September 05, 2019

Good morning. Today's word count is 840 words, or ~3 minutes.

1 big thing: A reality check on hospital mergers

Illustration: Sarah Grillo/Axios

A new report funded by the American Hospital Association claims hospital mergers result in better care and savings for patients. But every other independent study shows the exact opposite — that hospital mergers lead to less competition and higher prices, Axios' Bob Herman reports.

Why it matters: Hospitals represent the largest chunk of U.S. health care spending. And hospitals are acquiring more market power and commanding higher prices — bills that every American pays for in some part.

Driving the news: AHA CEO Rick Pollack told journalists Wednesday that hospital mergers "create efficiencies that unleash savings," and that his organization's report proved it.

Yes, but: The report is not close to being an independent assessment.

  • A large portion relies on non-random interviews of hospital executives who have been involved with acquisitions.
  • The data analysis focuses on costs, not prices, which skews the conclusions.
  • These analysts are paid consultants, and the report was not peer-reviewed.

Reality check: Academic researchers countered the AHA's report by laying out their own independent work.

  • One of the most comprehensive studies, which was published last year and is based on commercial insurance claims data, found that hospitals with little competition command higher prices and more favorable contractual terms, said Zack Cooper, a Yale health economist and lead author of the study.
  • Hospital systems in different metro areas also raise prices when they combine, said Leemore Dafny, a Harvard health economist.
  • Merging systems don't really save money on routine items like supplies and devices, said Stuart Craig, a research student at the University of Pennsylvania.
  • Large hospital systems beget even larger systems, which operate more like publicly traded companies than tax-exempt charities.

Not all hospital mergers are inherently bad. But "consolidation … is not the same thing as integration," said Martin Gaynor, a health economist at Carnegie Mellon University.

2. A county jail's health care politics

American jails and prisons end up becoming de facto health care institutions, but there can be little accountability for the private companies in charge of inmates' care, Reuters reports.

Case in point: Reuters dives into the story of a Georgia county jail, the company hired to manage the jail's health care services, and how local politics tied into it all.

  • Chatham County hired a jail monitor charged with investigating the jail's health care following a string of deaths. The monitor delivered scathing reports detailing staff shortages, unclear guidelines and failures to give inmates their medication.
  • But the monitor drew backlash from the sheriff, who received campaign contributions from the company running the jail's health care services. The jail's pharmacy operator was also politically connected.
  • The health care company, CorrectHealth, ended up retaining its contract with the county, and fines recommended by the monitor were waived. The monitor's contract was terminated.
  • Since CorrectHealth took over the jail's health care services in 2016, 6 inmates have died.

The big picture: "The Chatham County Detention Center's troubles offer a look into the challenges American communities face in holding accountable the private companies that have been entrusted with managing healthcare services at a growing number of jails and prisons," Reuters writes.

3. CVS-Aetna merger becomes official

Federal Judge Richard Leon has officially approved CVS Health's acquisition of Aetna, writing in an opinion that the companies' settlement of selling off Medicare drug plans "is well 'within the reaches' of the public interest," Bob writes.

The big picture: CVS has been operating as if the merger was completed, and legal experts said the judge didn't have the authority to unwind the deal. This final order puts everything to rest, including concerns that combining CVS and Aetna will lead to anti-competitive conduct in different health care markets.

4. The toll of family separations

Illustration: Aïda Amer/Axios

During the family separation crisis last year, Health and Human Services facilities struggled to provide adequate mental health care to migrant children as required under the Flores agreement, according to a new agency watchdog report.

Why it matters: Many of these migrant minors had already faced significant trauma in their home countries and in their travel to the border — such as physical abuse, kidnapping, rape and other forms of violence, according to the report, my colleague Stef Kight writes.

  • In addition, child migrant care facilities told the Office of Inspector General "addressing the unique mental health needs of separated children was particularly challenging."

What to watch: Dozens of migrant parents are preparing to sue the U.S. government, claiming their children were harmed while in HHS custody during family separation, AP reported last month. It found taxpayers could end up having to pay $200 million in damages.

Go deeper: Child detention is creating a mental health crisis

5. Michigan bans flavored e-cigarettes

Michigan yesterday became the first state to ban the sale of flavored e-cigarettes after the state's health department deemed youth vaping a public health emergency, the Washington Post reports.

The big picture, per Axios' Sam Baker: This first ban came fast, all things considered. And it’s notable that it's not coming from California or New York, which are usually at the leading edge of banning things. That's a clear sign that the next phase of vaping's political troubles is just beginning.

  • The ban will cover retail and online sales, lasting for 6 months. State legislators will then have the option to renew it as state officials mull a more permanent solution.

The backdrop: While Michigan is the first state to ban flavored e-cigarettes, San Francisco was the first major city to do so in June. The ban has prompted e-cigarette maker Juul to pour millions into overturning it, Axios' Rashaan Ayesh writes.

  • Almost 300 people have been hospitalized in the U.S. from lung-related illnesses linked to vaping — prompting the CDC to issue a formal warning against the use of e-cigarettes.
  • Oregon health officials are investigating the death of someone who had one of these lung illnesses. If it's confirmed, it'll be the country's second reported death of this kind, according to NBC News.

Go deeper: Juul's growing kids crisis