Category Archives: Market Power

Where Does Medicare Go From Here: Profit-Driven Chaos or Patient-Centered Community?

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After covering the Medicare privatization crisis for over two years, an investigative reporter takes a step back and examines what’s at stake.

Medicare, the country’s largest and arguably most successful health care program, is under duress, weakened by decades of relentless efforts by insurance companies to privatize it.

A rapidly growing Medicare Advantage market — now 52% of Medicare beneficiaries, up from 37% in 2018 — controlled by some of the largest and most powerful corporations in the world, threatens to both drain the trust fund and eliminate Medicare’s most important and controversial component: its ability to set prices. 

It is not an overstatement to call it a heist of historic proportions, endangering the health not only of the more than 65 million seniors and people with disabilities who depend on Medicare but all Americans who benefit from the powerful role that Medicare has historically played in reining in health care costs.

The giant corporations that dominate Medicare Advantage have rigged the system to maximize payments from our government to the point that they are now being overpaid between $88 billion and $140 billion a year. The overpayments could soar to new heights if the insurers get their way and eliminate traditional Medicare.

All of America’s seniors and disabled people who depend on Medicare could soon be moved to a managed care model of ever-tightening networks, relentless prior authorization requirements and limited drug formularies. The promise of a humane health care system for all would be sacrificed at the altar of the almighty insurer dollar. 

The Medicare Payments Advisory Commission (MedPAC), the independent congressional agency tasked with overseeing Medicare, last month released a searing report which found that Medicare spends 22% more per beneficiary in Medicare Advantage plans than if those beneficiaries had been enrolled in traditional fee-for-service Medicare. That’s up from a 6% estimate in the prior year.  

A similar cost trend exists for diagnosis coding.

Medicare Advantage plans and their affiliated providers increasingly upcoded diagnoses to get higher reimbursements. In 2024, overpayments due to upcoding could total $50 billion, according to MedPAC, up from $23 billion in 2023. These enormous overpayments drive up the cost of premiums — MedPAC’s conservative estimate is that the premiums paid to Medicare out of seniors’ Social Security checks will be $13 billion higher in 2024 because of those overpayments. 

There is evidence that Americans and lawmakers are starting to wake up.

Medicare Advantage enrollment growth slowed considerably in 2023. Support within the Democratic Party for Medicare Advantage is cratering. In 2022, 147 House Democrats signed an industry-backed letter supporting Medicare Advantage. This year, just 24 House Democrats signed the letter. Earlier this month, the Biden administration cut Medicare Advantage base payments for the second year in a row (while still increasing payments overall), over the fierce opposition of the insurance lobby. The investment bank Stephens called Biden’s decision a “highly adverse” outcome for insurers. Wall Street has taken note, punishing the stock price of the largest Medicare Advantage insurers, with Barron’s noting that Wall Street’s “love affair” with Humana is “ending in tears.” The cargo ship is turning. It is up to us to determine if that will be enough. 

We can’t attack a problem if we don’t know how to diagnose it. I spoke with some of the most knowledgeable critics of Medicare Advantage about the danger the rapid expansion of Medicare privatization presents to the American public.

Rick Gilfillan is a medical doctor who in 2010 became the first director of the Center for Medicare and Medicaid Innovation (CMMI). He would go on to serve as CEO of Trinity Health from 2013 to 2019. In 2021 he launched an effort to halt the involuntary privatization of Medicare benefits. 

“Right now, all investigations are finding tremendous overpayments,” Gilfillan said. “The overpayments are based on medical diagnoses that may or may not be meaningful from a patient care standpoint. Insurers are using chart reviews, nurse home visits and AI software to find as many diagnoses as possible and thereby inflate the health risks of the patients and the premium they get from Medicare. The overpayments are just outrageous,” he said.

The problem could get worse if the Supreme Court curtails the powers of regulatory agencies, as it may do this year.  “It would make a huge difference in what CMS would be able to do,” Gilfillan said.

The logic behind Medicare privatization is that seniors and people with disabilities use too much care, egged on by their doctors. If true, a solution could have been to enforce the Stark Law, which bans physicians from having financial relationships with providers they refer to, or other anti-kickback statutes. States could also enforce laws 33 of them have enacted that prohibit the “corporate practice of medicine.” 

Instead, health insurers were invited and incentivized by previous administrations to compete with the original Medicare program and “manage” beneficiaries’ care. Under this model— set in its modern form in 2003 — Medicare Advantage insurers are paid a rate based on a complex risk modeling process and estimated costs.

But Medicare Advantage plans have never been cheaper than traditional Medicare, as MedPAC has repeatedly pointed out.  

This is a far more complex approach than the fee-for-service model in which CMS sets prices in health care in a public and transparent manner, Gilfillan notes. The prices negotiated by Medicare Advantage companies, by contrast, are not disclosed.

“With fee-for-service, a patient is provided a service, treatment or medication. The physician who provides the service charges a specific amount for that service,” Gilfillan said. “And then Medicare  pays whatever it decided it was worth for that service. The benefit is you pay for what you get.”

Some Medicare Advantage plans use a “capitated” approach in paying primary care physicians. The amount is based on the premium they receive for the patient. The more codes submitted, the higher the capitation, the greater the profit. That approach is having far-reaching economic impacts on health care, said Hayden Rooke-Ley, an Oregon-based lawyer and health care consultant who co-authored a recent New England Journal of Medicine article on the corporatization of primary care. It is the capitation model, he says, that drives the rampant upcoding among Medicare Advantage plans. 

From Horizontal to Vertical

“An undercovered aspect of Medicare Advantage is the way it is fueling vertical consolidation” in the insurance business, Rooke-Ley added, noting that until recent years, insurers bulked up by buying smaller competitors (known as horizontal integration). “With so much government money, we’re seeing insurance companies restructuring themselves as vertically integrated conglomerates [through the acquisition of physician practices, clinics and pharmacy operations] to become even more profitable, especially in Medicare Advantage.”

“A key part of this strategy is to own primary care practices,” he said, citing Humana’s partnership with the private-equity firm Welsh Carson to become the largest owner of Medicare-based primary care, CVS/Aetna’s acquisition of Oak Street, and UnitedHealth’s roll up of doctors practices across the country.

As Rooke-Ley explained, control of primary care allows insurance companies to more easily manipulate “risk scores” to increase payments from the government by claiming patients are in worse health than they really are.

“The easiest way to increase risk scores, short of simply fabricating diagnosis codes, is to control the behavior of physicians and other clinicians,” he said. 

“When an insurance company owns the physician practice, it can configure workflows, technology, and incentives to drive risk coding.

UnitedHealth, for example, can preferentially schedule Medicare Advantage patients – and it can choose to reach out to health plan enrollees it identifies with its data as having high ‘coding opportunities.’ It can require its doctors to go to risk-code training, and it can prohibit doctors from closing their notes before they address all the ‘suggested’ diagnosis codes.” 

“While Medicare Advantage insurance companies tout all their provider acquisitions as investments in value-based care, the concern is that it’s really just looking like a game of financialization,” Rooke-Ley said. “MA was supposed to save Medicare money, but the exact opposite has happened.

