Mergers, Acquisitions and Healthcare Competition
Is There Too Little Antitrust Enforcement in the U.S. Hospital Sector? (American Economic Association)
Zarek Brot-Goldberg, Zack Cooper, Stuart Craig, Lev Klarnet
From 2002 to 2020, there were more than 1,100 hospital mergers with a 1% enforcement rate by the FTC resulting in only 13 blocked transactions. The authors of this study speculate low rates of enforcement could be due to factors including budgetary issues and jurisprudence that favors mergers. It is estimated these mergers resulted in a high concentration of hospital markets in “90% of US metropolitan areas” and an average of 1.6% increase in hospital spending, a total of $204 million, for those who are privately insured. This study found that specific hospital mergers estimated to lessen competition in an area actually resulted in healthcare rate increases of over 5%. The authors encourage implementation of pre-merger screeners to proactively identify which mergers may work against antitrust enforcement efforts. Overall, the study found significant underenforcement of anticompetitive healthcare mergers by the FTC and DOJ in the hospital sector and calls for policymakers to flag mergers that are likely to raise prices and lessen competition.
Private Equity Investment In Assisted Living: Distinct Impacts And Policy Considerations (Health Affairs Forefront)
Kali S. Thomas, John R. Bowblis, Paula Carder, Cassandra Hua, Sean Shenghsiu Huang, Yashaswini Singh, Lindsey Smith, Momotazur Rahman
While some tout the pros of private equity (PE) acquisitions of health care entities, such as renovations and technological advancement procurement as a result of financial flexibility, concerns of decreased quality and rate hikes remain. However, the effects of PE acquired assisted living communities are largely unknown as comparisons cannot be drawn to other healthcare sectors due to differences in features and payment methods that are more reflective of real estate investments. Typically, these communities set their own prices that are directly paid by the residents and are not reliant on health insurance varying the degree to which rates of service will fluctuate. Quality of care competition is therefore regulated by the premium willing to be paid by the private residents. Policy recommendations for the future include studying the intricacies of assisted living communities to determine how PE acquisitions may affect them through collaboration with stakeholders such as owners & operators, staff, and residents.
Does hospital competition improve the quality of outpatient care? – empirical evidence from a quasi-experiment in a Chinese city (Health Economics Review)
Zixuan Peng, Audrey Laporte, Xiaolin Wei, Xinping Sha, Peter C. Coyte
To improve quality of care, some countries with national health systems have adopted a pro-competition system to reduce financial issues experienced as a result of governmental regulation. China’s “semi-control and semi-market” health system resulted in similar results and prompted a transition to a more pro-competition system to improve health outcomes, specifically focusing on outpatient care. The authors of this study found non-acute outpatient care quality in China had a positive association with hospital competition, despite misalignment of findings from similar studies. Authors postulate differences in findings could be related to “price and demand elasticity” as well as patient demographic variations. Policy recommendations from the study include pro-competition policies, information-sharing technology, and performance-based price incentives for providers.
Emerging Trends in Healthcare
National Health Expenditure Projections, 2023–32: Payer Trends Diverge As Pandemic-Related Policies Fade (Health Affairs)
Jacqueline A. Fiore, Andrew J. Madison, John A. Poisal, Gigi A. Cuckler, Sheila D. Smith, Andrea M. Sisko, Sean P. Keehan, Kathryn E. Rennie, Alyssa C. Gross
Temporary spending and the increase of insured individuals due to COVID-19 are estimated to return to pre- pandemic levels by 2032. However, healthcare rates and utilization of personal health goods and services will outpace the rest of the US economy from 2027-2032. These predictions follow healthcare spending trends that grew by over 7% in 2023 due to a record of insured individuals reaching 93.1% of the population during the pandemic. Expenditures are forecasted to continue increasing by nearly 6% annually as a result of healthcare rate hikes, a growing aging population, and higher needs for services. Major goods and services including hospital spending, physician and clinical services, and prescription drugs are expected to increase annually by 2027 due to increases in Medicare enrollment. Medicare is projected to experience overall growth trends of over 7% with government spending stabilizing at 49% by the year 2032. Accordingly, private insurance and out-of-pocket healthcare costs are expected to decrease.
Elevating the Importance of Local Elections (JAMA Network)
Deanna M. Behrens, Lauren Gambill, Andrew F. Beck
Local politics play a critical role in the health outcomes of community members. Social determinants of health, including policies relating to minimum wage, firearm regulations, taxes, education, housing, and pandemic policies are reliant on local election outcomes. Despite the importance of voter turnout for local policy issues, there is a trend of disengagement in local elections, compared to national elections, that the authors warn could negatively impact health outcomes. Various positions that may appear on the surface to lack influence on health, such as school boards, agriculture commissioners, and sheriffs, may hold more authority on health-related topics than is assumed, further stressing the need for voter engagement. Recommendations to increase voter turnout include implementation of evidence-based tactics for elected officials to engage with the public as well as a call for health professionals running for office.
Addressing Medi-Cal Behavioral Health Workforce Shortages Through Non-financial Incentives (California Health Care Foundation)
Sarah Arnquist
Despite the need for behavioral health and substance use support in California, there is a significant lack of providers enrolled through Medi-Cal. This article identifies the hurdles providers face in serving Medicaid patients, including lengthy application wait times and reimbursement issues due to initial and re-credentialing verification requirements. To minimize these burdens and increase provider enrollment, in 2023 California adopted the California Mental Health Services Authority (CalMHSA), a system similar to that of other states that streamline processes for credentialing. However, challenges remain with relation in integrating specialty and non-specialty mental health providers in a centralized system stemming from reimbursement rate disparities and differing credentialing requirements. The author recommends policymakers focus on “non-financial incentives” to increase provider enrollment to ensure equitable mental healthcare access for all residents.