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Richards MR, Whaley CM. Hospital behavior over the private equity life cycle. JOURNAL OF HEALTH ECONOMICS 2024; 97:102902. [PMID: 38861907 PMCID: PMC11392649 DOI: 10.1016/j.jhealeco.2024.102902] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 07/14/2023] [Revised: 05/10/2024] [Accepted: 05/28/2024] [Indexed: 06/13/2024]
Abstract
Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with ambulatory surgery centers. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also manage shorter, less treatment-intensive stays for admitted patients. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.
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Affiliation(s)
- Michael R Richards
- Jeb E. Brooks School of Public Policy, Cornell University, 3301 MVR Hall, Ithaca NY 14853 and NBER.
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Silva MA, Peterson EC. Cerebral angiography in outpatient endovascular centers: roadmap and lessons learned from interventional radiology, cardiology, and vascular surgery. J Neurointerv Surg 2024:jnis-2024-022101. [PMID: 39084856 DOI: 10.1136/jnis-2024-022101] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 06/08/2024] [Accepted: 07/14/2024] [Indexed: 08/02/2024]
Abstract
A growing proportion of percutaneous procedures are performed in outpatient centers. The shift from hospitals to ambulatory surgery centers and office-based laboratories has been driven by a number of factors, including declining reimbursements, increased patient demand, and competition for hospital resources. This transition has been dominated by the interventional radiology, cardiology, and vascular surgery fields. Cerebral angiography, in contrast, is still performed almost exclusively in a hospital-based setting, despite sharing many features with other endovascular procedures commonly performed in outpatient centers. As interest grows in performing cerebral angiography in outpatient endovascular centers, much can be learned from the decades of experience that our interventional colleagues have in the outpatient setting. In this article we examine the outpatient experience of other interventional fields and apply key principles to evaluate the prospect of outpatient neurointervention. The literature suggests that cerebral angiography can feasibly be performed in an outpatient center in both private and academic settings, as some groups have begun to do. Outpatient endovascular centers have helped to improve the patient experience, liberate inpatient resources, and control costs in other interventional fields, and might offer neurointerventionalists an opportunity to do the same.
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Affiliation(s)
- Michael A Silva
- Department of Neurosurgery, University of Miami Miller School of Medicine, Miami, Florida, USA
| | - Eric C Peterson
- Department of Neurosurgery, University of Miami Miller School of Medicine, Miami, Florida, USA
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Weaver ML, Neal D, Columbo JA, Holscher CM, Sorber RA, Hicks CW, Stone DH, Clouse WD, Scali ST. Market competition influences practice patterns in management of patients with intermittent claudication in the vascular quality initiative. J Vasc Surg 2023; 78:727-736.e3. [PMID: 37141948 PMCID: PMC10699768 DOI: 10.1016/j.jvs.2023.04.032] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 02/13/2023] [Revised: 04/06/2023] [Accepted: 04/24/2023] [Indexed: 05/06/2023]
Abstract
OBJECTIVE The Society for Vascular Surgery (SVS) clinical practice guidelines recommend best medical therapy (BMT) as first-line therapy before offering revascularization to patients with intermittent claudication (IC). Notably, atherectomy and tibial-level interventions are generally discouraged for management of IC; however, high regional market competition may incentivize physicians to treat patients outside the scope of guideline-directed therapy. Therefore, we sought to determine the association between regional market competition and endovascular treatment of patients with IC. METHODS We examined patients with IC undergoing index endovascular peripheral vascular interventions (PVI) in the SVS Vascular Quality Initiative from 2010 to 2022. We assigned the Herfindahl-Hirschman Index as a measure of regional market competition and stratified centers into very high competition (VHC), high competition, moderate competition, and low competition