Do State Bans of Most-Favored-Nation Contract Clauses Restrain Price Growth? Evidence From Hospital Prices.

Policy Points Looking for a way to curtail market power abuses in health care and rein in prices, 20 states have restricted most-favored-nation (MFN) clauses in some health care contracts. Little is known as to whether restrictions on MFN clauses slow health care price growth. Banning MFN clauses between insurers and hospitals in highly concentrated insurer markets seems to improve competition and lead to lower hospital prices. CONTEXT: Most-favored-nation (MFN) contract clauses have recently garnered attention from both Congress and state legislatures looking for ways to curtail market power abuses in health care and rein in prices. In health care, a typical MFN contract clause is stipulated by the insurer and requires a health care provider to grant the insurer the lowest (i.e., the most-favored) price among the insurers it contracts with. As of August 2020, 20 states restrict the use of MFN clauses in health care contracts (19 states ban their use in at least some health care contracts), with 8 states prohibiting their use between 2010 and 2016. METHODS: Using event study and difference-in-differences research designs, we compared prices for a standardized hospital admission in states that banned MFN clauses between 2010 and 2016 with standardized hospital admission prices in states without MFN bans. FINDINGS: Our results show that bans on MFN clauses reduced hospital price growth in metropolitan statistical areas (MSAs) with highly concentrated insurer markets. Specifically, we found that mean hospital prices in MSAs with highly concentrated insurer markets would have been $472 (2.8%) lower in 2016 had the MSAs been in states that banned MFN clauses in 2010. In 2016, the population in our sample that resided in MSAs with highly concentrated insurer markets was just under 75 million (23% of the US population). Hence, banning MFN clauses in all MSAs in our sample with highly concentrated insurer markets in 2010 would have generated savings on hospital expenditures in the range of $2.4 billion per year. CONCLUSIONS: Our empirical findings suggest banning MFN clauses between insurers and providers in highly concentrated insurer markets would improve competition and lead to lower prices and expenditures.

Challenges with Defining Pharmaceutical Markets and Potential Remedies to Screen for Industry Consolidation.

CONTEXT: Dramatic increases in pharmaceutical merger and acquisition (M&A) activity since 2010 suggest we are in the midst of a third wave of industry consolidation. METHODS: The authors reviewed 168 economic, legal, medical, industry, and government sources to examine the effects of consolidation on competition and innovation and to explore how industry attributes complicate M&A regulation in a pharmaceutical context. FINDINGS: The authors find that, in spite of certain metrics that might argue otherwise, consolidation consistently reduces innovation and harms the public good. They also find that several factors within the pharmaceutical industry impede proper evaluation of proposed mergers. Because consumer choice across substitutes is limited, pharmaceutical markets frustrate conventional methods of defining markets. Volume bargaining in the pharmaceutical supply chain and asset managers' common ownership of pharmaceutical firms further complicate the definitional process. Hence, the Herfindahl-Hirschman Index (HHI), one measure used by the Federal Trade Commission and the Department of Justice to screen for concerning M&A activity, sometimes depends on faulty market definitions and fails to capture the implications of consolidation for future market share. CONCLUSIONS: The authors describe ways to improve how pharmaceutical markets are defined, highlight quantitative alterations to HHI to account for common ownership, and propose areas requiring further research.

Forecasting imbalances in the global health labor market and devising policy responses.

BACKGROUND: The High-Level Commission on Health Employment and Economic Growth released its report to the United Nations Secretary-General in September 2016. It makes important recommendations that are based on estimates of over 40 million new health sector jobs by 2030 in mostly high- and middle-income countries and a needs-based shortage of 18 million, mostly in low- and middle-income countries. This paper shows how these key findings were developed, the global policy dilemmas they raise, and relevant policy solutions. METHODS: Regression analysis is used to produce estimates of health worker need, demand, and supply. Projections of health worker need, demand, and supply in 2030 are made under the assumption that historical trends continue into the future. RESULTS: To deliver essential health services required for the universal health coverage target of the Sustainable Development Goal 3, there will be a need for almost 45 million health workers in 2013 which is projected to reach almost 53 million in 2030 (across 165 countries). This results in a needs-based shortage of almost 17 million in 2013. The demand-based results suggest a projected demand of 80 million health workers by 2030. CONCLUSIONS: Demand-based analysis shows that high- and middle-income countries will have the economic capacity to employ tens of millions additional health workers, but they could face shortages due to supply not keeping up with demand. By contrast, low-income countries will face both low demand for and supply of health workers. This means that even if countries are able to produce additional workers to meet the need threshold, they may not be able to employ and retain these workers without considerably higher economic growth, especially in the health sector.

