Category Archives: Barriors to Entry

U.S. health care costs a lot, and not just in money

Posted on by • Posted in Administrative Complexity, Administrative Costs, Barriors to Entry, Deferred Healthcare, Health Equity, Health Inequity, Health Insurance Coverage Adequacy, Health Policy • Leave a comment
U.S. health care costs a lot, and not just in money
Administrative Burden | RSF

Health spending in the United States is highest in the world, driven in part by administrative complexity. To date, studies examining the administrative costs of American health care have primarily focused on clinicians and organizations—rarely on patients.

A new study in Health Services Research finds administrative complexity in the U.S. health care system has consequences for access to care that are on par with those of financial barriers like copays and deductibles. In other words, we pay for health care in two ways: in money and in the hassle of dealing with a complex, confusing, and error-riddled system. Both are barriers to access. The study was led by Michael Anne Kyle, and coauthor, Austin Frakt.

Main Findings

  • Nearly three-quarters (73%) of people surveyed reported doing at least one health care-related administrative task in the past 12 months. Such administrative tasks include: appointment scheduling; obtaining information from an insurer or provider; obtaining prior authorizations; resolving insurance or provider billing issues; and resolving premium problems.
  • Administrative tasks often impose barriers to care: Nearly one-quarter (24.4%) of survey respondents reported delaying or foregoing needed care due to administrative tasks.
  • This estimate of administrative barriers to access to care is similar to those of financial barriers to access: a 2019 Kaiser Family Foundation survey, found that 26% of insured adults 18-64 said that they or a family member had postponed or put off needed care in the past 12 months due to cost.
  • Administrative burden has consequential implications for equity. The study finds administrative burden falls disproportionately on people with high medical needs (disability) and that existing racial and socioeconomic inequities are associated with greater administrative burden.

Methods

To measure the size and consequences of patients’ administrative roles, we used data from the nationally representative March 2019 Health Reform Monitoring Survey of insured, nonelderly adults (18-64) to assess the annual prevalence of five common types of administrative tasks patients perform: (1) appointment scheduling; (2) obtaining information from an insurer or provider; (3) obtaining prior authorizations; (4) resolving insurance or provider billing issues; (5) and resolving insurance premium problems. The study examined the association of these tasks with two important measures of their burden: delayed and forgone care.

Conclusions

High administrative complexity is a central feature of the U.S. health care system. Largely overlooked, patients frequently do administrative work that can create burdens resulting in delayed or foregone care. The prevalence of delayed or foregone care due to administrative tasks is comparable to similar estimates of cost-related barriers to care. Administrative complexity is endemic to all post-industrial health systems, but there may be opportunity to design administrative tools with greater care to avoid exacerbating or reinforcing inequities.

There Is No Single, Best Policy for Drug Prices

Posted on by • Posted in 2020 Election Issues, Barriors to Entry, Biosimilars, Competition, Food and Drug Administration (FDA), Generic Drugs, Generic Entry, High Drug Prices, Market Exclusivity, Pharmaceutical Industry • Leave a comment

There Is No Single, Best Policy for Drug Prices

Image result for There Is No Single, Best Policy for Drug Prices

A majority of Americans prefer greater regulation of prescription drug prices, meaning government intervention to lower them.

But don’t count on a single policy to address a nuanced problem.

“All low-priced drugs are alike; all high-priced drugs are high priced in their own way,” Craig Garthwaite, a health economist from Northwestern University’s Kellogg School of Management, wrote with a colleague.

Outside of a few government programs — like Medicaid and the Veterans Health Administration — low-priced drugs are alike in that competition is the sole source of downward pressure on prices. When many generic versions of a brand-name drug enter the market, competition can push their prices 80 percent below the brand price, or sometimes even more.

In contrast, high-priced drugs lack competition for various reasons, “not all of which imply our goal should be to reduce prices,” Mr. Garthwaite said.

 

 

 

When a hospital wields monopoly power

Posted on by • Posted in Barriors to Entry, Competition, Health Policy, Health System, High Prices, Hospital, Hospital Industry, Market Consolidation, Market Power, Monopoly, Monopoly Behavior, Non-Profit Healthcare Industry, Operating Margin, Operating Performance, Price Transparency, Pricing • Leave a comment

https://www.axios.com/newsletters/axios-vitals-1b40c794-c913-4681-b2ac-7a6e9746718f.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of a giant health plus on top of a pile of cash, the ground underneath is cracking.

NorthBay Healthcare, a not-for-profit hospital system in California, recently gave a candid look into how it operates, telling investors it has used its negotiating clout to extract “very lucrative contracts” from health insurance companies.

Why it matters: This is a living example of the economic theories and research that suggest hospitals will charge whatever they want if they have little or no competition, Axios’ Bob Herman reports.

