Skip to main content

Some Health Care Research Nuggets

By March 9, 2022Commentary

Readers will have noticed that I have begun mixing in more health care research and will continue to do so.  Here are some of the latest studies that attracted my attention.

Various forms of private financing–venture capital, private equity, etc.–have become a dominant force in American business, especially for new or growing companies.  That includes in health care and more recently includes actual health care providers.  Concern has been expressed about the impacts of this trend on both health spending and health quality.  This study looked at whether ownership by a physician management company, often funded by private capital, affected prices and costs for anesthesiology services.  As I would have expected, using a physican management company and private equity funding were associated with higher unit prices and actual payments.  While private equity firms can and usually do bring operational improvements, they are also highly oriented toward profits and they are a cause of increases in health spending.  (JAMA Study)

Another pernicious trend in US health care has been consolidation and concentration of hospitals.  Now theoretically this trend could result in greater efficiency and lower costs.  In practice, however, it by definition results in greater market shares and lower competition.  That in turn typically leads to an ability to charge higher prices.  And it may also lead to worse service and quality, because patients have fewer alternatives.  This study looked at whether higher-priced hospitals were associated with higher quality, as measured by mortality.  Higher prices overall did have an association with lower mortality, but the association did not exist in highly concentrated markets.  Most urban markets today are highly concentrated, so what this study suggests is that for patients in those markets, they pay more but they aren’t any less likely to die as a result of the care they receive.    (NBER Study)

Join the discussion 4 Comments

  • dirtyjobsguy says:

    With no variation in billing schemes practical with the Medicare monolith you will get no innovation in practice structure or pricing. Medicare (and consequently most private insurance) see the same complex, irrational cost recovery. Just like someone contracting for the federal government you are virtually stopped from taking realistic profits on important services. Thus you bulk up on lots of small steps. I can’t count how many times the medical assistant takes my blood pressure etc. only to have the MD repeat this since they can get real information by doing it themselves.

  • Rob says:

    It doesn’t help matters that so many states have certificate of need laws which further restricts competition in hospitals.

  • James L. Edholm says:

    I seem to remember a J&J report (or was it the Kaiser Family Foundation?) from some years ago showing an average increase in prices of something like 20% AFTER a “cost-saving, economies of scale” merger

Leave a comment