cohorts. We defined BMT as preoperative documentation of being on antiplatelet medication, statin, nonsmoking status, and a recorded ankle-brachial index. We used logistic regression to evaluate the association of market competition with patient and procedural characteristics. A sensitivity analysis was performed in patients with isolated femoropopliteal disease matched by the TransAtlantic InterSociety classification of disease severity. RESULTS There were 24,669 PVIs that met the inclusion criteria. Patients with IC undergoing PVI were more likely to be on BMT when treated in higher market competition centers (odds ratio [OR], 1.07 per increase in competition quartile; 95% confidence interval [CI], 1.04-1.11; P < .0001). The probability of undergoing aortoiliac interventions decreased with increasing competition (OR, 0.84; 95% CI, 0.81-0.87; P < .0001), but there were higher odds of receiving tibial (OR, 1.40; 95% CI, 1.30-1.50; P < .0001) and multilevel interventions in VHC vs low competition centers (femoral + tibial OR, 1.10; 95% CI, 1.03-1.14; P = .001). Stenting decreased as competition increased (OR, 0.89; 95% CI, 0.87-0.92; P < .0001), whereas exposure to atherectomy increased with higher market competition (OR, 1.15; 95% CI, 1.11-1.19; P < .0001). When assessing patients undergoing single-artery femoropopliteal intervention for TransAtlantic InterSociety A or B lesions to account for disease severity, the odds of undergoing either balloon angioplasty (OR, 0.72; 95% CI, 0.625-0.840; P < .0001) or stenting only (OR, 0.84; 95% CI, 0.727-0.966; P < .0001) were lower in VHC centers. Similarly, the likelihood of receiving atherectomy remained significantly higher in VHC centers (OR, 1.6; 95% CI, 1.36-1.84; P < .0001). CONCLUSIONS High market competition was associated with more procedures among patients with claudication that are not consistent with guideline-directed therapy per the SVS clinical practice guidelines, including atherectomy and tibial-level interventions. This analysis demonstrates the susceptibility of care delivery to regional market competition and signifies a novel and undefined driver of PVI variation among patients with claudication.
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Affiliation(s)
- M Libby Weaver
- Division of Vascular and Endovascular Surgery, University of Virginia Health System, Charlottesville, VA.
| | - Dan Neal
- Department of Surgery, University of Florida, Gainesville, FL
| | - Jesse A Columbo
- Section of Vascular Surgery, Dartmouth-Hitchcock Medical Center, Lebanon, NH
| | - Courtenay M Holscher
- Division of Vascular Surgery and Endovascular Therapy, Johns Hopkins University School of Medicine, Baltimore, MD
| | - Rebecca A Sorber
- Division of Vascular Surgery and Endovascular Therapy, Johns Hopkins University School of Medicine, Baltimore, MD
| | - Caitlin W Hicks
- Division of Vascular Surgery and Endovascular Therapy, Johns Hopkins University School of Medicine, Baltimore, MD
| | - David H Stone
- Section of Vascular Surgery, Dartmouth-Hitchcock Medical Center, Lebanon, NH
| | - W Darrin Clouse
- Division of Vascular and Endovascular Surgery, University of Virginia Health System, Charlottesville, VA
| | - Salvatore T Scali
- Division of Vascular Surgery and Endovascular Therapy, University of Florida, Gainesville, FL
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Lin H, Munnich EL, Richards MR, Whaley CM, Zhao X. Private equity and healthcare firm behavior: Evidence from ambulatory surgery centers. JOURNAL OF HEALTH ECONOMICS 2023; 91:102801. [PMID: 37657144 PMCID: PMC10528209 DOI: 10.1016/j.jhealeco.2023.102801] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 12/09/2022] [Revised: 05/26/2023] [Accepted: 08/04/2023] [Indexed: 09/03/2023]
Abstract
Healthcare firms regularly seek outside capital; yet, we have an incomplete understanding of external investor influence on provider behavior. We investigate the effects of private equity investment, divestment, and an initial public offering (IPO) on ambulatory surgery centers (ASCs). Throughput is unchanged while charges grow by up to 50% for the same service mix. Affected ASCs witness declines in privately insured cases and rely more on Medicare business. Private equity increases physician ASC ownership stakes, and both simultaneously divest when the ASC is sold. Our findings appear more consistent with private equity influencing the financing of ASCs, rather than treatment approaches.
