Read the following attachments: ?Health Care Market Concentration Trends in The United States: Evidence and Policy Responses? ?Industry Trends: Key Trends in Healthcare for 2020 and Beyond?
Read the following attachments:
Health Care Market Concentration Trends in The United States: Evidence and Policy Responses
Industry Trends: Key Trends in Healthcare for 2020 and Beyond
Address the following in 400 to 500 words,
- Describe population health trends and quality management trends in the past 6 months to 1 year in detail.
- Summarize the importance of population health trends and quality management trends as well as possible impacts on a healthcare organization of your choice.
- Assess the advantages and disadvantages of a healthcare organization that rides population health trends and quality management trends.
- Support your response with a minimum of two scholarly sources that were published in the last 5 years. Be sure to cite your references using proper APA Style
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This article will differ from our past articles on key trends in healthcare in part as a result of the up- coming presidential election. The market land-
scape has begun to change since 2016 in the commercial and government sectors of the healthcare ecosystem. Factors contributing to the progress—such as relaxed rules for commercial insurance or Employee Retirement Income Security Act plans, administrative simplification, and the US Food and Drug Administration (FDA)’s effi- ciency in drug reviews and approvals—to date have been White House policy changes along with congressional inaction; administrative agency streamlining, downsizing, and outsourcing; and the emergence of state-level action in place of federal action on a number of key economic sectors related to, or including, healthcare.
Therefore, this article takes a top-level look at the 3 key themes of market dynamic (ie, commercial), state-, and federal (ie, government)-level trends as they affect healthcare trends by integrating cost, quality, and access to care. Some of these trends have been underway for some time but have not been very visible. The expecta- tion is that 2020 could create a tipping point for key economic sectors that will emerge more visibly should President Trump get re-elected. Even without that elec- tion outcome, some trends are likely to sustain them- selves through grassroots public support on healthcare.
Market Trends Are Increasingly Dynamic Consumerism and transparency in healthcare have
been trending for the past few years but will likely take on added significance in 2020. The growing costs for consumers show no signs of slowing down. Consumers, by necessity, have realized that they need to become more engaged in ensuring that they are getting the best value for their money spent on healthcare. They are be- coming more proactive in demanding transparency and choice in their care experience. Healthcare providers’ success will depend on their ability to meet consumers’ needs and expectations. Providers will need to manage the healthcare supply chain to offer consumers the best quality, access, and cost-efficient choices.
Several marketplace dynamics (Table 1) drive the increased interest in consumerism and transparency at
the state and federal levels. These include downside risk arrangements and increased out-of-pocket (OOP) costs.
Downside Risk Arrangements Healthcare providers continue to make progress in
adopting value-based care payment models. This success with programs that incentivize providers for delivering quality care has led providers to consider seriously taking on more financial risk as a strategy to succeed in the next 3 to 5 years. Providers will have day-to-day financial re- sponsibility for their patient population, with increased downside risk arrangements.
When deciding to take on the management of greater risk, providers will need to expand home and telehealth services in the face of a continued decrease in rural hos- pitals. Providers will need to factor in the importance of social determinants of health and increased transparency when developing programs to manage their sickest mem- bers. Site-of-care treatment becomes an increasingly important factor in a provider’s strategy.
Although taking on upside and downside financial risks through value-based contracts is still years away, according to a recent survey of healthcare leaders con- ducted by HealthCare Executive Group and Change Healthcare, this trend will take on increasing impor- tance in healthcare.1
Out-of-Pocket Costs In an analysis by TransUnion Healthcare, patients’
OOP costs for inpatient services increased, on average, by approximately 14% between 2017 and 2018.2 Patients’ deductibles and copays averaged $4659 for an inpatient visit in 2018 compared with $4086 in 2017. The outpa- tient OOP costs averaged $1109 in 2018 versus $990 in 2017, an increase of approximately 12%. In 2018, the average OOP bill for a trip to the emergency department was $617, 7% more than the $577 cost in 2017.2
How consumerism plays out in the real world varies widely. For example, healthcare companies of all types are placing increasing importance on their value com- munication strategies. Employers focus on their benefit offerings as part of their value with the workforce, and manufacturers are increasing their investment in the
Key Trends in Healthcare for 2020 and Beyond By F. Randy Vogenberg, PhD, and John Santilli, MBA Dr Vogenberg is Principal, Institute for Integrated Healthcare, and Board Chair, Employer-Provider Interface Council, Greenville, SC; Mr Santilli is President, Access Market Intelligence, LLC, Trumbull, CT.