According to MedPAC, the government will over-subsidize MA to the tune of $88 billion this year, with $54 billion of that due to excess risk coding relative to what we see in traditional Medicare. That’s a staggering amount of money that could go directly to patients and clinicians by strengthening traditional Medicare.”   

Two Possible Futures

There are two options for the future of Medicare, said Dr. Ed Weisbart, former chief medical officer of the pharmacy benefit manager Express Scripts, which Cigna bought in 2018, who now leads the Missouri chapter of Physicians for a National Health Program.

In one future, he said, “We will change the trajectory and get rid of the profiteers, and manage to divert the funds that are being profiteered to patient care.”

In another future, the business practices of Medicare Advantage plans “will be unfettered and more damaging and harmful than they are today,” he said. “If we continue on this course we’ll find an increasingly polarized health care system that caters increasingly to the wealthy and privileged. The barriers to care will be worse.” 

BIG INSURANCE 2023: Revenues reached $1.39 trillion thanks to taxpayer-funded Medicaid and Medicare Advantage businesses

Posted on by • Posted in 2024 Election Issues, ACA, Affordability, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, High Deductible Health Plans, High Drug Prices, High Premiums, Lobbyist, Market Consolidation, Market Power, Medicare Advantage, Medicare Advantage Denials, Medicare Advantage Insurance Brokers, Out of Network, Out of Pocket Expenses, Preexisting Conditions, Profit Motive, Underinsured • Leave a comment
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The Affordable Care Act turned 14 on March 23. It has done a lot of good for a lot of people, but big changes in the law are urgently needed to address some very big misses and consequences I don’t believe most proponents of the law intended or expected. 

At the top of the list of needed reforms: restraining the power and influence of the rapidly growing corporations that are siphoning more and more money from federal and state governments – and our personal bank accounts – to enrich their executives and shareholders.

I was among many advocates who supported the ACA’s passage, despite the law’s ultimate shortcomings. It broadened access to health insurance, both through government subsidies to help people pay their premiums and by banning prevalent industry practices that had made it impossible for millions of American families to buy coverage at any price. It’s important to remember that before the ACA, insurers routinely refused to sell policies to a third or more applicants because of a long list of “preexisting conditions” – from acne and heart disease to simply being overweight – and frequently rescinded coverage when policyholders were diagnosed with cancer and other diseases.

While insurance company executives were publicly critical of the law, they quickly took advantage of loopholes (many of which their lobbyists created) that would allow them to reap windfall profits in the years ahead – and they have, as you’ll see below. 

Among other things, the ACA made it unlawful for most of us to remain uninsured (although Congress later repealed the penalty for doing so). But, notably, it did not create a “public option” to compete with private insurers, which many advocates and public policy experts contended would be essential to rein in the cost of health insurance. Many other reform advocates insisted – and still do – that improving and expanding the traditional Medicare program to cover all Americans would be more cost-effective and fair. 

I wrote and spoke frequently as an industry whistleblower about what I thought Congress should know and do, perhaps most memorably in an interview with Bill Moyers. During my Congressional testimony in the months leading up to the final passage of the bill in 2010, I told lawmakers that if they passed it without a public option and acquiesced to industry demands, they might as well call it “The Health Insurance Industry Profit Protection and Enhancement Act.”

A health plan similar to Medicare that could have been a more affordable option for many of us almost happened, but at the last minute, the Senate was forced to strip the public option out of the bill at the insistence of Sen. Joe Lieberman (I-Connecticut), who died on March 27, 2024. The Senate did not have a single vote to spare as the final debate on the bill was approaching, and insurance industry lobbyists knew they could kill the public option if they could get just one of the bill’s supporters to oppose it. So they turned to Lieberman, a former Democrat who was Vice President Al Gore’s running mate in 2000 and who continued to caucus with Democrats. It worked. Lieberman wouldn’t even allow a vote on the bill if it created a public option. Among Lieberman’s constituents and campaign funders were insurance company executives who lived in or around Hartford, the insurance capital of the world. Lieberman would go on to be the founding chair of a political group called No Labels, which is trying to find someone to run as a third-party presidential candidate this year.

The work of Big Insurance and its army of lobbyists paid off as insurers had hoped. The demise of the public option was a driving force behind the record profits – and CEO pay – that we see in the industry today.

The good effects of the ACA:

Nearly 49 million U.S. residents (or 16%) were uninsured in 2010. The law has helped bring that down to 25.4 million, or 8.3% (although a large and growing number of Americans are now “functionally uninsured” because of unaffordable out-of-pocket requirements, which President Biden pledged to address in his recent State of the Union speech). 

The ACA also made it illegal for insurers to refuse to sell coverage to people with preexisting conditions, which even included birth defects, or charge anyone more for their coverage based on their health status; it expanded Medicaid (in all but 10 states that still refuse to cover more low-income individuals and families); it allowed young people to stay on their families’ policies until they turn 26; and it required insurers to spend at least 80% of our premiums on the health care goods and services our doctors say we need (a well-intended provision of the law that insurers have figured out how to game).

The not-so-good effects of the ACA: 

As taxpayers and health care consumers, we have paid a high price in many ways as health insurance companies have transformed themselves into massive money-making machines with tentacles reaching deep into health care delivery and taxpayers’ pockets. 

To make policies affordable in the individual market, for example, the government agreed to subsidize premiums for the vast majority of people seeking coverage there, meaning billions of new dollars started flowing to private insurance companies. (It also allowed insurers to charge older Americans three times as much as they charge younger people for the same coverage.) Even more tax dollars have been sent to insurers as part of the Medicaid expansion. That’s because private insurers over the years have persuaded most states to turn their Medicaid programs over to them to administer.

Insurers have bulked up incredibly quickly since the ACA was enacted through consolidation, vertical integration, and aggressive expansion into publicly financed programs – Medicare and Medicaid in particular – and the pharmacy benefit space. Premiums and out-of-pocket requirements, meanwhile, have soared.

We invite you to take a look at how the ascendency of health insurers over the past several years has made a few shareholders and executives much richer while the rest of us struggle despite – and in some cases because of – the Affordable Care Act.

BY THE NUMBERS

In 2010, we as a nation spent $2.6 trillion on health care. This year we will spend almost twice as much – an estimated $4.9 trillion, much of it out of our own pockets even with insurance. 

In 2010, the average cost of a family health insurance policy through an employer was $13,710. Last year, the average was nearly $24,000, a 75% increase.

The ACA, to its credit, set an annual maximum on how much those of us with insurance have to pay before our coverage kicks in, but, at the insurance industry’s insistence, it goes up every year. When that limit went into effect in 2014, it was $12,700 for a family. This year, it has increased by 48%, to $18,900. That means insurers can get away with paying fewer claims than they once did, and many families have to empty their bank accounts when a family member gets sick or injured. Most people don’t reach that limit, but even a few hundred dollars is more than many families have on hand to cover deductibles and other out-of-pocket requirements. 

Now 100 million Americans – nearly one of every three of us – are mired in medical debt, even though almost 92% of us are presumably “covered.” The coverage just isn’t as adequate as it used to be or needs to be.

