Healthcare Competition and Consolidation
Are “All or Nothing” Contracts by Hospital Systems Anti-Competitive? – Evidence from a Recent Antitrust Lawsuit (Journal of Hospital Management and Health Policy)
Glenn Melnick, Katya Fonkych
Research has consistently shown that hospital prices are a major driver of increasing healthcare costs in the United States, with the expansion of multi-hospital systems contributing highly to this trend. While contracts between hospitals and health plans have been suspected to contribute to increasing prices, these assertions could not be confirmed until recently since many of these contracts have been confidential. Researchers recently assessed information disclosed in previously confidential documents related to a major hospital antitrust lawsuit in Northern California in Sidibe v. Sutter Health. Court documents in combination with pricing data showed that Sutter Health adopted an “all-or-nothing” contracting structure beginning in the early 2000s. Prior to implementing an “all-or-nothing” contracting structure, Sutter’s prices were subject to competitive market forces and were thus, very similar to control hospital groups. However, researchers found that after implementing an “all-or-nothing” contracting structure, Sutter’s prices were no longer subject to competitive market forced and prices were over 30% higher than control hospitals and have consistently stayed there. Insights into the previously confidential contracting mechanisms between hospitals and health systems provides more data to policymakers, regulators, and stakeholders, as they seek to understand market dynamics and create a more affordable and competitive healthcare landscape.
One or Two Health Systems Controlled the Entire Market for Inpatient Hospital Care in Nearly Half of Metropolitan Areas in 2022 (KFF)
Jamie Godwin, Zachary Levinson, Tricia Neuman
National health spending currently accounts for almost 20% of the United States’ gross domestic product (GDP) and is only expected to continue to grow in the upcoming decade. As health spending continues to increase, policymakers have been tasked with implementing strategies to increase the affordability of healthcare. One trend in particular, hospital consolidation, has been attracting a lot of attention from policymakers and is the focus of a recent KFF article. Researchers quantified hospital care competitiveness within the U.S. healthcare market using 2022 RAND Hospital and American Hospital Association (AHA) survey data. The authors assessed competition in three ways: share of metropolitan statistical areas (MSAs) controlled by a small number of health systems, the level of market concentration in MSAs, and the share of hospitals affiliated with health systems over time. In all, the authors found that health system monopolies controlled entire markets for inpatient hospital care in nearly half of metropolitan areas they assessed, and that one or two health systems controlled nearly 75% of the market in over 80% of metropolitan areas. While the study mainly sought to provide an overview of the current state of hospital consolidation within the United States, the authors ascertained that local and cross-regional hospital acquisitions may be leading to higher prices overall.
Price Transparency
Estimation of Tax Benefit of US Nonprofit Hospitals (JAMA)
Elizabeth Plummer, Mariana P. Socal, Ge Bai
Nonprofit hospitals in the United States are subject to generous tax benefits due to their tax-exempt status and have increasingly been under scrutiny to justify the benefits that they receive. In a new study in JAMA, researchers sought to understand what the total tax benefit received by US nonprofit hospitals were by estimating the financial tax-exempt benefits they derived and assessing how the benefits were distributed across state and local communities. Researchers analyzed data from Medicare Cost Reports and found that almost 3000 US nonprofit hospitals received approximately $37.4 billion in total tax benefits in 2021. The benefits varied across states and was found to be highly concentrated among a small number of hospitals, with more than half of the benefits being received at the state and local levels. Understanding the variation of nonprofit hospital tax benefits across states can aid policy efforts to strengthen taxpayer accountability and improve laws for valuation and reporting purposes.
Robust Evidence Synthesis to Support Transparent Medicare Drug Price Negotiation (Health Affairs Forefront)
Joseph Mattingly II, Adrian Towse, Louis P. Garrison, Jr.
The Inflation Reduction Act of 2022 ushered in a transformative shift in US policy for reducing and reorienting federal spending on medicines for the elderly and disabled. The Act authorized the Centers for Medicare and Medicaid Services (CMS) to implement a new program to establish a Maximum Fair Price (MFP) on eligible drugs. As CMS continues to review and consider the factors related to the comparative effectiveness of drugs in the MFP process and their therapeutic equivalents, questions of best practices to attain these goals have arisen. In this article, the authors outline the major stages of evidence synthesis and recommend best practices for each stage, with the intent of influencing the next round of the MFP process. The authors state that CMS must first develop an evidence review protocol, then search for evidence, determine study selection and eligibility, appraise included studies, extract and synthesize data, and present and report on findings to the public. While the MFP determination framework for CMS is novel, the research methods required to support the process are not. The authors recommend that CMS begin by using and building on existing best practices, as opposed to re-inventing the wheel and urge stakeholders to stay engaged and provide feedback to fine-tune CMS’ processes.
Artificial Intelligence
FTC Regulation of AI-Generated Medical Disinformation (JAMA Viewpoint)
Claudia E. Haupt, Mason Marks
Artificial intelligence has taken the world by storm. With the expansion of large language models like OpenAI and ChatGPT, users have been able to readily communicate with their computers to perform monotonous tasks, enhance learning, and create engaging content. These advances have the potential to radically affect and benefit society as far as the world of medicine is concerned. Nevertheless, large technological advances come with new emerging risks, particularly where medical education is concerned. Since AI can produce authoritative-looking content and voice-cloning AI can synthesize human voices and imitate individuals’ speech, physicians and public health officials should be weary of circulating deepfakes which may mislead or manipulate the public under the guise of their likeness. These materials can appear trustworthy but may spread medical misinformation to the public. In this new JAMA Viewpoint article, the authors discuss the need to address all forms of AI-generated medical disinformation, and how the Federal Trade Commission (FTC) can assist in achieving that goal. As technology progresses, the medical community’s vigilance against threats of misinformation should subsequently also increase.