New Toolkit for States: Regulating Financialization in the Health Care Systems

Manatt Health to support states in understanding the landscape of financial activity in the health care system and identify opportunities to strengthen their regulatory framework to protect residents from the potential harms associated with financialization.

The toolkit:

• Provides an overview of trends and a summary of the literature on the impact of financialization on the health care delivery system.
• Describes recent federal action taken to study and regulate financial activity in the health care system.
• Highlights recommendations and state best practices.

Key insights include:

• In the past decade, private equity (PE) firms more than 8,000 transactions involving health care entities ($1 trillion in value); however, recent federal and state regulatory scrutiny as well as broader economic factors have created a .
  • Investment in physician specialties increased significantly--more than 75% of doctors are by hospitals, health insurers, PE, or other corporate entities.
  • Though hospitals were once the primary focus of financial activity recently, there has been a shift toward more (e.g., health information technology, dental care, dermatology).
• Investments in the health care system through and have also grown significantly.
• Hospitals, in particular, are increasingly leveraging financial strategies to improve their , pursue returns, and improve their for facility improvements.
• Emerging research highlights the of financialization on health care quality, costs, and access. These impacts create obstacles to state and federal action to improve population health outcomes.
• Though there has been to address these impacts, states have broad authority to regulate financial activity in the health care system and conduct ongoing oversight to protect patients and communities. The recommendations in the toolkit include strategies to (1) strengthen transparency, promote competition, and prevent market abuses; (2) support community-based care; and (3) enhance quality and safety protections.

Support for the toolkit was provided by the State Health and Value Strategies program, a grantee of the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation.

Click here to the full toolkit.