Meanwhile, insurance companies had a gangbuster 2023. The seven big for-profit U.S. health insurers’ revenues reached $1.39 trillion, and profits totaled a whopping $70.7 billion last year.

SWEEPING CHANGE, CONSOLIDATION–AND HUGE PROFITS FOR INVESTORS

Insurance company shareholders and executives have become much wealthier as the stock prices of the seven big for-profit corporations that control the health insurance market have skyrocketed.

NOTE: The Dow Jones Industrial Average is listed on this chart as a reference because it is a leading stock market index that tracks 30 of the largest publicly traded companies in the United States.

REVENUES collected by those seven companies have more than tripled (up 346%), increasing by more than $1 trillion in just the past ten years.

PROFITS (earnings from operations) have more than doubled (up 211%), increasing by more than $48 billion.

The CEOs of these companies are among the highest paid in the country. In 2022, the most recent year the companies have reported executive compensation, they collectively made $136.5 million.

U.S. HEALTH PLAN ENROLLMENT

Enrollment in the companies’ health plans is a mix of “commercial” policies they sell to individuals and families and that they manage for “plan sponsors” – primarily employers and unions – and government/enrollee-financed plans (Medicare, Medicaid, Tricare for military personnel and their dependents and the Federal Employee Health Benefits program).

Enrollment in their commercial plans grew by just 7.65% over the 10 years and declined significantly at UnitedHealth, CVS/Aetna and Humana. Centene and Molina picked up commercial enrollees through their participation in several ACA (Obamacare) markets in which most enrollees qualify for federal premium subsidies paid directly to insurers.

While not growing substantially, commercial plans remain very profitable because insurers charge considerably more in premiums now than a decade ago.

(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2) Humana announced last year it is exiting the commercial health insurance business. (3) Enrollment in the ACA’s marketplace plans account for all of Molina’s commercial business.

By contrast, enrollment in the government-financed Medicaid and Medicare Advantage programs has increased 197% and 167%, respectively, over the past 10 years.

(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS.

Of the 65.9 million people eligible for Medicare at the beginning of 2024, 33 million, slightly more than half, enrolled in a private Medicare Advantage plan operated by either a nonprofit or for-profit health insurer, but, increasingly, three of the big for-profits grabbed most new enrollees. Of the 1.7 million new Medicare Advantage enrollees this year, 86% were captured by UnitedHealth, Humana and Aetna. Those three companies are the leaders in the Medicare Advantage business among the for-profit companies, and, according to the health care consulting firm Chartis, are taking over the program “at breakneck speed.”

(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2,3) Centene’s and Molina’s totals include Medicare Supplement; they do not break out enrollment in the two Medicare categories separately.

It is worth noting that although four companies saw growth in their Medicare Supplement enrollment over the decade, enrollment in Medicare Supplement policies has been declining in more recent years as insurers have attracted more seniors and disabled people into their Medicare Advantage plans.

OTHER FEDERAL PROGRAMS

In addition to the above categories, Humana and Centene have significant enrollment in Tricare, the government-financed program for the military. Humana reported 6 million military enrollees in 2023, up from 3.1 million in 2013. Centene reported 2.8 million in 2023. It did not report any military enrollment in 2013.

Elevance reported having 1.6 million enrollees in the Federal Employees Health Benefits Program in 2023, up from 1.5 million in 2013. That total is included in the commercial enrollment category above. 

PBMs

As with Medicare Advantage, three of the big seven insurers control the lion’s share of the pharmacy benefit market (and two of them, UnitedHealth and CVS/Aetna, are also among the top three in signing up new Medicare Advantage enrollees, as noted above). CVS/Aetna’s Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx PBMs now control 80% of the market.

At Cigna, Express Scripts’ pharmacy operations now contribute more than 70% to the company’s total revenues. Caremark’s pharmacy operations contribute 33% to CVS/Aetna’s total revenues, and Optum Rx contributes 31% to UnitedHealth’s total revenues. 

WHAT TO DO AND WHERE TO START

The official name of the ACA is the Patient Protection and Affordable Care Act. The law did indeed implement many important patient protections, and it made coverage more affordable for many Americans. But there is much more Congress and regulators must do to close the loopholes and dismantle the barriers erected by big insurers that enable them to pad their bottom lines and reward shareholders while making health care increasingly unaffordable and inaccessible for many of us.

Several bipartisan bills have been introduced in Congress to change how big insurers do business.

They include curbing insurers’ use of prior authorization, which often leads to denials and delays of care; requiring PBMs to be more “transparent” in how they do business and banning practices many PBMs use to boost profits, including spread pricing, which contributes to windfall profits; and overhauling the Medicare Advantage program by instituting a broad array of consumer and patient protections and eliminating the massive overpayments to insurers. 

And as noted above, President Biden has asked Congress to broaden the recently enacted $2,000-a-year cap on prescription drugs to apply to people with private insurance, not just Medicare beneficiaries. That one policy change could save an untold number of lives and help keep millions of families out of medical debt. (A coalition of more than 70 organizations and businesses, which I lead, supports that, although we’re also calling on Congress to reduce the current overall annual out-of-pocket maximum to no more than $5,000.) 

I encourage you to tell your members of Congress and the Biden administration that you support these reforms as well as improving, strengthening and expanding traditional Medicare. You can be certain the insurance industry and its allies are trying to keep any reforms that might shrink profit margins from becoming law. 

Hospitals declare War on Corporate Insurance: Handicapping the Players

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Hospitals declare War on Corporate Insurance: Handicapping the Players

At the Annual Meeting of the American Hospital Association in DC last week, its all-out attack on “corporate insurance” was a prominent theme. In the meeting recap, AHA CEO Rick Pollack made the influential organization’s case:

“This year, there was special focus on educating policymakers that our health care system is suffering from multiple chronic conditions. These include continued government underpayment, cyberattacks, workforce shortages, broken supply chains, access to behavioral health, and irresponsible behavior by corporate commercial health insurance companies, among others — that put access to services in serious jeopardy.”

The AHA’s declaration of war came on the heels of last week’s Congressional investigation of Change Healthcare’ (UnitedHealth Group subsidiary) cybersecurity breech and the widely-noticed earnings release by Elevance (aka Anthem) that featured prominently its plans to build a $4 billion business unit focused on primary care and chronic care management. Per company CEO Gail Boudreaux:

“This will help us continue through having a focus on advanced primary care; it’s still very much focused on our chronic patients and complex patients. We are still building specialty care enablement, which is another very important component of what we’re trying to prime through… In time, Elevance Health will have full ownership of what we expect will be a leading platform for value-based care delivery and physician enablement at scale.”

To industry watchers, the war is no surprise.

It’s been simmering for years but most recently inflamed as operating margins for most hospitals eroded while profits among corporate insurers led by Big 6 (UnitedHealth, Humana, CVS-Aetna, Elevance, Cigna, Centene) swelled at double-digit rates.

To outsiders, it’s not quite so clear.

Big names (Brands) are prominent in both. Corporatization seems embedded in the business models for both. And both appear complicit in well-documented beliefs that the health system is failing as unnecessary higher costs make it less accessible, affordable and effective.

