Healthcare Competition and Consolidation
Vertical Integration and Market Consolidation in Healthcare: Policy Drivers and Impact on Physicians and Patient Care (Seminars in Colon and Rectal Surgery)
Rachel Ekaireb, Anna Yap, and Robert Kucejko
Over the past several decades, the healthcare market has become increasingly consolidated. For instance, in the last twelve years alone, the percentage of physicians employed by hospitals or healthcare systems has more than doubled from 26% to 55%. While proponents for vertical integration have touted its potential to improve the efficiency and quality of care delivery, empirical data stemming from these practices has been less promising. The data demonstrates the potentially negative effects of consolidation on healthcare outcomes, cost, patient choice, and physician wellbeing. Subsequently, the authors of this article review economic theory and assess the real-world implications of vertical mergers within the healthcare system and discuss the policy trends that are continuing to drive the pursuit for market consolidation. Overall, the authors suggest that physicians should advocate for both the preservation of sufficient competition within the healthcare market and the maintenance of a diverse range of practice settings to give patients more options for care.
Hospital Assets Before and After Private Equity Acquisition (JAMA)
Elizabeth Schrier, Hope E.M. Schwartz, David U. Himmelstein
Between the five-year span of 2018 and 2023, private equity firms spent $505 billion on health care acquisitions. While cash infusions may help to augment care, private equity firms have simultaneously often sold hospital assets such as land and buildings to repay their investors. The effect of these sales has resulted in an increase in hospital rent payments for facilities that the hospital previously owned. A new JAMA study assessed changes in the capital assets of hospitals before and after they were acquired by private equity. On average, the study found that after being acquired by a private equity firm, a hospital’s assets decreased by 24% relative to control hospitals during a two-year period. While funds from asset drawdowns may be reinvested into improving the quality and efficiency of care, the authors assert that there is not much support for this stipulation. Further studies regarding the relationship between the financial outcomes of private equity hospital acquisitions and the effect on patient care can help to develop a more substantial body of evidence in this realm.
Price Transparency
Is It Working? Evaluating the First Round of Medicare Drug Price Negotiations (Health Affairs)
Laura Tollen
The passage of the Inflation Reduction Act (IRA) of 2022 signaled a move by the Biden administration to reduce federal drug spending, lower drug costs for Medicare beneficiaries, and improve access to medications. The IRA finally provided the Centers for Medicare and Medicaid Services (CMS) with the ability to negotiate prices with the drug manufacturers of high-priced medications. While the program has been predicted to save the federal government $100 billion between 2026 to 2031, we are only beginning to have outcomes to assess the efficacy of the IRA by. On September 1, CMS will announce the final negotiated prices for the first set of selected drugs, which will go into effect in 2026. Ahead of the September 1 release, the author of this article ponders what outcomes would be considered a success for the architects of the IRA, as well as when and how the program can be evaluated for progress towards its stated outcomes. While a myriad of metrics could be used, the author argues for program evaluation to be based on the factors of beneficiary access, prices and spending, promotion of value, and effects on innovation. They also suggest that evaluators should consider also assessing the political success of the legislation based on beneficiaries’ personal savings and awareness of the program.
Unforeseen Health Care Bills and Coverage Denials by Health Insurers in the U.S. (The Commonwealth Fund)
Avni Gupta, Sara R. Collins, Shreya Roy, and Relebohile Masitha
As health insurance deductibles and copayments continue to climb, many Americans are becoming burdened by medical debt, delaying filing their prescriptions, and avoiding visits to their doctors. A recent brief by the Commonwealth Fund found that many working-age, insured Americans are facing unexpected medical bills and coverage denials for doctor-recommended care that they thought should have been free or covered. While patients can challenge coverage denials and medical bills, many don’t even though those that they do often see reductions or eliminations of their medical bills. Among those surveyed, the most common reason for why many did not challenge their medical bills was a lack of awareness of their right to do so. This was particularly true among younger people and people with lower incomes. To ensure patients can access the care they need, policy makers and regulators should consider tracking claim denials, holding insurers who regularly commit billing errors accountable, promoting consumer awareness of consumer rights, and supporting consumers in the appeals process.
Rationing by Inconvenience: How Insurance Denials Induce Administrative Burdens (Journal of Health Politics, Policy and Law)
Miranda Yaver
Health coverage denials and the appeals process deepen health inequities along class and race lines and impose meaningful psychological and administrative burdens on patients. When a patient is denied access to prescribed care by their health insurer, they face significant challenges in receiving access to the care that they need. The author of this study conducted a nationwide survey of American adults regarding their experiences with coverage denials and found that people with lower incomes were significantly less likely to appeal coverage denials. Moreover, even when appealed, Black Medicaid patients and patients in worse health were significantly less likely to prevail in their appeals. Policy interventions designed to mitigate health insurance bureaucracy are imperative to prevent a further deepening of health equities among specific subsets of the American population.
Healthcare System Reform
Who Participates in Value-Based Care Models? Physician Characteristics and Implications for Value-Based Care (Health Affairs Scholar)
Debra R. Winberg, Matthew C. Baker, Xiaochu Hu, and Keith A. Horvath
Value-based model care (VBC) models have proliferated and increased in popularity throughout the United States. VBC models are intended to encourage a more efficient, multifaceted approach to health care delivery by focusing on overall cost and quality outcomes rather than individual services. A recent study in Health Affairs Scholar sought to determine the relationship between physician characteristics and participation in VBC payment models. The study found that while most survey respondents engaged in at least one VBC, physician specialty was highly predictive of overall participation. Specifically, hospital-based physicians, medical specialists, psychiatrists, and surgeons were less likely to participate in VBC models than primary care physicians. The authors of the study suggest that policymakers should focus on better engaging specialists to address the uneven participation rates in VBC models across medical specialties.