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Affiliation(s)
- Haizhen Lin
- Department of Business Economics and Public Policy, Kelley School of Business, Indiana University, 1309 E Tenth St, Bloomington, IN 47405 USA
| | - Elizabeth L Munnich
- Department of Economics, College of Business, University of Louisville, Louisville, KY 40292 USA
| | - Michael R Richards
- Jeb E. Brooks School of Public Policy, Cornell University, 3300 MVR Hall, Ithaca, NY 14853 USA.
| | - Christopher M Whaley
- RAND Corporation, 1776 Main St, Santa Monica, CA 90401 USA; Department of Health Services, Policy, and Practice, School of Public Health, Brown University, Providence, RI, USA
| | - Xiaoxi Zhao
- RAND Corporation, 1776 Main St, Santa Monica, CA 90401 USA
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Geruso M, Richards MR. Trading spaces: Medicare's regulatory spillovers on treatment setting for non-Medicare patients. JOURNAL OF HEALTH ECONOMICS 2022; 84:102624. [PMID: 35580506 PMCID: PMC10371213 DOI: 10.1016/j.jhealeco.2022.102624] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/20/2021] [Revised: 02/17/2022] [Accepted: 04/21/2022] [Indexed: 06/15/2023]
Abstract
Medicare pricing is known to indirectly influence provider prices and care provision for non-Medicare patients; however, Medicare's regulatory externalities beyond fee-setting are less well understood. We study how physicians' outpatient surgery choices for non-Medicare patients responded to Medicare removing a ban on ambulatory surgery center (ASC) use for a specific procedure. Following the rule change, surgeons began reallocating both Medicare and commercially insured patients to ASCs. Specifically, physicians became 70% more likely to use ASCs for the policy-targeted procedure among their non-Medicare patients. These novel findings demonstrate that Medicare rulemaking affects physician behavior beyond the program's statutory scope.
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Affiliation(s)
- Michael Geruso
- Department of Economics, University of Texas-Austin, BRB 1.116, Stop C3100, Austin TX 78712, USA
| | - Michael R Richards
- Department of Economics, Baylor University, One Bear Place Waco TX 76798, USA.
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Ambulatory Surgery Centers Versus Hospital Outpatient Departments for Orthopaedic Surgeries. J Am Acad Orthop Surg 2022; 30:207-214. [PMID: 35143432 DOI: 10.5435/jaaos-d-21-00739] [Citation(s) in RCA: 7] [Impact Index Per Article: 3.5] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Received: 07/10/2021] [Accepted: 11/27/2021] [Indexed: 02/01/2023] Open
Abstract
BACKGROUND The goals of this study were to compare the utilization and costs of ambulatory surgery centers (ASCs) versus hospital outpatient department (HOPD) for commonly performed outpatient orthopaedic surgical procedures. METHODS Commercially insured patients undergoing elective, outpatient orthopaedic surgery were queried using an administrative claims database. We queried the following surgeries: carpal tunnel release, lumbar microdiskectomy, anterior cruciate ligament reconstruction, knee arthroscopy, arthroscopic rotator cuff repair, and bunion repair. Total costs were defined as the sum of all payments for a surgical episode. Professional fees were defined as payments to the primary orthopaedic surgeon and technical fees as all other payments. Comparisons between ASC and HOPD reimbursements were conducted using bivariate statistics and generalized linear models controlling for patient age, sex, and Elixhauser comorbidity index. RESULTS Among 990,980 cases of outpatient orthopaedic surgery done from 2013 to 2018, the utilization rate of ASCs increased from 31% to 34% across all procedures assessed: compound annual growth rate of 3.3% for lumbar microdiscectomy, 1.8% for knee arthroscopy, 1.4% for anterior cruciate ligament, 1.4% for carpal tunnel release, 1.2% for arthroscopic rotator cuff repair, and 0.5% for bunion repair (P < 0.001 for all). The average total costs were 26% lower at ASCs than HOPDs (P < 0.001 for each procedure). The average technical fees were 33% lower at ASCs than HOPDs (P < 0.001 for each procedure). Both total costs and technical fees were less for ASCs than HOPDs after controlling for patient age, sex, and Elixhauser comorbidity index (P < 0.001 for each procedure). Over the study period, the mean total costs at HOPDs increased by 2.5% yearly, whereas the mean total costs at ASCs decreased by 0.1% yearly. The average surgeon professional fees declined in both care settings over time. CONCLUSION From 2013 to 2018, there was an increase in ASC utilization for common outpatient orthopaedic surgeries. ASCs were overall less costly than HOPDs for outpatient orthopaedic surgeries. LEVEL OF EVIDENCE IV.
