Impact of Federal Hospital Policies
Sharp Rise In Urban Hospitals With Rural Status In Medicare (Health Affairs)
Yang Wang, Jared Perkins, Christopher Whaley, Ge Bai
This article aims to quantify the impacts of Geisinger Community Medical Center v. Secretary, United States Department of Health and Human Services, and Lawrence Memorial Hospital v. Burwell, which began allowing hospitals to qualify for both urban wage indexes for calculating Medicare reimbursements and Medicaid rural health policies designed to support rural healthcare. The authors assess changes by tracking the proportions of administratively and geographically rural and urban hospitals from 2013 to 2023 and examining their bed composition and dual classification status over time. The article finds that the share of administratively rural hospitals increased 14%, while the share of rural beds more than doubled, with the key driver being the dual classification of existing, geographically urban hospitals. The number of administratively rural hospitals located in urban areas rose from 3 in 2017 to 425 in 2023. The authors note that administratively urban hospital bed counts stayed stable, and that dual classification tended to be most prevalent on the East Coast, and amongst non-profits (including many large academic medical centers). The results demonstrate the potential increase in Medicare spending on urban hospitals that capitalize on dual classification and rural subsidies, and the consequential divestment from geographically rural hospitals, which currently face financial hardship despite receiving subsidies. They conclude that federal subsidies for rural hospitals should be allocated based on geography, rather than administrative classification. The authors note the limitation of reliance on hospital administrative data. They also encourage further investigation into the impact of dual classification on geographically rural healthcare delivery, access, and outcomes.
From Hidden Fees to Open Books: An Empirical Examination of the Impact of Hospital Price Transparency Rule on Costs and Quality of Medical Services (Production and Operations Management)
Xiru Pan, Niam Yaraghi
Implemented on January 1, 2021, the hospital price transparency rule aims to provide patients with clear and accessible information about healthcare prices, promoting competition and helping to control healthcare costs. The paper aims to investigate how policy and organizational structures can impact efficiency, how price transparency can reduce costs, and the overall effect of transparency on the market. The article assesses the impact of the rule on lowering healthcare costs and patients' decision-making processes when choosing a hospital. The authors analyze inpatient admissions data, including insurance information, demographic data, diagnoses, procedures, and the hospitals' compliance status with the rule. The authors find that while the rule does not broadly encourage hospitals to reduce prices, it does promote lower costs for self-paying patients undergoing elective procedures. Since these patients are more sensitive to price and have the most opportunity to select providers, they are more likely to compare prices among hospitals and choose hospitals that charge below the market rate. Providing patients with flexibility and market capital forces hospitals to compete to attract patients, and consequently, lower prices. The study also found that self-paying, elective procedure patients were likely to shorten their hospital stay and reduce the complexity of their services, suggesting price transparency is most beneficial to patients with the flexibility to choose more cost-effective providers. The authors conclude that the effects of price transparency are subtle and complicated.
Private Equity
Why US regulators are cracking down on private equity investments in the healthcare sector (Global Competition Review)
Jeny Maier, Monica Smith, Leandra Ipiña
The influence and impact of private equity (PE) ownership in the healthcare market has increasingly become a topic of interest for both state and federal lawmakers, as the practice has grown extensively in the past decade. While some argue that PE-backed transactions have the potential to improve efficiency in the healthcare system, research indicates that the resulting market consolidation can lead to reduced competition and increased costs for patients, without a commensurate improvement in patient care. This article examines the differences in the approaches to regulating healthcare acquisitions between the Trump and Biden administrations. It also notes the increasing importance of state Attorneys General in bringing enforcement and advocating for healthcare policy, and provides details on fifteen key states that have enacted mini-Hart-Scott-Rodino pre-merger notification laws. Key enforcement actions and case studies are also highlighted. The article concludes with tips and best practices for dealmakers to follow in order to help avoid negative attention from federal and state regulators.
Private Equity Acquisitions in Oncology: Impact on Market Share and Prices (International Journal of Radiation)
Ola A. Abdelhadi, Daniel R. Arnold
Oncology has been a popular practice for PE acquisitions and has become more attractive due to the growing demand resulting from a high rate of diagnoses, an aging population, and increased private insurance coverage. While private equity can stimulate capital and funding, it can also consolidate the market, potentially causing negative impacts on patients. This article assesses trends in private equity acquisitions in oncology, examining healthcare costs, quality of care, and health disparities from 2012 to 2022. The authors compare PE-acquired practices against non-acquired practices, looking at geographic coverage and concentration to estimate private equity's impact on radiation oncology spending and prices. They employ a difference-in-differences analysis to measure changes in price in relation to acquisitions and compare the resulting outcomes. The article notes that PE-acquired oncology practices had a lower percentage of female physicians and a lower average physician-to-practice ratio, which they note may impact the quality of care. The study finds a positive correlation between acquisitions and PE market share, with Texas and New Mexico having the highest concentration of PE market share. It also finds that PE-acquired practices are likely to be significantly larger, see a significant decrease in patients' median household income, and a decrease in the ratio of physicians to patients. The average price for services increased in low-income regions for both new and pre-existing patients, although research noted a weak increase following acquisition. The study found that radiotherapy treatment for low-income households increased, while treatment for wealthier classes remained unchanged. The authors suggest further research into whether changes in administration, management, or resources resulting from PE acquisition have different effects on high-quality care. They also encourage policymakers and providers to be mindful of socioeconomic background to ensure patients receive high-quality care regardless of their status.
Hospital and Insurer Acquisition of Physician Practices
Are Hospital Acquisitions of Physician Practices Anticompetitive? (National Bureau of Economic Research)
Zack Cooper, Stuart V. Craig, Aristotelis Epanomeritakis, Matthew Grennan, Joseph R. Martinez, Fiona Scott Morton & Ashley T. Swanson
In 2024, 34.5% of physicians worked in hospital-owned practices, up from 23.4% in 2012. This paper examines the effects of hospital acquisitions of physician practices on healthcare competition and pricing. The authors assess trends in hospital-physician integration, using childbirth claims data, and develop a test to determine where the most substantial anticompetitive effects of non-horizontal mergers are likely to occur. They find that due to a decrease in competition, integration led to hospital prices increasing by 3.3% and physician prices increasing by 15.1%, with no significant change in quality. The authors encourage increased antitrust visibility and the use of their test to predict where the anticompetitive effects of non-horizontal mergers are likely to be strongest.
The Impact of Health Insurer Acquisitions of Physician Practices on Prices and Patient Visits (Health Services Research)
Derek T. Lake, Lawrence Casalino, Michael Richards, Sean Nicholson, Rahul Fernandez, Brendan O'Connell, Manyao Zhang, Robert Tyler Braun
Health insurer acquisitions of physician practices is growing, with Optum (a health provider subsidiary of UnitedHealth Group) acquiring 44 physician practices from 2007 to 2023. Here, the authors aim to assess the impacts of acquisition on patient volume, service prices, and overall competition through a case study on Optum. They compared Optum's changes in prices and office visits with non-UHG commercial health insurance claims using a difference-in-differences analysis. The research first suggests an increase in patient costs and the number of visits. However, the data was disproportionately skewed by DaVita, Optum's largest acquisition, and the findings regarding office visits were not suggestive enough to form conclusions. Removing this outlier, the research ultimately finds no statistically significant price change in acquired practices, and a weak correlation to a moderate reduction in overall office visits. The research supports theories regarding vertical integration, including the notion that practices with a greater market share can demand higher prices. This may make larger practices a target for acquisition, and the authors suggest that further extensive research is needed to better understand the full implications of vertical integration.
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