Health Affairs Forefront
Provider Prices In The Commercial SectorThe Missing Piece In Health Care Transparency: Ownership Transparency

Editor’s Note:
This article is the latest in the Health Affairs Forefront series, Provider Prices in the Commercial Sector, featuring analysis and discussion of physician, hospital, and other health care provider prices in the private-sector markets and their contribution to overall spending therein. Readers are encouraged to review the Call for Submissions for this series. We are grateful to Arnold Ventures for their support of this work.
Health care transparency is one of those rare policies with bipartisan support. On September 7, GOP House leaders released a bill, the Lower Costs, More Transparency Act, to improve the transparency of health care prices, bills, and the practices of pharmacy benefit managers (PBMs). The bill reconciles a series of health care transparency proposals put forward by the three committees with jurisdiction on health care, House Energy & Commerce, Ways & Means, and Education & Workforce. Although all the proposals purport to increase transparency in health care, they do so in different ways and to different extents. Notably, the Lower Costs, More Transparency Act is missing a key form of transparency: transparency in the ownership of health care providers.
Ownership transparency is an essential tool to achieving the overarching goal of lowering health care costs. Unlike in many other countries where prices are largely determined by the government, the prices of health care services in the United States are determined by market forces. Differences in providers’ and insurers’ bargaining power are a key driver of variation in commercial health care prices and underscore the concerns of regulators and policymakers about the effects of ongoing provider consolidation on health care costs.
Ownership transparency is also critical to understanding the changing corporate landscape of health care. For example, patients struggle to figure out who owns their physician’s practice, whether it’s a private equity firm, an insurance company, a health system, Amazon, or a giant conglomerate, such as CVS-Aetna-Express Scripts or UnitedHealth-Optum-OptumRx. Patients need to know whether their physicians are employed by corporate entities with vested financial interests, as these relationships may influence the accessibility, affordability, and quality of health care services.
With all the discussion of policy proposals to improve transparency in health care, it is easy to be confused or lulled into thinking that policymakers are making meaningful strides to improve transparency writ large. Yet, we need to be clear what purposes different forms of transparency serve and what we lose when they are dropped from consideration.
Different Forms Of Transparency
There are three distinct forms of transparency related to health care services (as opposed to pharmaceuticals): (1) price transparency; (2) billing location transparency; and (3) ownership transparency. Though the Lower Costs, More Transparency Act contains provisions on the first two types, it excludes ownership transparency, except for providers owned by Medicare Advantage plans. This exclusion undermines the effectiveness of price and billing transparency provisions and misses a key opportunity to improve transparency in ownership—a subject of intense interest to patients and purchasers, and it should be for policymakers.
Price Transparency
Price transparency attempts to make the actual prices for health care items and services known to patients, purchasers, and employers, before the service is provided. The Lower Costs, More Transparency Act seeks to improve health care price transparency by codifying in statute the Trump administration’s hospital price transparency and transparency in coverage rules. The House bill would require hospitals to publicize charges, negotiated rates, and out-of-network allowed amounts for 300 common, shoppable services. While the bill would extend price transparency requirements to other services not covered by the existing rules, such as laboratory and ambulatory surgery, the price transparency provisions do not significantly expand the existing levels of disclosures beyond what is already in effect.
Billing Or Location Transparency
Billing or location transparency is a form of transparency that largely serves to advance site-neutral-payment policy. Site neutral payment would, if adopted, equalize reimbursement rates for the same outpatient physician service, regardless of the site of service. Site-neutral payment aims to counteract the incentive for hospitals to acquire physician practices or ambulatory centers to charge higher amounts and facility fees by billing the services as an outpatient department of the hospital. Currently, payers cannot tell where an outpatient service was provided, because the parent facility’s provider number can be used to bill all services.
Billing location transparency would require medical bills and claims forms to include the location of all off-campus outpatient services using unique provider identification numbers for each location, rather than billing all services under the hospital’s provider number. Location transparency is a first and modest step toward a more impactful policy to adopt site-neutral payment.
To be clear, the Lower Costs, More Transparency Act does not currently include a site-neutral payment policy (except for physician-administered drugs under Medicare Part B), but it lays the informational groundwork for such a policy. At the very least, location transparency allows payers, if they have the bargaining power, to push back on the site-of-service differential or unwarranted facility fees.
Ownership Transparency
Ownership transparency refers to the disclosure of the identities of individuals or entities that have an ownership stake in health care providers. Historically, ownership within health care was characterized by a single entity that served as a provider’s sole owner. For example, physicians often owned their own independent practice or were employees of a health system. In recent years, however, an influx of commercial corporate investment has led to more complicated and obscure ownership relationships among interrelated entities. Ideally, ownership transparency would involve the development of an updated, modernized data system to: (1) collect data on the identity and attributes of entities that have an ownership stake in health care facilities; and, (2) track changes to ownership resulting from horizontal and vertical mergers, acquisitions, and joint ventures between health systems, health insurers, retailers, and private equity firms. Other bills introduced in the House this year included provisions for ownership transparency, but these requirements were excluded from the Lower Costs, More Transparency Act.
Why Do We Need Ownership Transparency In Health Care?