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Munnich EL, Richards MR. Long-run growth of ambulatory surgery centers 1990-2015 and Medicare payment policy. Health Serv Res 2022; 57:66-71. [PMID: 34318499 PMCID: PMC8763276 DOI: 10.1111/1475-6773.13707] [Citation(s) in RCA: 5] [Impact Index Per Article: 2.5] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 12/16/2020] [Revised: 05/27/2021] [Accepted: 06/29/2021] [Indexed: 02/03/2023] Open
Abstract
OBJECTIVE To examine long-run growth in the ambulatory surgery center (ASC) industry and potential factors influencing its trajectory. DATA SOURCES National data for all Medicare-certified ASCs (1990-2015) and outpatient discharge records from the state of Florida in 2007. STUDY DESIGN We documented the number of ASCs in the United States over time and decomposed the trend into underlying ASC market entry and exit behavior. We then examined the plausibility of 2008 Medicare payment reforms to influence the trend changes. DATA EXTRACTION METHODS Data on ASC openings and closures are obtained from the Centers for Medicare and Medicaid Services Provider of Service files. Secondary data on ASC volume in Florida are obtained from the Florida Agency for Health Care Administration. PRINCIPAL FINDINGS The number of ASCs in the United States grew 5%-10% annually between 1990 and 2007 but by 1% or less beginning in 2008. This change coincided with substantive reductions in Medicare payments for key ASC services. The annual number of new ASCs was as much as 50% lower following the payment change. CONCLUSIONS ASCs are an important competitor for outpatient services, but growth has slowed dramatically. Sharp changes in new ASC entry align with less generous Medicare fees.
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Affiliation(s)
- Elizabeth L. Munnich
- Department of EconomicsCollege of Business, University of LouisvilleLouisvilleKentuckyUSA
| | - Michael R. Richards
- Department of EconomicsHankamer School of Business, Baylor UniversityWacoTexasUSA
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Richards MR, Seward JA, Whaley CM. Treatment consolidation after vertical integration: Evidence from outpatient procedure markets. JOURNAL OF HEALTH ECONOMICS 2022; 81:102569. [PMID: 34911008 PMCID: PMC8810743 DOI: 10.1016/j.jhealeco.2021.102569] [Citation(s) in RCA: 11] [Impact Index Per Article: 5.5] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 06/16/2020] [Revised: 11/01/2021] [Accepted: 11/23/2021] [Indexed: 06/14/2023]
Abstract
Hospital ownership of physician practices has grown across the US, and these strategic decisions seem to drive higher prices and spending. Using detailed physician ownership information and a universe of Florida discharge records, we show novel evidence of hospital-physician integration foreclosure effects within outpatient procedure markets. Following hospital acquisition, physicians shift nearly 10% of their Medicare and commercially insured cases away from ambulatory surgery centers (ASCs) to hospitals and are up to 18% less likely to use an ASC at all. Altering physician choices over treatment setting can be in conflict with patient and payer cost, convenience, and quality preferences.
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Affiliation(s)
- Michael R Richards
- Department of Economics, Hankamer School of Business, Baylor University, One Bear Place, Waco TX 76798, United States.
| | - Jonathan A Seward
- Department of Economics, Hankamer School of Business, Baylor University, One Bear Place, Waco TX 76798, United States.
