NEJM Interview: Loren Adler on regulatory strategies for addressing factors that make consolidation in health care especially profitable.

The organization of US healthcare delivery has increasingly become centered around large corporate entities. Although such corporatization doesn't have a single cause, predictable harms often arise in circumstances in which market discipline is lacking and policies make consolidation especially profitable. I'm Stephen Morrissey, Managing Editor of the New England Journal of Medicine, and I'm talking with Lauren Adler, a fellow and Associate Director at the Center on Health Policy at the Brookings Institution. Mr. Adler has written a perspective article about opportunities for regulation and policymaking to address harms associated with corporatization. It's the final article in the journal series on the corporatization of US healthcare. Mr. Adler, broadly, what's known about the effects of corporatization on costs and quality of healthcare and on healthcare labor markets?

We've learned a lot over the last five to 10 years. There's been a burgeoning research on the effects of corporatization of medicine, and we've seen a large impact of private equity firms coming in and buying up physician practices. More recently, we've seen insurers like UnitedHealthcare, their arm Optum, coming in and buying up physician practices. And obviously, hospitals and health systems have been sort of the core driver of consolidation in the physician market as well. I think we now have a pretty broad evidence base that this sort of corporatization tends to increase prices, increase the prices that consumers and employers end up paying for healthcare. A lot of that seems to be operating through market power. There are some recent studies that try to differentiate acquisitions that increase market power, where they are combining multiple physician practices within the same region or multiple orthopedic practices, multiple of the same specialty. That is certainly, there seem to be price effects there. We have some evidence on the quality side of the ledger. I'd say that evidence is still a bit more nascent. In the nursing home space, there has been some evidence of potentially adverse consequences of private equity buying up nursing homes. In the hospital space, the evidence is more mixed, and then in physician space, I don't think we have great evidence of have there really been changes in sort of the quality of care that patients are getting. So there are still, I think, important questions to, to nail down.

You say in your article that factors that would typically impose discipline in other markets may have weak effects in healthcare. Why is that the case?

I think part of the issue here is in traditional markets, there are often quality and price signals that patients can often react to cleanly in if a firm raises prices or cuts quality, consumers can leave. In healthcare, that discipline is much weaker typically. A patient may not know when quality has fallen. It's often hard to judge the quality of hospitals or a nursing home. They may not have a good alternative. There may not be sort of an alternative source of care that they can go to, and patients often do not directly observe the price. So I think that is creating room for corporate strategies that would be