As the War intensifies, each combatant is inclined to make their cases aggressively contrasting “us” against “them.” Here’s where things stand today:

ConsiderationHospitalsCorporate InsurersAdvantage
Public StandingHospitals enjoy relatively strong public support but growing discontent about their costs, prices and household affordability. Hospitals blame insurers & drug companies for increasing health costs.Increased attention to affordability, value and low prices is a threat.Insurers enjoy reasonably high support among middle & high-income consumers who think it necessary to their financial security. Insurers blame drug companies, hospitals and unhealthy consumer behaviors for increased health costs.It’s a tossup. Though polls show trust in hospitals is higher than insurers, both are declining especially among younger, urban and low-middle income consumers
Regulatory positioningScrutiny of business practices & the impact of consolidation on consumer prices, workforce wage compression, competition et al is significant and increasing in 5 Congressional Committees and 3 Federal agencies. Hospitals also face state and local regulatory challenges around pricing, community benefits, et al.Compliance with plan transparency rules, prior authorization requirements, Medicare Advantage marketing & coverage, and antitrust are targets. Levels of Congressional attention to business practices are relatively low. Insurers are primarily overseen by states, so the regulatory landscape varies widely except.Insurers enjoy regulatory advantages today not withstanding current attention to UnitedHealth Group.  Hospitals are “soft targets” for state legislatures, Congress and investigators in state and federal agencies.
Confidence of capital markets in their core businesses: Hospitals: inpatient, outpatient careInsurers: group & individual coverage, claims data commercializationThe acute sector, especially rural & systems operating in low-growth markets, face insurmountable headwinds due to reimbursement cuts, value-based purchasing initiatives by Medicare and private insurers and clinical innovations that drive demand away from inpatient care. Hospital Outpatient services are profitable for the near term despite growing competition from privately investors.  The consolidation of power, financial strength & influence among the corporate insurers is assuring to lenders & investors who value their performance and support their vertical integration expansion role.  Lenders and investors favor “corporate insurers” over others. The potential (likelihood) that hospitals will lose on high profile revenue-enhancer issues (facility fees, site neutral payments, et al) and restrict tax exemptions for NFP hospital operators is concerning to the capital markets.  
Relationships with Physicians Hospitals employ 58% of physicians directly & relate to all. Regulations (i.e. Stark Laws, et al), capital deployment for hospital programs and administrative overhead are factors of high importance to physicians seeking clinical autonomy & financial security.  Hospitals are a viable option to physicians seeking income security though not without concern.Insurers employment of physicians plus contractual relationships with network physicians are transactional. Physicians inclined toward business relationships with “corporate insurers” believe their role in healthcare’s future is more stable than that of hospitals based on the belief hospitals are wasteful and non-responsive to physician input.Hospitals enjoy a relationship advantage with most physicians. Corporate insurers enjoy a transactional relationship with physicians that’s premised on shared views about the future of the system vs. hospitals that focus on protecting the past. Hospitals enjoy a near-term advantage but the long-term is uncertain.
Unity of voiceRelatively strong around “chronic ailments” of the system but unclear about long-term destination and limited to universal hospital concerns (i.e. 340B) vs. cohort issues (tax exemptions for not for profits). The delineations between not-for-profit, investor-owned and public/government restricts the strength of hospital voice overall as each seeks unique recognition and regulatory protections.Corporate insurers have corporate boards, broader membership, stronger balance sheets and scale. Their messaging is customized to their key customers and influencers and aligned with but not controlled by their trade groups. And they direct considerable resources to their proprietary messaging strategies.Corporate insurers have fewer constraints in their messaging and enjoy an advantage in opining to issues that resonate with consumers (prices, quality, value).
Long-term Vision for the U.S. Health SystemA private connected system of health in which hospitals coordinate and provide services for patients across the continuum of their care: preventive, chronic, acute and long-term.A private system of comprehensive, customized products and services that operates efficiently, effectively and in the interests of all consumers.The public and Congress aren’t sure which is better positioned to develop a “new” system of health.

This war has been simmering. It’s now a blaze. The outcome is uncertain despite the considerable resources both will spend to win.

Stay tuned.

Paul

P.S. Last week, I participated in Scottsdale Institute’s Annual Leadership Summit in Arizona. It’s 62 institutional members and corporate partners include most of the major not-for-profit health systems and the biggest names in healthcare information technology solutions.

I left with two strong impressions I’ll share:

1-How GenAI and HCIT influence the future of healthcare services delivery is very much speculative but no-less certain. It’s a work in process for everyone.

2- To navigate its evolution, knowledge sharing (and mistake sharing) among those in the trenches is essential. SI afforded a great venue for both, and also a platform for those of us who are easily overwhelmed by all this to ask honest questions and get candid answers.

Check it out. http://www.scottsdaleinstitute.org.

8 Reasons Hospitals must Re-think their Future

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8 Reasons Hospitals must Re-think their Future

Today is the federal income Tax Day. In 43 states, it’s in addition to their own income tax requirements. Last year, the federal government took in $4.6 trillion and spent $6.2 trillion including $1.9 trillion for its health programs. Overall, 2023 federal revenue decreased 15.5% and spending was down 8.4% from 2022 and the deficit increased to $33.2 trillion. Healthcare spending exceeded social security ($1.351 trillion) and defense spending ($828 billion) and is the federal economy’s biggest expense.

Along with the fragile geopolitical landscape involving relationships with China, Russia and Middle East, federal spending and the economy frame the context for U.S. domestic policies which include its health system. That’s the big picture.

Today also marks the second day of the American Hospital Association annual meeting in DC. The backdrop for this year’s meeting is unusually harsh for its members:

Increased government oversight:

Five committees of Congress and three federal agencies (FTC, DOJ, HHS) are investigating competition and business practices in hospitals, with special attention to the roles of private equity ownership, debt collection policies, price transparency compliance, tax exemptions, workforce diversity, consumer prices and more.

Medicare payment shortfall: 

CMS just issued (last week) its IPPS rate adjustment for 2025: a 2.6% bump that falls short of medical inflation and is certain to exacerbate wage pressures in the hospital workforce. Per a Bank of American analysis last week, “it appears healthcare payrolls remain below pre-pandemic trend” with hospitals and nursing homes lagging ambulatory sectors in recovering.”

Persistent negative media coverage:

The financial challenges for Mission (Asheville), Steward (Massachusetts) and others have been attributed to mismanagement and greed by their corporate owners and reports from independent watchdogs (Lown, West Health, Arnold Ventures, Patient Rights Advocate) about hospital tax exemptions, patient safety, community benefits, executive compensation and charity care have amplified unflattering media attention to hospitals.

Physicians discontent: 

59% of physicians in the U.S. are employed by hospitals; 18% by private equity-backed investors and the rest are “independent”. All are worried about their income. All think hospitals are wasteful and inefficient. Most think hospital employment is the lesser of evils threatening the future of their profession. And those in private equity-backed settings hope regulators leave them alone so they can survive. As America’s Physician Group CEO Susan Dentzer observed: “we knew we’re always going to need hospitals; but they don’t have to look or operate the way they do now. And they don’t have to be predicated on a revenue model based on people getting more elective surgeries than they actually need. We don’t have to run the system that way; we do run the healthcare system that way currently.”