Global Health Workforce Labor Market Projections for 2030.

BACKGROUND: In low- and middle-income countries, scaling essential health interventions to achieve health development targets is constrained by the lack of skilled health professionals to deliver services. METHODS: We take a labor market approach to project future health workforce demand based on an economic model based on projected economic growth, demographics, and health coverage, and using health workforce data (1990-2013) for 165 countries from the WHO Global Health Observatory. The demand projections are compared with the projected growth in health worker supply and the health worker "needs" as estimated by WHO to achieve essential health coverage. RESULTS: The model predicts that, by 2030, global demand for health workers will rise to 80 million workers, double the current (2013) stock of health workers, while the supply of health workers is expected to reach 65 million over the same period, resulting in a worldwide net shortage of 15 million health workers. Growth in the demand for health workers will be highest among upper middle-income countries, driven by economic and population growth and aging. This results in the largest predicted shortages which may fuel global competition for skilled health workers. Middle-income countries will face workforce shortages because their demand will exceed supply. By contrast, low-income countries will face low growth in both demand and supply, which are estimated to be far below what will be needed to achieve adequate coverage of essential health services. CONCLUSIONS: In many low-income countries, demand may stay below projected supply, leading to the paradoxical phenomenon of unemployed ("surplus") health workers in those countries facing acute "needs-based" shortages. Opportunities exist to bend the trajectory of the number and types of health workers that are available to meet public health goals and the growing demand for health workers.

Accountable Care Organizations: Integrated Care Meets Market Power.

Will accountable care organizations (ACOs) deliver high-quality care at lower costs? Or will their potential market power lead to higher prices and lower quality? ACOs appear in various forms and structures with financial and clinical integration at their core; however, the tools to assess their quality and the incentive structures that will determine their success are still evolving. Both market forces and regulatory structures will determine how these outcomes emerge. This introduction reviews the evidence presented in this special issue to tackle this thorny trade-off. In general the evidence is promising, but the full potential of ACOs to improve the health care delivery system is still uncertain. This introductory review concludes that the current consensus is to let ACOs grow, anticipating that they will make a contribution to improve our poor-quality and high-cost delivery system.

Covered California: The Impact of Provider and Health Plan Market Power on Premiums.

We explain the establishment of Covered California, California's health insurance marketplace. The marketplace uses an active purchaser model, which means that Covered California can selectively contract with some health plans and exclude others. During the 2014 open-enrollment period, it enrolled 1.3 million people, who are covered by eleven health plans. We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationship between measures of provider market concentration--spanning health plans, hospitals, and medical groups--and rating region premiums. To do this, we analyze premiums for silver and bronze plans for specific age groups. We find both medical group concentration and hospital concentration to be positively associated with premiums, while health plan concentration is not statistically significant. We simulate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.

Accountable Care Organizations in California: Market Forces at Work?

Accountable care organizations (ACOs), one of the most recent and promising health care delivery innovations, encourage care coordination among providers. While ACOs hold promise for decreasing costs by reducing unnecessary procedures, improving resource use as a result of economies of scale and scope, ACOs also raise concerns about provider market power. This study examines the market-level competition factors that are associated with ACO participation and the number of ACOs. Using data from California, we find that higher levels of preexisting managed care leads to higher ACO entry and enrollment growth, while hospital concentration leads to fewer ACOs and lower enrollment. We find interesting results for physician market power - markets with concentrated physician markets have a smaller share of individuals in commercial ACOs but a larger number of commercial ACO organizations. This finding implies smaller ACOs in these markets.

Growth of Accountable Care Organizations in California: Number, Characteristics, and State Regulation.