Transparency in physician and provider ownership is necessary to understand and address the impact of the corporate transformation of the U.S. health care system. Who owns a doctor’s practice, hospital, or nursing home can dramatically affect the cost, accessibility, affordability, and quality of the services. Yet the chain of corporate ownership and web of financial interests are almost totally opaque to patients, purchasers, policymakers, researchers, and regulators.
A longstanding literature has illustrated how variation in ownership structures – such as for-profit status, chain ownership, hospital-affiliation, and private equity ownership, among others – can drive variation in health care prices, spending, quality, and access to care. This is because decisions that directly affect care – such as commercial price negotiations, volumes, referral and coding practices, and staffing– are often driven by the financial interests and market power of the corporate owner.
Despite its importance, data on ownership of health care providers is severely lacking. While the American Hospital Association and Centers for Medicare and Medicaid Services (CMS) collect some information on hospital ownership characteristics (e.g., government, for-profit, or non-profit ownership), this information is insufficient to provide a comprehensive overview of the changing landscape of hospital ownership. Moreover, no systematic source tracks and reports ownership changes of physician practices, ambulatory surgery centers, nursing and assisted living facilities, and other health care entities that can be readily linked to other data sources on the affordability, quality, and accessibility of health care.
CMS does not collect information about health care providers’ parent company, complex organizational structures, or affiliations. Private equity companies are exempt from Securities and Exchange Commission disclosure requirements, and even publicly traded companies do not disclose information granular enough to identify specific physician practice acquisitions. Consequently, researchers must piece together information from various proprietary data sources to characterize ownership attributes.
These proprietary databases, including Pitchbook, CB Insights, S&P Capital IQ, and Irving Levin Associates Health Care M&A databases, can cost tens of thousands of dollars. Compilation of these data involves extensive manual searching to definitively determine ownership information, requires frequent updating, and introduces error and uncertainty. These significant measurement challenges lead to an incomplete picture of the patterns of corporate consolidation and underestimates of its effects. For example, while one team of researchers identified the number of private equity-acquired gastroenterology practices between 2016 and 2020 to be 45, another team estimated the same to be 160 using a different database– a nearly four-fold difference. Given the difficulty and expense, patients, policymakers, researchers, and even government regulators have no way to meaningfully answer the question of who owns a given health care provider.
Lack of ownership transparency allows health care consolidation to intensify unchecked, with corresponding increases in prices. Opacity in ownership obscures the pattern of stealth consolidation through which a single acquirer may monopolize a local market through add-on acquisitions. But these acquisitions typically fall below the reporting threshold under the Hart-Scott-Rodino Act, so they go unreviewed by federal antitrust agencies. For example, acquisitions of physician practices by private equity investors typically follow a “platform and add-on” approach that has been shown to increase health care spending. A recent report found private equity firms have already amassed more than a 30% market share in 28% of metropolitan statistical areas (MSAs), and more than a 50% market share in 13% of MSAs. Expanding ownership transparency would facilitate antitrust scrutiny of the cumulative impact of roll-up acquisitions as outlined in the draft Merger Guidelines issues by the U.S. Federal Trade Commission and Department of Justice in July 2023.
Current Transparency Measures Fall Short
The different forms of transparency in health care—price, location, and ownership—are not substitutes for each other, but complements. All three share the overarching policy goals of bolstering competition, constraining costs, and fostering a high-value and well-functioning health system for all. Improving price and location transparency without ownership transparency limits the power of transparency policy to achieve these goals.
While transparency of prices may improve consumer cost-consciousness and help researchers and policymakers document variation in prices across services, the absence of ownership transparency obscures the context essential to determining which mechanisms drive price variation and inflation—and to designing the appropriate policy response. For example, the same insurer may pay higher prices for imaging services at Facility A compared to Facility B. Without ownership transparency, it is not possible to determine the source of price differential between the facilities: Does Facility B have lower relative prices for a given insurer because it is vertically integrated with the insurer (as in Optum-owned physician practices)? Or does Facility A have higher relative prices because it has market power to demand higher payments commercial insurers? Did the price increase follow acquisition by a private equity company? In the absence of ownership transparency, relevant information on the organizational incentives of health care providers is missing. Filling these information gaps is crucial to design targeted policy responses to foster a high-value health system.
Similarly, location transparency measures without ownership transparency will limit progress toward site-neutral payment reform. In the absence of ownership transparency, payers, regulators, policymakers, and researchers would be unable see the corporate organizational affiliation of the different locations that would be submitting claims under separate provider identifiers. As such, ownership transparency must be viewed as a complementary tool to price and billing transparency, one that is essential to fully leverage the potential of existing transparency provisions.
Conclusion
While the Lower Costs, More Transparency Act is a promising effort to improve health care transparency and lower costs, it lacks a crucial component: ownership transparency. To achieve true transparency in health care, it is essential to disclose who owns and controls health care facilities, physicians, and other providers. Ownership transparency can help prevent conflicts of interest, enhance accountability, promote competition, and must be seen as a complementary measure to price and location transparency to achieve the overarching goal of lowering health care costs.
Authors’ Note
Erin C. Fuse Brown acknowledges James Sherrill for research assistance on this work. Erin Fuse Brown reports funding from Arnold Ventures. Yashaswini Singh reports funding from Arnold Ventures.