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creation of value-based scientific and marketing materi- als, as well as in their stakeholders. Despite this, little actionable research has been done on the challenges and opportunities with these communications or with the people involved in value communication and their in- tended audience.
The continued increase in healthcare costs has result- ed in insured consumers paying more of the bill for their healthcare in premiums and OOP costs. The growing total cost to consumers is resulting in a demand for more insight and transparency into healthcare costs. This de- mand has resulted in additional information necessary for consumer comparison shopping, now that the Centers for Medicare & Medicaid Services (CMS) has required hos- pitals to post their standard charges online, and health plans are using consumer experience and patient-reported outcomes measures, among other market changes.
At the same time, reimbursement pressures have re- sulted in increasing numbers of hospital closures since late 2017.3 This market trend, especially in rural areas, portends a different issue for healthcare access that could be partially addressed through telehealth, along with the expansion of community-based clinic offerings that in- clude retail pharmacies as health spots. Likewise, ad- dressing social determinants of health takes on added importance to rural and urban areas as part of a compre- hensive population health strategy (Table 2). Social determinants of health are conditions in the local pa- tient environment in which people live, learn, work, worship, and play that affect a wide range of health, functioning, and quality-of-life outcomes and risks.4
State-Level Trends Are Increasingly Important The multiyear shifting of federal controls over select
healthcare-related decision-making has emboldened state legislatures to act when Congress has been unable to do so. As a result, laws requiring pharmacy benefit management registrations have been on the rise, while faster approvals that allow the broader use of prescription drugs (eg, naloxone) are addressing fast-changing public health issues, such as the opioid crisis, in most states. In addition, regulatory changes resulting from the Afford- able Care Act (ACA) have also contributed to state-lev- el engagement in healthcare change. Coupled with the current “healthcare for all” movement and select cases decided by the federal courts that support further ACA changes or elimination of the ACA, less federal control over state matters seems likely.
Rather than focus on illness, the healthcare industry is moving toward wellness as part of a value-based sys- tem of care.5 Virtual care and the use of technology will allow a continued focus on population health, which is an increasing challenge for states in balancing their
urban versus rural areas. Similarly, challenges remain with balancing the economics of healthcare delivery with state financial obligations (eg, pensions, Medicaid, infrastructure services) and the politics of running a state government.5
Other aspects of market change, such as pharmaco- genomic testing, have increasingly been incorporated into medical plan coverage through state insurance com- mission–approved plan offerings. Allowing more testing for targeting appropriate drug use has gained acceptance, along with paying for related services that will create delivery system efficiencies and cost-savings.
Harnessing technology to aid the management of healthcare costs remains a standard strategy for states as purchasers and payers of care. At the same time, subtle changes in government oversight or regulatory control contribute to the ripple effects of change in the health- care ecosystem (eg, allowing for the increased use of technology or removing regulatory requirements that cost administrative time and/or money while still achiev- ing desired clinical outcomes).