The Value Agenda in limbo:

Since the Affordable Care Act (2010), the CMS Center for Innovation has sponsored and ultimately disabled all but 6 of its 54+ alternative payment programs. As it turns out, those that have performed best were driven by physician organizations sans hospital control. Last week’s release of “Creating a Sustainable Future for Value-Based Care: A Playbook of Voluntary Best Practices for VBC Payment Arrangements.” By the American Medical Association, the National Association of ACOs (NAACOs) and AHIP, the trade group representing America’s health insurance payers is illustrative. Noticeably not included: the American Hospital Association because value-pursuers think for hospitals it’s all talk.

National insurers hostility:  

Large, corporate insurers have intensified reimbursement pressure on hospitals while successfully strengthening their collective grip on the U.S. health insurance sector. 5 insurers control 50% of the U.S. health insurance market: 4 are investor owned. By contrast, the 5 largest hospital systems control 17% of the hospital market: 1 is investor-owned. And bumpy insurer earnings post-pandemic has prompted robust price increases: in 2022 (the last year for complete data and first year post pandemic), medical inflation was 4.0%, hospital prices went up 2.2% but insurer prices increased 5.9%.

Costly capital: 

The U.S. economy is in a tricky place: inflation is stuck above 3%, consumer prices are stable and employment is strong. Thus, the Fed is not likely to drop interest rates making hospital debt more costly for hospitals—especially problematic for public, safety net and rural hospitals. The hospital business is capital intense: it needs $$ for technologies, facilities and clinical innovations that treat medical demand. For those dependent on federal funding (i.e. Medicare), it’s unrealistic to think its funding from taxpayers will be adequate.  Ditto state and local governments. For those that are credit worthy, capital is accessible from private investors and lenders. For at least half, it’s problematic and for all it’s certain to be more expensive.

Campaign 2024 spotlight:

In Campaign 2024, healthcare affordability is an issue to likely voters. It is noticeably missing among the priorities in the hospital-backed Coalition to Strengthen America’s Healthcare advocacy platform though 8 states have already created “affordability” boards to enact policies to protect consumers from medical debts, surprise hospital bills and more.

Understandably, hospitals argue they’re victims. They depend on AHA, its state associations, and its alliances with FAH, CHA, AEH and other like-minded collaborators to fight against policies that erode their finances i.e. 340B program participation, site-neutral payments and others. They rightfully assert that their 7/24/365 availability is uniquely qualifying for the greater good, but it’s not enough. These battles are fought with energy and resolve, but they do not win the war facing hospitals.

AHA spent more than $30 million last year to influence federal legislation but it’s an uphill battle. 70% of the U.S. population think the health system is flawed and in need of transformative change. Hospitals are its biggest player (30% of total spending), among its most visible and vulnerable to market change.

Some think hospitals can hunker down and weather the storm of these 8 challenges; others think transformative change is needed and many aren’t sure. And all recognize that the future is not a repeat of the past.

For hospitals, including those in DC this week, playing victim is not a strategy. A vision about the future of the health system that’s accessible, affordable and effective and a comprehensive plan inclusive of structural changes and funding is needed. Hospitals should play a leading, but not exclusive, role in this urgently needed effort.

Lacking this, hospitals will be public utilities in a system of health designed and implemented by others.

America’s newest doctors fuel efforts to unionize

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Shortages, Labor Union, Market Consolidation, Market Power, Physician Burnout, Physician Compensation, Physician Shortage, Physician Workforce, Physician's Labor Union • Leave a comment

https://www.axios.com/2024/04/15/doctors-union-gen-z-millennial

A new generation of doctors struggling with ever-increasing workloads and crushing student debt is helping drive unionization efforts in a profession that historically hasn’t organized.

Why it matters: 

Physicians in training, like their peers in other industries, increasingly see unions as a way to boost their pay and protect themselves against grueling working conditions as they launch their careers.

What they’re saying: 

“We deserve an increased salary to be able to afford to live in one of the most expensive areas in the United States,” said Ali Duffens, a third-year internal medicine resident at Kaiser Permanente’s San Francisco Medical Center.

  • She’s among the 400 residents at Kaiser’s Northern California system filing to unionize earlier this month.
  • Duffens earns about $82,000 per year, while paying $3,000 a month for rent and facing $350,000 in medical school loans.

The big picture: 

The Kaiser residents are part of a growing number of younger peers in medicine who have been unionizing in recent years.

  • The number of medical residents in unions has about doubled to more than 32,000 in three years, per CalMatters.
  • In the last year, residents at Montefiore Medical Center, Stanford Health Care, George Washington University and the University of Pennsylvania voted to unionize, per WBUR.
  • “The cost of day care … in a month is about half of my salary in total, and the cost of a nanny is essentially the entirety of my salary,” Leah Rethy, an internal medicine resident with Penn Medicine, told NPR last year.
  • Residents can work as much as 80 hours per week while earning far less than their older colleagues.

Yes, but: Just about 6%-7% of physicians are estimated to be in unions.

  • Historically, doctors have thought they could just suck up the long hours and relatively low pay in training as part of the tradition of medicine, said Robert Wachter, chair of the department of medicine at the University of California, San Francisco.
  • “For a new generation, they look at it and say, ‘That’s crazy. I can’t believe you did that. I want to work hard, but I also want a life and I want a family, and I want a reasonable income,'” he said.

And it’s not just younger doctors. 

Those more established in their careers are also unionizing as they see the industry changing in ways that they think undermine their profession.

  • In recent months, attending physicians at Salem Hospital, owned by Mass General Brigham, and a Cedars Sinai-owned anesthesiology practice filed to unionize.
  • About 600 doctors at Allina Health in Minnesota and Wisconsin last fall agreed to form what appears to be the largest union of private sector physicians.

Zoom in: 

The corporatization of American medicine is seen as a key driver. More than half of all U.S. doctors now work for a health system or large medical group rather than running an independent practice.

  • This shift has brought heavier workloads and less control over how they care for patients, said John August, director of health care labor relations in the Scheinman Institute on Conflict Resolution at the ILR School at Cornell.
  • That could mean demands to see more patients, limiting the time that doctors can spend with them.
  • “What you will hear from them 100% of the time in every conversation they have is they feel that they have lost control over the patient-physician relationship. I mean, every single physician says that now,” August said.

The other side: 

Health systems and large practices generally say they value their doctors and the relationships they hold with patients.

  • Hospitals have also struggled with pandemic-era financial shortfalls, including increasing labor costs.

The bottom line: 

While this is a labor issue, it ultimately trickles down to quality and safety for patients, said Rachel Flores, organizing director of the Union of American Physicians and Dentists.

  • “Patients should care because that’s less time to address their issues,” she said. “Patients should care because there’s not enough staff to support the physician.”

Is Private Equity the Solution or the Problem in Healthcare?

Posted on by • Posted in Affordability, Cherry Picking, Health Policy, Lobbyist, Market Consolidation, Market Power, Mergers & Acquisitions, Price Transparency, Pricing Leverage, Private Equity, Public Good, Public Health, Public Opinion, Public Perception • Leave a comment
Is Private Equity the Solution or the Problem in Healthcare?