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Robinson JC, Whaley CM, Brown TT. Price Differences To Insurers For Infused Cancer Drugs In Hospital Outpatient Departments And Physician Offices. Health Aff (Millwood) 2021; 40:1395-1401. [PMID: 34495715 DOI: 10.1377/hlthaff.2021.00211] [Citation(s) in RCA: 8] [Impact Index Per Article: 2.7] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/05/2022]
Abstract
The prices paid in 2019 by Blue Cross Blue Shield health plans in hospital outpatient departments were double those paid in physician offices for biologics, chemotherapies, and other infused cancer drugs (99-104 percent higher) and for infused hormonal therapies (68 percent higher). Had these plans excluded hospital clinics from their networks, channeling all of the infusions to physician offices, they would have saved $1.28 billion per year, or 26 percent of what they actually paid. Had they relied on cost-sharing incentives to channel infusions to physician offices-with either uniform 20 percent coinsurance or reference pricing-they would have realized savings but increased the financial burden on patients who received care at the higher-price hospital clinics. Under 20 percent coinsurance, patients' payment obligations for care at hospital clinics would have exceeded those for care in physician offices by a median of 67 percent for biologics, 72 percent for chemotherapies, 87 percent for hormonal therapies, and 75 percent for other cancer drugs. Large savings are potentially available to commercial insurers from shifting cancer infusion care to nonhospital settings, but cost-sharing burdens could become very high for patients.
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Affiliation(s)
- James C Robinson
- James C. Robinson is the Leonard D. Schaeffer Professor of Health Economics in the Division of Health Policy and Management, School of Public Health, at the University of California Berkeley, in Berkeley, California. He is a Health Affairs contributing editor
| | - Christopher M Whaley
- Christopher M. Whaley is an assistant adjunct instructor of public health at the School of Public Health, University of California Berkeley, and a policy researcher in health care at the RAND Corporation in Santa Monica, California
| | - Timothy T Brown
- Timothy T. Brown is an associate adjunct professor of health economics, School of Public Health, University of California Berkeley
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A Novel, Synergistic Model in Total Joint Arthroplasty: A Report of 2 Specialty Hospitals With Joint Ownership Between Physicians and Healthcare Systems. J Arthroplasty 2019; 34:1867-1871. [PMID: 31101390 DOI: 10.1016/j.arth.2019.04.037] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.6] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Received: 02/12/2019] [Revised: 03/24/2019] [Accepted: 04/17/2019] [Indexed: 02/01/2023] Open
Abstract
BACKGROUND In 2010, the Affordable Care Act introduced new restrictions on the expansion of physician-owned hospitals (POHs) due to concerns over financial incentives and increased costs. The purpose of this study is to determine whether joint ventures between tertiary care and specialty hospitals (SHs) allowing physician ownership (POHs) have improved outcomes and lower cost following THA and TKA. METHODS After institutional review board approval, a retrospective review of consecutive series of primary THA and TKA patients from 2015 to 2016 across a single institution comprised of 14 full-service hospitals and 2 SHs owned as a joint venture between physicians and their health system partners. Ninety-day episode-of-care claims cost data from Medicare and a single private insurer were reviewed with the collection of the same demographic data, medical comorbidities, and readmission rates for both the SHs and non-SHs. A multivariate regression analysis was performed to determine the independent effect of the SHs on episode-of-care costs. RESULTS Of the 6537 patients in the study, 1936 patients underwent a total joint arthroplasty at an SH (29.6%). Patients undergoing a procedure at an SH had shorter lengths of stay (1.29 days vs 2.23 days for Medicare, 1.15 vs 1.86 for private payer, both P < .001), were less likely to be readmitted (4% vs 7% for Medicare, P = .001), and had lower mean 90-day episode-of-care costs ($16,661 vs $20,579 for Medicare, $26,166 vs $35,222 for private payers, both P < .001). When controlling for the medical comorbidities and demographic variables, undergoing THA or TKA at an SH was associated with a decrease in overall episode costs ($3266 for Medicare, $13,132 for private payer, both P < .001). CONCLUSION Even after adjusting for a healthier patient population, the joint venture partnership with health systems and physician-owned SHs demonstrated lower 90-day episode-of-care costs than non-SHs following THA and TKA. Policymakers and practices should consider these data when considering the current care pathways.
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