Federal Trends Focus on Market Administration and Government Programs
The US Department of Justice has allowed more horizontal and vertical integration of health plans (eg, CVS and Aetna, CIGNA and Express Scripts). How that plays out in the marketplace remains to be seen
Table 1 Marketplace Change in Context of Dynamic Healthcare Issues
Cost of care Access to care Quality of care
Downside risk arrangements
Decrease in rural hospitals or healthcare
CMS monitoring shifts
Increased OOP costs Expanding home and telehealth Transparency promoted for patient use
More HSA-eligible plans and high-deductible health plans
Evolving pharmacy-based primary care services
Social determinants of health incorporated into health-system reimbursement
CMS indicates Centers for Medicare & Medicaid Services; HSA, health savings account; OOP, out- of-pocket.
Table 2 Government in Context of Dynamic Healthcare Issues Cost of care Access to care Quality of care
Allow for a wider variety of shared risk arrangements
Dealing with rural hospital or medical care “deserts”
CMS monitoring shifts, evaluating new measures
Allow for more health plan alternatives to traditional or ACA-eligible plans
Expanding home and telehealth: telemedicine and telepharmacy
Information transparency promoted for commercial plan and patient use
Allow for more HSA- eligible plans and determine opportunities to expand patient choice
Evolving pharmacy and community care–based primary care services
Social determinants of health support services encouraged for coverage in health-system reimbursement
ACA indicates Affordable Care Act; CMS, Centers for Medicare & Medicaid Services; HSA, health savings account.
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from the perspectives of economic and healthcare out- comes improvement.
The FDA has launched pathways toward faster ap- provals for generic or biosimilar drugs, as well as digi- tized medicine (ie, drugs, devices, diagnostics) and precision medicine, including approvals for niche or rare conditions or for applications with nonspecialty drugs. The rapid growth, administration, and breadth of use of personalized medicines are challenging tradition- al insurance administration processes beyond the costs of care only.
Artificial intelligence, cloud computing, and block- chain healthcare applications are poised to grow rapidly in 2020 and beyond. Such computing ease and innovation have already begun to challenge the existing safeguards for personal health data, while also facilitating increased in- sights gleaned from available data, at a faster pace.
As a result of the increasing use, applications for, and storage of data, cybersecurity has emerged to be even more important than before for healthcare providers and health- care systems that are entrusted with that personal informa- tion under the HIPAA (Health Insurance Portability and Accountability Act) and the Health Information Tech- nology for Economic and Clinical Health Act. Contain- ing the legal flow of data and the chain of control beyond the patient as a user of these data are becoming more complex. This flow of data represents a positive develop- ment, by enabling patients to become more engaged in their treatments, as well as a negative step, as the techno- logic innovations offer ever increasingly easier or simpler transfers of data that can be susceptible to hacking.
Conclusion Not all aspects of the coming industry trends in
healthcare are covered here. Instead, we identified a high-level context of trends that are likely to emerge or grow to maturation. The amount and pace of change in most aspects of healthcare mirror other sectors of the economy, but these were not readily apparent until the passage of the ACA in 2010 refocused attention on this economic sector.
Transparency has been elevated as consumerism marches forward in the face of steadily increasing health-
care costs. Nonetheless, full transparency regarding all the costs of care remains difficult to achieve or to act on to facilitate further changes.
State responses to the shifting of federal controls over decision-making boundaries have emboldened state leg- islatures to act when Congress has been unable to do so. From alternative benefit plan options, hospital closures, marijuana access, and opioid treatment legislation to healthcare infrastructure issues, states have increasingly acted when the federal government has allowed them.
Federal policy proposals or regulatory changes have already reshaped the commercial insurance landscape for 2020, while allowing longer-term change to emerge at a more incremental pace through federal programs man- aged by CMS. Commercial markets continue to be fa- vored for the introduction of innovation, while CMS moves to make its changes where and how it can in Medicare and Medicaid.
Finally, the wild card of a presidential election re- mains to be played out, but change will certainly happen. Whomever occupies the White House and holds con- gressional majorities certainly will have a critical influ- ence on healthcare trends for late 2020 and beyond.
Author Disclosure Statement Dr Vogenberg and Mr Santilli have no conflicts of interest
to report.