Accountable care organizations (ACOs) result in physician organizations' and hospitals' receiving risk-based payments tied to costs, health care quality, and patient outcomes. This article (1) describes California ACOs within Medicare, the commercial market, and Medi-Cal and the safety net; (2) discusses how ACOs are regulated by the California Department of Managed Health Care and the California Department of Insurance; and (3) analyzes the increase of ACOs in California using data from Cattaneo and Stroud. While ACOs in California are well established within Medicare and the commercial market, they are still emerging within Medi-Cal and the safety net. Notwithstanding, the state has not enacted a law or issued a regulation specific to ACOs; they are regulated under existing statutes and regulations. From August 2012 to February 2014, the number of lives covered by ACOs increased from 514,100 to 915,285, representing 2.4 percent of California's population, including 10.6 percent of California's Medicare fee-for-service beneficiaries and 2.3 percent of California's commercially insured lives. By emphasizing health care quality and patient outcomes, ACOs have the potential to build and improve on California's delegated model. If recent trends continue, ACOs will have a greater influence on health care delivery and financial risk sharing in California.

Review of Medicare, Medicaid, and Commercial Quality of Care Measures: Considerations for Assessing Accountable Care Organizations.

Accountable care organizations (ACOs) have proliferated under the Affordable Care Act (ACA). If ACOs are to improve health care quality and lower costs, quality measures will be increasingly important in determining if provider consolidations associated with the development of ACOs are achieving their intended purpose. This article assesses quality measurement across public and private sectors. We reviewed available quality measures for a subset of programs in six organizations and assessed the number and domain of measures (structure, process, outcomes, and patient experience). Two-thirds of all quality measures were categorized as process measures. Outcome measures made up nearly 20 percent of measures. Patient experience and structure measures made up approximately 8 percent and 7 percent, respectively. We propose further improvements to quality measurement initiatives. For example, programs that reward providers should consider reward size and distribution within the organization. Quality improvement initiatives should consider what encourages provider buy-in and participation and the effects on populations with disproportionate health care needs. As the focus of quality initiatives may change from year to year, measures should be periodically revisited to ensure continued improvement and sustainability. Finally, we suggest quality measures that regulators could use prior to ACO formation or in the year or two following formation.

Health labour market policies in support of universal health coverage: a comprehensive analysis in four African countries.

BACKGROUND: Progress toward universal health coverage in many low- and middle-income countries is hindered by the lack of an adequate health workforce that can deliver quality services accessible to the entire population. METHODS: We used a health labour market framework to investigate the key indicators of the dynamics of the health labour market in Cameroon, Kenya, Sudan, and Zambia, and identified the main policies implemented in these countries in the past ten years to address shortages and maldistribution of health workers. RESULTS: Despite increased availability of health workers in the four countries, major shortages and maldistribution persist. Several factors aggravate these problems, including migration, an aging workforce, and imbalances in skill mix composition. CONCLUSIONS: In this paper, we provide new evidence to inform decision-making for health workforce planning and analysis in low- and middle-income countries. Partial health workforce policies are not sufficient to address these issues. It is crucial to perform a comprehensive analysis in order to understand the dynamics of the health labour market and develop effective polices to address health workforce shortages and maldistribution as part of efforts to attain universal health coverage.

Evaluating the impact of California's full service partnership program using a multidimensional measure of outcomes.

This study evaluates the impact of California's full-service partnership (FSP) program using a multidimensional measure of outcomes. The FSP program is a key part of California's 2005 Mental Health Services Act. Secondary data were collected from the Consumer Perception Survey, the Client and Service Information System, and the Data Collection and Reporting System, all data systems which are maintained by the California Department of Mental Health. The analytic sample contained 39,681 observations of which 588 were FSP participants (seven repeated cross-sections from May 2005 to May 2008). We performed instrumental variables (IV) limited information maximum likelihood and IV Tobit analyses. The marginal monthly improvement in outcomes of services for FSP participants was approximately 3.5 % higher than those receiving usual care with the outcomes of the average individual in the program improving by 33.4 %. This shows that the FSP program is causally effective in improving outcomes among the seriously mentally ill.

Private Equity-Acquired Physician Practices And Market Penetration Increased Substantially, 2012-21.