Details: NorthBay owns two hospitals and several clinics in California’s Solano County. Kaiser Permanente owns the only other full-service hospital in the county, and Sutter Health operates some medical offices. (A NorthBay spokesperson argued the system is “more akin to the David among two Goliaths.“)

Three health insurers have terminated their contracts with NorthBay over the past couple years. During a June 19 call with bondholders, executives explained why this has happened.

“We’ve been able to maintain very lucrative contracts without the competition. And what the payers are saying is, they would like us to be like 90% of the rest of the United States in terms of contract structure.”

— Jim Strong, interim CFO, NorthBay Healthcare

Between the lines: NorthBay’s revenue has increased by 50% over the past few years, from $400 million in 2013 to $600 million in 2018, due in large part to its natural monopoly and oligopoly over hospital services.

  • This is exactly what we should expect to happen when sellers have the upper hand over buyers, economists say.

NorthBay also serves as a cautionary tale for price transparency, the policy fix du jour.

  • “If the health care system is consolidated, consumers don’t have anywhere else to go,” said Sunita Desai, a health economist at NYU. “Even if they see the prices of a given hospital, they’re limited in terms of how much they can ‘shop’ across providers.”

 

 

 

Healthcare consolidation goes beyond usual players

Posted on by • Posted in 2020 Election Issues, Antitrust, Barriors to Entry, Competition, Federal Trade Commission (FTC), Health Policy, Market Consolidation, Market Power, Monopoly, Monopoly Behavior • Leave a comment

https://www.modernhealthcare.com/mergers-acquisitions/healthcare-consolidation-goes-beyond-usual-players?utm_source=modern-healthcare-daily-finance&utm_medium=email&utm_campaign=20190610&utm_content=article1-readmore

Consolidation in the health system and health insurance industries has been a focus for years. But a new report sheds light on how the “bigger is better” mantra has taken hold in companies that make syringes, X-ray machines or other healthcare products.

The report, prepared by the Open Markets Institute using data from IBISWorld, shows a small handful of companies dominate their respective markets in certain healthcare sectors that tend to get less of a spotlight than their payer and provider counterparts. The largest three pharmacy and drugstore companies represent 67% of market share and the largest two ambulance manufacturers represent 83% of market share. Just two dialysis providers dominate 76% of market share.

Open Markets has released data on monopolization in other sectors of the economy, and Phil Longman, the group’s policy director, said with healthcare approaching 20% of the U.S. gross domestic product, it’s important to direct attention there, too.

“Pretty much anywhere you go in this economy, whether it’s eyeglasses or beer or automobiles or airplanes, if you ask the right questions, you’ll find it’s much more concentrated than it was before,” he said. “That’s true in healthcare, including all of its component parts.”

Pharmacy benefit management draws $453.4 billion in revenue, according to the report, and just four companies hold three-quarters of its market share: CVS, Express Scripts, UnitedHealth and Humana. The four largest healthcare consulting firms represent 76% of their sector, which draws $6 billion in revenue.

Two companies, LabCorp and Quest, have 37% of diagnostic and medical laboratory market share, a $52.6 billion industry, the report said. And three of the largest medical patient financing companies, Synchrony, Citigroup and Wells Fargo, make up 77% of that market, which draws $4.1 billion in revenue.

The report highlighted consolidation across several different healthcare manufacturers, including those that produce hospital beds, surgical apparel, PET imaging, pacemakers and wheelchairs. Three firms own 88% of the $10.6 billion orthopedic products manufacturing sector: Stryker Corp., Zimmer Holdings and Johnson & Johnson.

Healthcare in the U.S. costs more than in other countries because the prices are higher, Longman said. That’s almost always because there is a barrier to entry that thwarts competition. Longman noted that health systems typically purchase the supplies they need, from bed sheets to bandages, from group purchasing organizations.

“That adds up to serious money,” he said.

One of the factors driving consolidation across these subsectors of healthcare is the continued decline in government and commercial health insurance reimbursement for medical products and services, which puts the squeeze on the associated costs like equipment and doctor’s fees, said Beth Everett, managing director of healthcare banking and head of middle-market healthcare with MUFG in New York. Consolidation may help achieve healthcare cost reduction by creating economies of scale, she said. Whether this ultimately happens is “the million-dollar question,” Everett said.

Greater consolidation and integration in the healthcare system is widely recognized as necessary for improving patient care, Longman said. But it should come with some means of regulation to ensure the benefits of the resulting efficiencies go to the consumer. In this case, that hasn’t happened, and monopolistic corporations are holding the benefits of greater scale, efficiencies and coordination of care rather than passing them along.

“We’ve just really mismanaged competition policy in healthcare,” Longman said.