References 1. LaPointe J. Value-based contracts with risk 3 to 5 years away for providers. RevCycleIntelligence.com. March 19, 2019. https://revcycleintelligence.com/ news/value-based-contracts-with-risk-3-to-5-years-away-for-providers. Accessed August 26, 2019. 2. TransUnion. Out-of-pocket costs rising even as patients transition to lower cost settings of care: new TransUnion Healthcare analysis found that most pa- tients face a $500+ cost burden. June 25, 2019. https://newsroom.transunion. com/out-of-pocket-costs-rising-even-as-patients-transition-to-lower-cost-settings- of-care/. Accessed August 26, 2019. 3. Ramesh T, Gee E. Center for American Progress. Rural hospital closures reduce access to emergency care. Center for American Progress; September 9, 2019. www.americanprogress.org/issues/healthcare/reports/2019/09/09/474 001/rural-hospital-closures-reduce-access-emergency-care/. Accessed October 23, 2019. 4. HealthyPeople.gov. Social determinants of health. www.healthypeople. gov/2020/topics-objectives/topic/social-determinants-of-health. Accessed Au- gust 26, 2019. 5. Deloitte. 2019 global health care industry outlook: shaping the future. www2. deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health- Care/gx-lshc-hc-outlook-2019.pdf. Accessed August 26, 2019.
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By Brent D. Fulton
Health Care Market Concentration Trends In The United States: Evidence And Policy Responses
ABSTRACT Policy makers and analysts have been voicing concerns about the increasing concentration of health care providers and health insurers in markets nationwide, including the potential adverse effect on the cost and quality of health care. The Council of Economic Advisers recently expressed its concern about the lack of estimates of market concentration in many sectors of the US economy. To address this gap in health care, this study analyzed market concentration trends in the United States from 2010 to 2016 for hospitals, physician organizations, and health insurers. Hospital and physician organization markets became increasingly concentrated over this time period. Concentration among primary care physicians increased the most, partially because hospitals and health care systems acquired primary care physician organizations. In 2016, 90 percent of Metropolitan Statistical Areas (MSAs) were highly concentrated for hospitals, 65 percent for specialist physicians, 39 percent for primary care physicians, and 57 percent for insurers. Ninety-one percent of the 346 MSAs analyzed may have warranted concern and scrutiny because of their concentration levels in 2016 and changes in their concentrations since 2010. Public policies that enhance competition are needed, such as stricter enforcement of antitrust laws, reducing barriers to entry, and restricting anticompetitive behaviors.
T he US health care system relies on competition in the provider and health insurer markets to lower costs and improve quality. Howev- er, the market concentration of
hospitals and insurers has been a matter of con- cern for several decades.1–6 More recently, Mar- tin Gaynor and colleagues reviewed studies of the competitive landscape of hospitals, health insurers, and physician services and found that hospital and health insurer markets have be- come more concentrated since the 1990s.7
To measure market concentration, the Anti- trust Division of the Department of Justice (DOJ) and Federal Trade Commission (FTC) of- ten use the Herfindahl-Hirschman Index (HHI),
which is calculated by squaring the market shares of each firm competing in a market and summing those values across all firms, resulting in a range from 0 to 10,000.8 Gaynor and col- leagues reported that 65percent ofMetropolitan Statistical Areas (MSAs) had highly concentrat- ed hospital markets (those with HHIs greater than 2,500) in 1990, and that share had in- creased to 77 percent by 2006.7 By way of exam- ple, an HHI of 2,500 could result from each of four firms in a given market having a 25 percent market share. There is less historical informa- tion on concentration in physician markets, but Gaynor and colleagues reported that those mar- kets were generally unconcentrated (with HHIs less than 1,500), particularly for primary care
doi: 10.1377/hlthaff.2017.0556 HEALTH AFFAIRS 36, NO. 9 (2017): 1530–1538 ©2017 Project HOPE— The People-to-People Health Foundation, Inc.