Of late, private equity investors in healthcare services have faced intense criticism that their business practices have compromised patient safety and raised costs for consumers. March 5, the FTC, DOJ and HHS announced the launch of an investigation into the inner workings of PE in healthcare. It comes on the heels of U.S. Senate investigations in their Finance, HELP and Budget Committees to explore legislative levers they might pull to address their growing concerns about affordability, competition and accountability in the industry.

PE funds don’t welcome the spotlight. 

Their business model lends to misinformation and disinformation: company takeovers by new owners are rarely treated as good news unless the circumstance under prior ownership was dire. Even then, attention shifts quickly to the fairness of the PE business model playbook: acquire the asset on favorable terms, replace management, reduce operating costs, grow and the sell in 5-7 years at a profit using debt to finance the deal along the way. In exchange, the PE fund’s General Partner gets an annual management fee of 2% plus 20% of the value they create when they sell the company or take it public, and favorable tax treatment (carried interest) on their gain.

Concern about PE in healthcare services comes at a particularly delicate time: hospitals. nursing homes, outpatient care, medical practices, clinics et al) are still feeling the after-effects of the pandemic, proposed reimbursement bumps by Medicare for hospitals and physicians do not offset medical inflation and the Change Healthcare cybersecurity breach February 21 has created cash flow issues for all.

Concern about PE ownership was high already.

Innovations funded through PE-backed organizations have been drowned out by the steady drip of peer reviewed and industry-sponsored studies a causal relationship between PE ownership decreased quality and patient safety and increased prices and worker discontent. Nonetheless, PE-owns 4% of hospitals (among 36% that are investor-owned, 13% of medical practices and 6% of nursing homes today and they’re increasing in all cohorts of health services.

Here are the facts:

Private equity enjoys significant influence in public policy including healthcare. Direct lobbying activity by PE funds in Congress and state legislatures is well-funded and effective, especially by the It is increasingly 20 global fund sponsors that control 46% of assets under management. Cash on hand and fund-raising by PE are strong and healthcare remains an important but non-exclusive target of PE investing.

2023 was a down year for PE, 2024 will be strong: the IPO market and sponsor- to sponsor transactions dipped, and deal values shrank. Even with interest rates remaining high, returns exceeded overall growth in the stock market for deals consummated. At the same time, PE raised $1.2 trillion last year and has $2.6 trillion of dry powder to invest. Healthcare services will be a target as PE deal activity increases in 2024.

In U.S. healthcare, PE investments are significant and increasing.  Technology-enabled services that lower unit costs and AI-based solutions that enable standardization and workforce efficiency will garner higher valuations and greater PE interest than traditional services. Valuations will recover from record 2023 lows and dry powder will be deployed for roll-ups despite antitrust concerns and government investigations. Congress will investigate the impact on PE on patient safety, prices and competition and, in tandem with FTC and DOJ issue guidance: compliance will be mandated and financial penalties added. But displacement of PE in health services is unlikely.

Some notable data:

  • Private equity funds have $2.49 trillion of cash on hand to invest—up 7% from 2022. They raised $1.2 trillion globally in 2023. 26% of its global dry powder is more than 4 years old—undeployed.
  • Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn. 40% of the companies waiting to be sold are at least four years old. Last year, the combined value of companies that the industry sold privately or on public markets fell 44% and the value of companies sold to other buyout groups fell 47%.
  • Private equity investments in almost every sector in healthcare are significant, and until lately, increasing. Last year, deals were down 16.2% (from 940 to 788) cutting across every sector. In some sectors, like physician services, PE deals were tuck-in’s to their previous platform investments increasing from 75 deals in 2012 to 484 deals in 2021.
  • PE investments in US healthcare exceeded $1 trillion in the last 10 years. Investments in healthcare services i.e. acute, long-term, ambulatory and physician services– have been less profitable to investors than PE investments in technology, devices and therapeutics (based on the ratio of Enterprise Value to EBITDA) but exceed equity-market returns overall.
  • Peer reviewed studies have shown causal relationships between private equity ownership of hospitals, nursing homes and medical practices with lower operating costs, higher staff turnover, high prices and higher profits.

My take:

Like it or not, private equity investment in healthcare is here to stay. The likelihood of higher taxes paid by employers and individuals to fund the health system is nil. The majority (69%) of the public think it wasteful and inefficient (See Polling below). The majority believe it puts its profits above all else. The majority think it needs major change. That’s not new, but it’s felt more intensely and more widely than ever.

That means accommodation for private capital, including private equity, is not a major concern to voters: the prices they pay matters more than who owns the organization.

Tighter regulation of private equity, including more rights given to the Limited Partners who invest in the PE funds and limitations on public officials who become fund advisors, are likely. Bad actors will be vilified by regulators and elected officials. Media scrutiny of specific PE funds and their GPs will intensify as PE public reporting regulations commence. And investments made by not-for-profit multi-hospital systems and independent hospitals will be critical elements in upcoming Congressional and regulatory policy setting about their community benefit accountability and tax exemptions.

The public’s major concern about its healthcare industry is affordability. To the extent PE-backed solutions offer lower-cost, higher-value alternatives on a playing field that’s level with respect to equitable access and demand-management, they will be at the table.

To the extent PE-backed solutions cherry-pick the system’s low-hanging fruit at the expense of patient safety and affordability sans any regulatory restriction, they’ll breed public discontent from those they choose to ignore.

So, the reality is this: PE’s focus is generating profits for its GP and their LPs. Doing business in a socially responsible way is a fund’s prerogative. Some do it better than others.

PE is part of healthcare’s solution to its poorly structured, perpetually inadequate and mal-distributed funding. But creating a level playing field through meaningful regulatory reform is necessary first.

PS Among the stickier issues facing hospitals is site-neutral payments. Hospitals oppose the proposal reasoning the overhead structure for their outpatient services (HOPD) include indirect & direct costs for services provided those unable to pay i.e. emergency services. Proponents of the change argue that what’s done is the key, not where it’s done, and uniform pricing is common sense. Leavitt Partners has advanced a compromise: a Unified Ambulatory Payment System for HOPDs, ASCs and physician clinics that would be applied to 66 services starting

New reports detail UnitedHealth’s latest acquisitions under shady pretenses

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Change Healthcare, Financial Transparency, Health Insurance Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Questionable Business Practices, UnitedHealth Group, UnitedHealthcare • Leave a comment
https://wendellpotter.substack.com/p/new-reports-detail-unitedhealths?utm_source=post-email-title&publication_id=255152&post_id=142522036&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Two newly published investigative reports, by the intrepid reporters at STAT News and The American Prospect, pull the curtains back a little more on the astonishing number of recent acquisitions UnitedHealth has made as it moves deeper and deeper into health care delivery, enabling it to grab ever-increasing chunks of our premium and tax dollars to reward its shareholders. 

As STAT’s Bob Herman points out this morning, United has been on a clinic-buying spree in recent months, targeting areas of the country where it has significant enrollment in its Medicare Advantage plans.

That’s a strategic move that allows the company to steer more seniors to facilities it owns, boosting revenues it gets from the government and padding its bottom line. 

