and PTCs is particularly notable since these ownership models are particularly focused on above-market profitability in a short period of time. This combination of changes with a focus towards generating investor returns has been reported to produce worse caregiver-reported experiences and higher rates of life discharges and hepatization, drawing questions about the alignment of patient care alongside aggressive financial objectives. In a new JAMA article, the authors seek to assess caregiver-reported hospice quality against different types of objectives. Developing a better understanding of hospice quality from the caregiver’s perspective can help policymakers to implement better solutions to mitigate against existing downside effects.
The Curious Persistence of Site-Dependent Payments (JAMA Health Forum)
Barak D. Richman, Elizabeth Plummer, Ge Bai
The Lower Costs, More Transparency bill holds significant promise in improving health care costs but is currently encountering obstacles in securing Senate approval due to aggressive lobbying by various hospital interest groups. The bill, which aims to move toward site-neutral payment policies, is estimated to save more than $3.7 billion over 10 years and had received overwhelming bipartisan support in the U.S. House of Representatives. A new article in JAMA Health Forum delves into the current inefficiencies and inequities in the health care payment system and draws light on site-dependent payments in particular. Site-dependent payments involve different reimbursement models for the same services depending on whether they were delivered in a hospital versus outpatient facility. While there are no particular reasons for the differences in cost based on location, hospitals and lobbying groups defend the inflation as being necessary to cover complex care and regulatory requirements. Employers play a critical role as key purchasers in the health care market. Consequently, the authors underscored the need for policy reforms focused on accountability and value-based pricing to curb wasteful spending and improve the broader health care system for all.
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