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.

Considerations for state-imposed conditions on healthcare provider transactions.

The widespread consolidation of health systems, hospitals, and physicians has contributed to the high price of healthcare across the United States. While federal antitrust enforcers continue to play an important role in overseeing large mergers, acquisitions, and other consolidating transactions of major healthcare providers, state oversight over healthcare markets is essential to slow consolidation more broadly and address market failures across the country. State laws govern the scope of authority held by state attorneys general and other state agencies to receive notice of, review, and approve, conditionally approve, or block healthcare provider transactions, which can significantly impact the breadth and content of oversight. While blocking potentially anticompetitive transactions can help states maintain any competitive forces that remain in the market, in some situations, approving a transaction with conditions may be the best path forward. Applying conditions to transactions may allow state officials to oversee and govern the behavior of providers post-transaction while states pursue other legislative fixes. Although the use of conditions is a relatively common practice at the state level, little research has been done to explore their use among states. Following a search in all 50 states, this paper examines decisions from state officials imposing conditions intended to address the impacts of transactions on healthcare price, access, and quality and provides recommendations for the effective use of conditions moving forward.

In this Together: International Collaborations for Environmental and Human Health.

Climate change exacts a devastating toll on health that is rarely incorporated into the economic calculus of climate action. By aligning health and environmental policy and collaborating across borders, governments and industries can develop powerful initiatives to promote both environmental and human health.

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.

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.

States' Merger Review Authority Is Associated With States Challenging Hospital Mergers, But Prices Continue To Increase.

States can challenge proposed hospital mergers by using antitrust laws to prevent anticompetitive harms. This observational study examined additional state laws-principally charitable trust, nonprofit corporation, health and safety, and certificate-of-need laws-that can serve as complements and substitutes for antitrust laws by empowering states to be notified of, review, and challenge proposed hospital mergers through administrative processes. During the period 2010-19, 862 hospital mergers were proposed, but only forty-two (4.9 percent) were challenged by states, including thirty-five by states without federal involvement, of which twenty-five (71.4 percent) originated in the eight states with the most robust merger review authority. The twenty-five challenges resulted in two mergers being blocked; three being abandoned; and twenty being approved with conditions, including seven with competitive-impact conditions. Hospital market concentration and prices increased at similar rates in these eight states versus other states, potentially because most challenges allowed mergers to proceed with conditions that did not adequately address competitive concerns. Although these findings do not reveal an optimal state framework, elements of advanced state merger review authority may have the potential to improve poorly functioning hospital markets.

California's Drug Transparency Law: Navigating The Boundaries Of State Authority On Drug Pricing.

The California drug transparency bill (SB-17), signed into law in October 2017, seeks to promote transparency in pharmaceutical pricing, enhance understanding about pharmaceutical pricing trends, and assist in managing pharmaceutical costs. This article examines the legal and regulatory aspects of SB-17, explores legal challenges to the law, compares it to other state efforts to address rising drug prices, and discusses how California can maximize the impact of SB-17 by coupling the law with other incentives. While SB-17 might not significantly reduce drug prices, the new law represents a meaningful step for one state seeking to negotiate the political and legal boundaries of state action to rein in drug prices.

The Legal Dimensions of Genomic Sequencing in Newborn Screening.

The possible integration of genomic sequencing (including whole-genome and whole-exome sequencing) into the three contexts addressed in this special report-state-mandated screening programs, clinical care, and direct-to-consumer services-raises related but distinct legal issues. This essay will outline the legal issues surrounding the integration of genomic sequencing into state newborn screening programs, parental rights to refuse and access sequencing for their newborns in clinical and direct-to-consumer care, and privacy-related legal issues attending the use of sequencing in newborns.

Whole-Genome Screening of Newborns? The Constitutional Boundaries of State Newborn Screening Programs.

State newborn screening (NBS) programs routinely screen nearly all of the 4 million newborns in the United States each year for ∼30 primary conditions and a number of secondary conditions. NBS could be on the cusp of an unprecedented expansion as a result of advances in whole-genome sequencing (WGS). As WGS becomes cheaper and easier and as our knowledge and understanding of human genetics expand, the question of whether WGS has a role to play in state NBS programs becomes increasingly relevant and complex. As geneticists and state public health officials begin to contemplate the technical and procedural details of whether WGS could benefit existing NBS programs, this is an opportune time to revisit the legal framework of state NBS programs. In this article, we examine the constitutional underpinnings of state-mandated NBS and explore the range of current state statutes and regulations that govern the programs. We consider the legal refinements that will be needed to keep state NBS programs within constitutional bounds, focusing on 2 areas of concern: consent procedures and the criteria used to select new conditions for NBS panels. We conclude by providing options for states to consider when contemplating the use of WGS for NBS.

Cell-free fetal DNA testing for fetal aneuploidy and beyond: clinical integration challenges in the US context.

The recent release of new, non-invasive prenatal tests for fetal aneuploidy using cell-free fetal DNA (cffDNA) has been hailed as a revolution in prenatal testing and has triggered significant commercial interest in the field. Ongoing research portends the arrival of a wide range of cffDNA tests. However, it is not yet clear how these tests will be integrated into well-established prenatal testing strategies in the USA, as the timing of such testing and the degree to which new non-invasive tests will supplement or replace existing screening and diagnostic tools remain uncertain. We argue that there is an urgent need for policy-makers, regulators and professional societies to provide guidance on the most efficient and ethical manner for such tests to be introduced into clinical practice in the USA.

Aligning ethics with medical decision-making: the quest for informed patient choice.

Clinical evidence suggests that many patients undergo surgery that they would decline if fully informed. Failure to communicate the relevant risks, benefits, and alternatives of a procedure violates medical ethics and wastes medical resources. Integrating shared decision-making, a method of communication between provider and patient, into medical decisions can satisfy physicians' ethical obligations and reduce unwanted procedures. This article proposes a three-step process for implementing a nationwide practice of shared decision-making: (1) create model integration programs; (2) provide legal incentives to ease the transition; and (3) incorporate shared decision-making into medical necessity determinations.

Toward the 'tipping point': decision aids and informed patient choice.

Preference-sensitive treatment decisions involve making value trade-offs between benefits and harms that should depend on informed patient choice. There is strong evidence that patient decision aids not only improve decision quality but also prevent the overuse of options that informed patients do not value. This paper discusses progress in implementing decision aids and the policy prospects for reaching a "tipping point" in the adoption of "informed patient choice" as a standard of practice.