The bigger a company gets, the less it has to disclose about the acquisitions it makes in any easily obtainable way. That’s because publicly-traded companies are only required to immediately inform investors of individual deals that are “material to earnings.”

A material amount, as Investopedia explains, “can signify any sum or figure worth mentioning, as in account balances, financial statements, shareholder reports, or conference calls. If something is not a material amount, it is considered too insignificant or trivial to mention.”

UnitedHealth’s long string of acquisitions in recent years has catapulted the company to the #5 spot on the Fortune 500 list of American companies, based on revenue. Only Walmart, Exxon Mobile, Amazon and Apple are bigger.

That rapid growth means that fewer and fewer of UnitedHealth’s acquisitions reach the threshold of requiring prominent disclosure to shareholders.

It was only through a close review of UnitedHealth’s latest annual report to investors and other financial documents that STAT was able to see what the company hides from most of us. As Herman noted:

UnitedHealth Group is so big that it doesn’t have to publicly announce a vast majority of its acquisitions. But a STAT analysis of company financial documents shows the health care conglomerate quietly acquired dozens of outpatient facilities in 2023, with a particular focus on surgery centers. 

And it’s not adding random surgery centers, either. There seems to be an explicit strategy: Many of UnitedHealth’s new centers sit in geographic areas where the company is the biggest Medicare Advantage player, based on the latest insurance market share data. That overlap reinforces how UnitedHealth is looking to funnel more of its insurance members toward providers that it owns, with the overarching goal of capturing more profit.

As an example, STAT said it stumbled upon an entry–”buried within UnitedHealth’s annual report”–that revealed the company’s previously undisclosed December acquisition of National Cardiovascular Partners, which operates 21 cardiac cath and vascular labs. Not coincidentally, NCP’s facilities are “in places like Phoenix and large metro areas in Texas where UnitedHealth has the biggest MA market share.”

Separately, at The American Prospect, reporter Maureen Tkacik, reported yesterday how UnitedHealth is exploiting the crisis created for physician groups and hospitals when one of its other recently acquired companies, Change Healthcare, was hacked last month. 

Tkacik wrote that last Thursday, UnitedHealthcare applied for an emergency exemption that would fast-track its takeover of a medical practice in Corvallis, Oregon, which is facing the prospect of closing its doors because of the financial crunch caused by the hack. As Tkacik explained, the hack interrupted the flow of information from Change Healthcare’s claims processing systems that enables physicians, hospitals, and other health care providers to get paid. 

Perversely, UnitedHealth is telling Oregon regulators that the best solution is to allow the company’s proposed acquisition of the medical practice to go forward. 

Tkacik reported that: 

Although the specific reason for the exemption request is redacted from the publicly posted version of the application, a clinic insider says the “emergency” is the same one that has plunged thousands of other health providers across the nation into a terrifying cash crunch… 

The situation underscores the perverse state of affairs in which UnitedHealth, which comprises some 2,642 separate companies that collectively raked in $371.6 billion last year, has arguably profited from the desperation that the hacking of its Change computer systems in late February has inflicted upon the health care system.

An estimated half of all health care transactions are processed or somehow otherwise touched by Change, a rollup of dozens of health care technology firms that provide 137 software applications that have been affected by the outage. 

Tkacid added that “Every dollar in revenue that has disappeared from hospitals, medical practices, and pharmacies in the aftermath of the outage corresponds to an extra dollar sitting in the coffers of the nation’s health insurers, so UnitedHealth, which pays out roughly $662 million in medical claims each day, is presumably sitting on a mountain of unexpected cash.” 

Trauma center hospitals charged above-market prices for non-trauma care

Posted on by • Posted in Emergency Care, Emergency Care Acuity, Emergency Care High Intensity, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Monopoly Behavior, No Surprises Act, Out of Network, Rev Cycle Management, Revenue Cycle, Trauma Center • Leave a comment
https://revcycleintelligence.com/news/trauma-center-hospitals-charged-above-market-prices-for-non-trauma-care?utm_campaign=newsletter&utm_medium=email&utm_source=nl&asrc=EM_MDN_289835827&uid=44919073&bt_ee=GUIB5xjHotJh391VMdfSwJ5eVYMPP5SKbzrLAM1%2FIqsYkTKpLBfTnXZvDEEMkjjg&bt_ts=1710178495311

Prices for non-trauma inpatient admissions were 4.4 percent higher at trauma center hospitals than at hospitals without a trauma designation.

Hospitals designated as trauma centers charged higher prices for non-trauma inpatient admissions and emergency department visits compared to non-trauma center hospitals, a Health Affairs study found.

Hospital prices are the largest driver of rising healthcare spending in the commercial market and are often influenced by the structure of hospital markets. Trauma centers are a critical aspect of the hospital market as they are highly regulated and endowed by regulators with monopoly power over trauma patients in their service areas.

In most states, regulations are designed to encourage the entry of new trauma centers in areas that do not already have one and restrict new entry into areas that already have a trauma center. Additional regulations often require all trauma patients within an area to be transported or transferred to the designated hospital serving the area.

These restrictions create local monopolies for hospitals that are designated as trauma centers. Those in favor of the regulations argue that the monopolies are necessary to ensure each trauma center has sufficient volume to support high-quality and low-cost care. However, this structure could allow hospitals with market power over trauma services to raise prices for non-trauma services.

Researchers used claims data from 2011 to 2018 to assess whether hospitals designated as trauma centers use their market power for trauma services to receive above-market rates for non-trauma services. The sample included 2,000 hospitals with more than two million inpatient admissions and ten million emergency department visits over the study period.

The share of hospitals included in the sample serving as trauma centers increased from 21 percent in 2012 to 28 percent in 2018, resulting in a net addition of 138 trauma centers. The share of non-trauma inpatient admissions and emergency department visits at hospitals serving as trauma centers also increased between 2012 and 2018.

Hospitals serving as trauma centers every year from 2012 to 2018 were categorized as an always trauma center. Opened trauma centers were those not serving as a trauma center in 2012 but serving as one by 2018. Hospitals serving as a trauma center in 2012 but not in 2018 were closed trauma centers, and hospitals that did not serve as a trauma center at all during the study period were called “never trauma centers.”

The average price for non-trauma inpatient admissions among all hospitals was $21,112. Always trauma center hospitals had a higher average price of $22,568 per inpatient admission. The average price per admission was $22,097 at opened centers, $20,589 at closed centers, and $19,769 at never centers. Emergency department prices were similar, with always and opened center hospitals having higher prices than closed and never trauma center facilities.

Always trauma center hospitals were generally larger compared to the other hospital types and were more likely to be in more concentrated hospital markets. The average new injury severity score among emergency department visits in never trauma center hospitals was smaller compared to scores at other hospitals. The average MS-DRG weight for always trauma center hospitals was 1.61 compared to 1.54 for opened and never trauma center hospitals.

Holding these patient and hospital characteristics constant, prices for non-trauma inpatient admissions were 4.4 percent higher in hospitals with trauma center designation than at non-trauma center hospitals. Prices for non-trauma emergency department visits were 5.2 percent higher in trauma center hospitals.

“The results presented here provide an example of an important challenge: How to ensure access to specialized services and protect public health while also accounting for and possibly managing the effects of concomitant market failure,” researchers wrote.