Private equity (PE) firms have been acquiring physician practices at an increasing rate, raising concerns about such firms' penetration at the physician level into local markets and the impact on health care quality and prices. However, limited knowledge exists about the extent of PE firms' control in local markets. By linking data on PE acquisitions to physician data and using full-time-equivalent physicians as the base of assessment, we estimated the local market share of each PE firm within ten physician specialties at the Metropolitan Statistical Area (MSA) level. PE-acquired physician practice sites increased from 816 across 119 MSAs in 2012 to 5,779 across 307 MSAs in 2021. Single PE firms had significant market share, exceeding 30 percent in 108 MSA specialty markets and exceeding 50 percent in 50 of those markets. The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators, and policy makers.

New evidence on the impacts of cross-market hospital mergers on commercial prices and measures of quality.

OBJECTIVE: To examine the impact of "cross-market" hospital mergers on prices and quality and the extent to which serial acquisitions contribute to any measured effects. DATA SOURCES: 2009-2017 commercial claims from the Health Care Cost Institute (HCCI) and quality measures from Hospital Compare. STUDY DESIGN: Event study models in which the treated group consisted of hospitals that acquired hospitals further than 50 miles, and the control group was hospitals that were not part of any merger activity (as a target or acquirer) during the study period. DATA EXTRACTION METHODS: We extracted data for 214 treated hospitals and 955 control hospitals. PRINCIPAL FINDINGS: Six years after acquisition, cross-market hospital mergers had increased acquirer prices by 12.9% (CI: 0.6%-26.6%) relative to control hospitals, but had no discernible impact on mortality and readmission rates for heart failure, heart attacks and pneumonia. For serial acquirers, the price effect increased to 16.3% (CI: 4.8%-29.1%). For all acquisitions, the price effect was 21.8% (CI: 4.6%-41.7%) when the target's market share was greater than the acquirer's market share versus 9.7% (CI: -0.5% to 20.9%) when the opposite was true. The magnitude of the price effect was similar for out-of-state and in-state cross-market mergers. CONCLUSIONS: Additional evidence on the price and quality effects of cross-market mergers is needed at a time when over half of recent hospital mergers have been cross-market. To date, no hospital mergers have been challenged by the Federal Trade Commission on cross-market grounds. Our study is the third to find a positive price effect associated with cross-market mergers and the first to show no quality effect and how serial acquisitions contribute to the price effect. More research is needed to identify the mechanism behind the price effects we observe and analyze price effect heterogeneity.

Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California.

Importance: Empirical evidence is needed on how a capitated, risk-based county plan performs as a viable public option in the Affordable Care Act (ACA) Marketplace in California. Objective: To estimate whether LA Care-a capitated, county-based public option and California's largest public insurer-was associated with health insurance premium growth in the Los Angeles (LA) regions of Covered California (CC), the ACA exchange in California. Design, Setting, and Participants: This economic evaluation used ACA silver plan premium data within the 19 CC regions. Difference-in-differences and event study models used data on plan-level premiums from Health Insurance Exchange Compare for years 2014 to 2022 to estimate the association between LA Care and ACA premium growth in LA. Exposures: The intervention was LA Care becoming the lowest-cost health plan on the ACA exchange in 2018. The treatment group included the East and West LA regions, and the control group included the remaining 17 CC regions. Main Outcomes and Measures: The main outcome variable was annual premium growth of plans on CC from 2014 to 2022. Results: Using 504 plan-level observations for 2014 to 2022, ACA premium growth in LA declined by 4.8% after LA Care became the lowest-cost health plan on the exchange in 2018 (coefficient estimate, -0.048; SE, 0.022; 95% CI, -0.093 to -0.002). Savings due to lower premium growth from 2019 to 2022 were calculated to be $345 million, with approximately 70% of the savings ($242 million) going to the federal government. Conclusions and Relevance: In this economic evaluation, LA Care was associated with lower premium growth of other health insurance plans in the LA regions of CC, with the majority of savings going to the federal government. California could have captured these savings if it had applied for and received a State Innovation Waiver under section 1332 of the ACA. LA Care may be a viable public option with the potential to be expanded across California through the state's 16 other county-based health plans.

The Better Care Plan: a blueprint for improving America's healthcare system.