Brent D. Fulton ([email protected] berkeley.edu) is an assistant adjunct professor in the School of Public Health at the University of California, Berkeley.
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physicians. Although provider concentration could pro-
duce efficiencies that benefit purchasers of health care services, the evidence does not point in that direction. For example, reviews of studies of hospital markets have found that concentrat- ed markets are associated with higher hospital prices, with price increases often exceeding 20 percent when mergers occur in such mar- kets.7,9 Of even greater concern, the reviews found that these price increases did not appear to improve quality: In some cases, higher hospi- tal concentration was associated with higher mortality rates. In comparison to the number of hospital
market studies, a relatively small number of studies has examined the impact of physician organization concentration. Overall, these stud- ies found that higher concentration was associ- ated with higher physician prices across a range of services, including three types of commonly billed office visits,10 office visits across ten prom- inent specialties,11 orthopedics,12 cardiology and orthopedics,13 and common outpatient pro- cedures.14
A significant share of health care services in theUnited States is purchased by health insurers via employer-sponsored insurance and the indi- vidual market, including the Affordable Care Act Marketplaces. Increased health insurer con- centration could result in lower premiums to employers and consumers along two pathways: having efficiencies from economies of scale and insurers’ negotiating lower prices with hospitals and physician organizations that are attempting to charge prices above the competitive level. To some extent, research shows that this is happen- ing, with higher health insurer concentration being associatedwith lower hospital15–17 and phy- sician prices.10,17 However, the evidence shows that these price reductions are not passed on to consumers. A number of studies have found that higher health insurer concentration leads to higher premiums,7,18 including for employers19–21
and for individuals purchasing Marketplace plans.22 (This effect was moderated in Covered California, theMarketplace in an active-purchas- er state that selectively contracts and negotiates premiums with insurers.)23
Objectives The Council of Economic Advisers recently ex- pressed concern about the lack of estimates of market concentration acrossmany sectors of the US economy.24 This study fills that gap for the most recent period for a significant portion of the health care sector. First, it shows how hospi- tal, physician organization, and health insurer
market concentration changed at the MSA level from 2010 to 2016. Second, it reports the num- ber of MSAs that may have warranted concern and scrutiny, based on themarket concentration level in 2016 and the change in concentration since 2010. Third, because of the large increase in primary care physician market concentration during this period, it examines whether the oth- er health care subsectors’ concentration levels and changes were associated with this increase.
Study Data And Methods Market Concentration Measure And Data Sources Market concentration was measured by the HHI, because of its widespread use. The sources used to estimate HHIs included the fol- lowing annual data for the period 2010–16 (as of January 1 each year): for hospitals, the American Hospital Association (AHA) Annual Survey data- base; for physicians, the SK&A Office Based Physicians Database provided by IMS Health (now Quintiles); and for insurers, the Managed Market Surveyor File from HealthLeaders Inter- Study (now Decision Resources Group). The market shares of hospitals, physician organiza- tions, and insurerswerebasedon thenumbers of inpatient admissions, physicians, and enrollees, respectively. Market concentrationwasmeasured using the
product and geographic market definitions that are discussed next. Product Market Definitions The hospital
product was defined as a cluster of all inpatient services from short-term general hospitals. Hospital systems were treated as a single firm because they typically negotiate with payers as a system. The physician organization products included
services from the following five types of pro- viders: primary care physicians, cardiologists, oncologists/hematologists, radiologists, and or- thopedists. These types were selected because in each case at least 10,000 physicians were includ- ed in the data source, and all of the types except for primary care physicians are among the most highly compensated types. Physician organiza- tions owned by a group medical practice, hospi- tal, or health care system (which always included at least one hospital) were treated as a single firm. The four specialist physician organization products were combined into one HHI by calcu- lating the mean HHI across the specialties, weighted by the number of physicians in each specialty. The health insurer product was defined as