“Our findings provide empirical support for the notion that provider market power in one area can be leveraged to affect prices in other areas.”

The No Surprises Act limits the amounts that hospitals can charge to out-of-network patients for emergency services, including trauma services. This may help limit trauma emergency cross-service leverage pricing, researchers said.

Justice Department conducting antitrust probe against UnitedHealth Group

Posted on by • Posted in Antitrust, Competition, Dept of Justice (DOJ), Federal Trade Commission, Federal Trade Commission (FTC), Investigation, Market Consolidation, Market Power, Monopoly, Monopoly Behavior, UnitedHealth Group, UnitedHealthcare • Leave a comment

https://mailchi.mp/fc76f0b48924/gist-weekly-march-1-2024?e=d1e747d2d8

The Department of Justice (DOJ) has been investigating UHG for anticompetitive behavior since last October, as first revealed by the Examiner News earlier this week and subsequently confirmed by the Wall Street Journal. 

The DOJ is reportedly interested in Optum’s acquisitions of physician groups and how their relationships with UHG’s health plans affects competition.

The probe appears to be wide-ranging, but there are no indications of if or when the DOJ plans to file charges. UHG is no stranger to antitrust attention: the DOJ failed to block its purchase of Change Healthcare in 2022, and its planned acquisition of home healthcare company Amedisys is still subject to a federal probe. 

The Gist: The Biden administration has made antitrust scrutiny a key plank of its policy platform, having recently launched high-profile investigations into several large companies including Apple, Amazon, and Google. 

Although these probes span major sectors of the US economy, healthcare consolidation has been a particular focus for the White House. 

As the nation’s both largest employer of physicians and largest health insurance company, UHG is an unsurprising target within the healthcare industry. Recently finalized federal merger guidelines have changed how the DOJ and Federal Trade Commission (FTC) gather M&A information, but not the laws or legal precedent upon which cases are ruled, so it remains to be seen if regulators’ new approach will translate into stronger enforcement.

What a Biden-Trump Re-Match means for Healthcare Politics: How the Campaigns will Position their Differences to Voters

Posted on by • Posted in 2024 Election Issues, ACA, Access & Quality of Healthcare, Access to IVF Treatments, Affordability, Antitrust, Competition, Federal Trade Commission, Federal Trade Commission (FTC), Health Insurance Coverage Adequacy, Health Policy, High Drug Prices, Market Consolidation, Market Power, Medicaid, Medicare, Monopoly Behavior, Out of Pocket Expenses, Price Transparency, Public Health • Leave a comment
What a Biden-Trump Re-Match means for Healthcare Politics: How the Campaigns will Position their Differences to Voters

With the South Carolina Republican primary results in over the weekend, it seems a Biden-Trump re-match is inevitable. Given the legacies associated with Presidencies of the two and the healthcare platforms espoused by their political parties, the landscape for healthcare politics seems clear:

Healthcare IssueBiden PolicyTrump Policy
Access to Abortion‘It’s a basic right for women protected by the Federal Government’‘It’s up to the states and should be safe and rare. A 16-week ban should be the national standard.’
Ageism‘President Biden is alert and capable. It’s a non-issue.’‘President Biden is senile and unlikely to finish a second term is elected. President Trump is active and prepared.’
Access to IVF Treatments‘It’s a basic right and should be universally accessible in every state and protected’‘It’s a complex issue that should be considered in every state.’
Affordability‘The system is unaffordable because it’s dominated by profit-focused corporations. It needs increased regulation including price controls.’‘The system is unaffordable to some because it’s overly regulated and lacks competition and price transparency.’
Access to Health Insurance Coverage‘It’s necessary for access to needed services & should be universally accessible and affordable.’‘It’s a personal choice. Government should play a limited role.’
Public health‘Underfunded and increasingly important.’‘Fragmented and suboptimal. States should take the lead.’
Drug prices‘Drug companies take advantage of the system to keep prices high. Price controls are necessary to lower costs.’‘Drug prices are too high. Allowing importation and increased price transparency are keys to reducing costs.’
Medicare‘It’s foundational to seniors’ wellbeing & should be protected. But demand is growing requiring modernization (aka the value agenda) and additional revenues (taxes + appropriations).’‘It’s foundational to senior health & in need of modernization thru privatization. Waste and fraud are problematic to its future.’
Medicaid‘Medicaid Managed Care is its future with increased enrollment and standardization of eligibility & benefits across states.’‘Medicaid is a state program allowing modernization & innovation. The federal role should be subordinate to the states.’
Competition‘The federal government (FTC, DOJ) should enhance protections against vertical and horizontal consolidation that reduce choices and increase prices in every sector of healthcare.’‘Current anti-trust and consumer protections are adequate to address consolidation in healthcare.’
Price Transparency‘Necessary and essential to protect consumers. Needs expansion.’‘Necessary to drive competition in markets. Needs more attention.’
The Affordable Care Act‘A necessary foundation for health system modernization that appropriately balances public and private responsibilities. Fix and Repair’‘An unnecessary government takeover of the health system that’s harmful and wasteful. Repeal and Replace.’
Role of federal government‘The federal government should enable equitable access and affordability. The private sector is focused more on profit than the public good.’‘Market forces will drive better value. States should play a bigger role’

My take:

Polls indicate Campaign 2024 will be decided based on economic conditions in the fall 2024 as voters zero in on their choice. Per KFF’s latest poll, 74% of adults say an unexpected healthcare bill is their number-one financial concern—above their fears about food, energy and housing. So, if you’re handicapping healthcare in Campaign 2024, bet on its emergence as an economic issue, especially in the swing states (Michigan, Florida, North Carolina, Georgia and Arizona) where there are sharp health policy differences and the healthcare systems in these states are dominated by consolidated hospitals and national insurers.

  • Three issues will be the primary focus of both campaigns: women’s health and access to abortion, affordability and competition. On women’s health, there are sharp differences; on affordability and competition, the distinctions between the campaigns will be less clear to voters. Both will opine support for policy changes without offering details on what, when and how.
  • The Affordable Care Act will surface in rhetoric contrasting a ‘government run system’ to a ‘market driven system.’ In reality, both campaigns will favor changes to the ACA rather than repeal.
  • Both campaigns will voice support for state leadership in resolving abortion, drug pricing and consolidation. State cost containment laws and actions taken by state attorneys general to limit hospital consolidation and private equity ownership will get support from both campaigns.
  • Neither campaign will propose transformative policy changes: they’re too risky. integrating health & social services, capping total spending, reforms of drug patient laws, restricting tax exemptions for ‘not for profit’ hospitals, federalizing Medicaid, and others will not be on the table. There’s safety in promoting populist themes (price transparency, competition) and steering away from anything more.

As the primary season wears on (in Michigan tomorrow and 23 others on/before March 5), how the health system is positioned in the court of public opinion will come into focus.

Abortion rights will garner votes; affordability, price transparency, Medicare solvency and system consolidation will emerge as wedge issues alongside.

PS: Re: federal budgeting for key healthcare agencies, two deadlines are eminent: March 1 for funding for the FDA and the VA and March 8 for HHS funding.