The United States falls far short of its potential for delivering care that is effective, efficient, safe, timely, patient-centered, and equitable. We put forward the Better Care Plan, an overarching blueprint to address the flaws in our current system. The plan calls for continuously improving care, moving all payers to risk-adjusted prospective payment, and creating national entities for collecting, analyzing, and reporting patient safety and quality-of-care outcomes data. A number of recommendations are made to achieve these goals.

Human resources for mental health care: current situation and strategies for action.

A challenge faced by many countries is to provide adequate human resources for delivery of essential mental health interventions. The overwhelming worldwide shortage of human resources for mental health, particularly in low-income and middle-income countries, is well established. Here, we review the current state of human resources for mental health, needs, and strategies for action. At present, human resources for mental health in countries of low and middle income show a serious shortfall that is likely to grow unless effective steps are taken. Evidence suggests that mental health care can be delivered effectively in primary health-care settings, through community-based programmes and task-shifting approaches. Non-specialist health professionals, lay workers, affected individuals, and caregivers with brief training and appropriate supervision by mental health specialists are able to detect, diagnose, treat, and monitor individuals with mental disorders and reduce caregiver burden. We also discuss scale-up costs, human resources management, and leadership for mental health, particularly within the context of low-income and middle-income countries.

Social capital and self-rated health in Argentina.

The potential link between social capital and health suggests important pathways by which health may be improved. We examine this relationship using a unique data set from Argentina. This national survey allows us to determine whether the relationships between social capital and health that have been found in the US and Europe also apply to countries in South America (Argentina is the second-largest country in South America with a population of approximately 40 million). We estimate a causal effect of individual-level social capital on health using a measure of informal social interactions as our measure of social capital. Using information about access to public transportation as instrumental variables, we find that both men and women with higher levels of social capital report better health.

Health care supply and county-level variation in attention-deficit hyperactivity disorder prescription medications.

PURPOSE: Although much literature reports small-area variation in medication prescriptions used to treat attention-deficit hyperactivity disorder (ADHD), scant research has examined factors that may drive this variation. We examine, across counties in the USA, whether the use of prescription medications to treat ADHD varies positively with supply-side healthcare characteristics. METHODS: We retrieved annual prescription data for ADHD medications in 2734 US counties from a nationally representative sample of 35 000 pharmacies in 2001-2003. We used a county-level, multivariable fixed effects analysis to estimate the relation between annual changes in healthcare supply and ADHD medication prescriptions. Methods controlled for time-invariant factors unique to each county as well as ADHD prevalence. RESULTS: From 2001 to 2003, retail prescription purchases for ADHD medications increased 33.2%. In the multivariable analysis, ADHD medication prescriptions move positively with an increase in the concentration of total physicians. In addition, ADHD medication prescriptions move inversely with changes in the percentage of non-Hispanic Black population. CONCLUSIONS: Supply-side healthcare factors may contribute to the rise from 2001 to 2003 in ADHD medication prescriptions. This finding warrants attention because it implies that the relative capacity of the healthcare system may influence population prescription rates. We encourage further exploration of the contribution of the supply-side of the healthcare market to secular changes in ADHD medication prescriptions.

The Rise Of Cross-Market Hospital Systems And Their Market Power In The US.

Although hospital consolidation within markets has been well documented, consolidation across markets has not, even though economic theory predicts-and evidence is emerging-that cross-market hospital systems raise prices by exerting market power across markets when negotiating with common customers (primarily insurers). This study analyzes hospital systems using the American Hospital Association Annual Survey Database and defines hospital geographic markets as commuting zones that link workers to places of employment. The share of community hospitals in the US that were part of hospital systems increased from 10 percent in 1970 to 67 percent in 2019, resulting in 3,436 hospitals within 368 systems in 2019. Of these systems, 216 (59 percent) owned hospitals in multiple commuting zones, in part because 55 percent of the 1,500 hospitals targeted for a merger or acquisition between 2010 and 2019 were located in a different commuting zone than the acquirer. Based on market-power differences among hospitals in systems, the number of systems in urban commuting zones that could potentially exert enhanced cross-market power increased from thirty-seven systems in 2009 to fifty-seven systems in 2019, an increase of 54 percent. The increase in cross-market hospital systems warrants concern and scrutiny because of the potential anticompetitive impact of hospital systems exerting market power across markets in negotiations with common customers.