point-of-service plans and plans with preferred provider organizations, exclusive provider or- ganizations, and health maintenance organiza-
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tions for the employer-sponsored market—in- cluding fully and self-insured plans—and the individual market outside of the Marketplaces (because these two markets could not be sepa- rated in the data). This product was constructed because an insurer’s market share of enrollees across these lines of business is correlated with the insurer’s market share of purchased hospital and physician services, thus indicating the con- centration level of the primary purchasers of provider services. Marketplace, Medicare Advantage, and Med-
icaid managed care enrollees were excluded, be- cause provider reimbursement rates for these enrollees are low, constrained by Medicare fee- for-service prices and Medicaid managed care premiums, or both. Additional information on the product definitions is in the online Ap- pendix.25
Geographic Market Definitions The geo- graphic market for hospitals, specialist physi- cian organizations, and insurers in this study was an MSA, which has been commonly used in other studies on market concentration of hospitals,15,26 specialist physicians,27 and insur- ers.15,26,28 The Office of Management and Budget delineated 382 MSAs in the United States,29 in which 278 million people (86 percent of the US population) resided in 2016, according to the Census Bureau.30 The geographic market for primary care physician organizations was a pri- mary care service area (PCSA), the smallest geographic area that can be a discrete service area for primary care physicians.31 The Health Resources and Services Administration defined 7,144 PCSAs in the United States,32 and PCSA- level HHIs were aggregated to the MSA level by weighting them using the PCSA population. Summary Measure To Evaluate Changes In
Market Concentration When the DOJ or FTC evaluates a proposed merger or acquisition, the agency considers how the proposed action will change the market concentration and what the resulting concentration will be. The agencies’ Horizontal Merger Guidelines8 specify the follow- ing postmerger HHI thresholds and the changes in the HHI that warrant different levels of con- cern and scrutiny, as the basis for further inves- tigation: The level is high if theHHI ismore than 2,500 and the change in HHI is more than 200, because the merger or acquisition is “presumed to be likely to enhancemarket power”; moderate either if the HHI is more than 2,500 and the change in HHI is at least 100 and not more than 200, or if the HHI is at least 1,500 and not more than 2,500 and the change inHHI is at least 100, because the merger or acquisition “potentially raise[s] significant competitive concerns and of- ten warrant[s] scrutiny”; and low if either the
HHI is less than 1,500 or the change in HHI is less than 100, because in this case the merger or acquisition is “unlikely to have adverse competi- tive effects and ordinarily require[s] no further analysis.” Thesecriteriawereapplied toevaluate changes
in market concentration at the MSA level in the period 2010–16 and to identify the number of MSAs that might warrant either a high or mod- erate level of concern and scrutiny. The change in HHI in each MSA for each product or product grouping was based on regressing the HHI on theyear, to estimate the changeusingup to seven data points (for more details, see the Appen- dix).25 Because the criteria were based on both changes in concentration and ending levels of concentration, an MSA that was highly concen- trated (for example, one with an HHI of 5,000) in a particular subsector in 2016 would not even warrant moderate concern and scrutiny unless the HHI increased by at least 100 points. There- fore, these criteria were relevant for analyzing concentration trends and ending levels, not merely concentration levels at a point in time. Regression Models From 2010 to 2016, the
concentration of primary care physician organ- izations increased more than that of any other subsectors I examined. Therefore, I explored fac- tors associated with the 2016 levels and this change using four regression models. In models 1 and 2, the dependent variable was the primary care physician organization HHI in 2016, and the key independent variables were the HHIs of hospitals, specialist physician organizations, and insurers in the same year. These models tested whether primary care physician concen- tration in 2016 was associated with concentra- tion levels in other subsectors. Model 2 added health care and demographic control variables described in the Appendix.25
In models 3 and 4, the dependent variable was
Although provider concentration could produce efficiencies that benefit purchasers, the evidence does not point in that direction.
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