About

Lawton R. Burns is the James Joo-Jin Kim Professor of Health Care Management and Professor of Management at the Wharton School, University of Pennsylvania. He holds a PhD in sociology, an MBA in health administration, and an MA from the University of Chicago, and a BA from Haverford College. His research interests include formal organizations, health care management, hospital-physician relationships, integrated health care, physician networks, physician practice management firms, strategic change, and supply chain management. Dr. Burns has analyzed various sectors of the healthcare industry and has authored multiple books on healthcare systems, innovation, and organizational strategies, including works on the institutional supply chain, healthcare innovation, hospital consolidation, and the U.S. healthcare ecosystem. He has also contributed to understanding healthcare in India and China. As a faculty member at Wharton since 1994, he has served as Chairperson of the Health Care Systems Department and as Director of the Wharton Center for Health Management and Economics. His professional work includes consulting on pharmaceutical outsourcing, antitrust implications of provider organizations, and development of integrated delivery systems. Dr. Burns is recognized for his contributions to health services research and healthcare management education.

Research topics

• Political Science
• Computer Science
• Business
• Economics
• Mathematics
• Law
• Public relations
• Statistics
• Knowledge management
• Economic growth
• Physics

Selected publications

• It's the Healthcare Production Function Dummy… (And Still the Prices Stupid)!

  Health Services Research · 2025-03-25 · 3 citations

  articleOpen accessSenior author

  What is known on this topic Consolidation in health care markets has led to higher prices paid by consumers and increased market power by health systems, providers, and insurers. Price setting is an important policy tool used by the federal and state governments in Medicare, Medicaid, and in antitrust regulation, often based on benchmarks that are supposed to reflect costs and efficient production. What this study adds While healthcare transaction prices get significant attention, policy, and regulatory discussions often ignore the link between production costs and prices, resulting in less attention to the underlying economic issues that contribute to both inefficient production and non-competitive markets in health care. We highlight key limitations in data and publicly available information currently accessible to policymakers, researchers, and consumers to better understand the costs of production and their relationship to pricing. We provide insights and suggestions on how to improve the collection of coherent cost, price, and production data, and how such information can lead to better policy making, including changing value-based payment schemes to incentivize more efficient production of health care services. In their classic article published in the journal Health Affairs in 2003 [1], health economists Gerald Anderson, Uwe Reinhardt, Peter Hussey, and Varduhi Petrosyan declared—“It's the Prices Stupid”—to explain why total health care spending in the United States is significantly higher—by well more than double—the median value for all countries that are members of the Organization for Economic Cooperation and Development (OECD). The purpose of that paper was to shed light on what drives the higher spending in the United States and the authors were able to rule out other potential factors such as rates of utilization of services as a driver of the increased spending. At the end of their article, the authors ask an important question—What are Americans getting for their greater health spending? More than two decades later, the answer to that question is still not clear. While some analyses associate improvements in wellbeing with spending [2-4], others suggest that the United States delivers far worse results than most developed countries [5] and have questioned the opportunity costs of health care spending growth at rates that far exceeds what is seen in markets for other goods and services. For example, according to the National Health Expenditure Accounts, per capita spending on health care in the United States was $13,493 in 2022 (up from $4631 in 2000 as reported by Anderson et al. [1]). When considered in terms of health insurance costs, the Kaiser Family Foundation (KFF) recently reported that the average family premium for an employer sponsored health plan in 2024 was $25,572, prompting KFF President Drew Altman to note that “employers are shelling out the equivalent of buying an economy car for every worker every year to pay for family coverage.” [6] Two recent articles have questioned the value of these high expenditures, highlighting both wasteful spending and high administrative costs as significant contributors to problems in the US health care system [7, 8]. Although inefficiencies exist in many industries (e.g., transportation, manufacturing, farming), as documented by numerous studies using Stochastic Frontier Analysis and Data Envelopment Analysis [9-11], the significant level of wastefulness in the US health care sector has come under increasing scrutiny [12-14]. A less emphasized point in the Anderson et al. analysis is that the growth in US prices and spending has been linked to significant consolidation in the health care industry at multiple levels—hospitals, physicians, insurers, and health care delivery systems. It should be noted that a number of the OECD countries that serve as comparisons for US spending operate national single-payer health financing and/or delivery systems where market competition is less relevant, both for providers and insurers. For more than three decades, economists have been actively analyzing and documenting how market power (concentration) in healthcare affects prices and quality of care, and studying if key regulatory policy insights lead to effective actions by the federal and state governments [15-18]. A KFF policy summary reported that hospital prices increased significantly after hospitals in the same market were allowed to merge [19]. Some of the recent additions to that literature investigated cross-market mergers [20, 21], where an acquiring hospital takes over another hospital that is considered outside of the acquirer's primary service area. Dafny et al. found significant increases in price within certain groups of hospitals after cross-market mergers, and also conducted extensive analyses to pinpoint the sources and mechanisms of the estimated price effects [20]. Arnold et al. show empirically that even this type of merger gives the acquirer leverage to raise prices (a 13% increase as reported by the study and even higher for serial acquirers) in its own geography [21]. These findings have led federal antitrust agencies to consider stricter regulations on cross-market mergers in the future [22]. Economic research has found a similar association between market consolidation and price increases for health care entities other than hospitals, including physician groups, health systems, single specialty provider practices, and health insurers, with the literature generally concluding that prices and premiums increase after the industry becomes more consolidated due to mergers, acquisitions, or exit [23-27]. Not surprising to anyone is the fact that health care entities wishing to merge or acquire are savvy enough to not lead with the promise of raising consumer prices post-merger! Instead, executives of health care entities seeking approval to consolidate promise regulatory authorities and civic leaders that the merger or acquisition will generate both production efficiencies leading to lower prices as well as improved quality of care for patients [28]. Although there have been studies reporting post-consolidation efficiency gains in hospitals and health systems [29-31], the clear evidence on pricing would suggest that if there are gains of production efficiencies, these are not being passed on to consumers as promised, likely because the benefits of such efficiencies are counteracted by the enhanced market power and negotiating leverage that results from consolidation. In terms of quality of care, while there are some studies finding minor benefits associated with consolidation, evidence suggesting the opposite has also been reported [32, 33]. The general consensus is a lack of strong empirical evidence to suggest that the health care market consolidation meaningfully improved quality of care for the populations served by these more consolidated providers [34, 35]. In this sense then, it does appear that it is still the prices, stupid, that drives up spending, often with increases due to market concentration! Returning to the poignant question of whether Americans are getting good value from this increased societal spending, we submit that the answer is “no” because prices in the United States are in no way reflective of production efficiency, an important concept taught in every introductory microeconomics class. For puzzling reasons, despite having a cadre of influential health economists in the United States, discussions of production efficiency are largely absent from discussions of overall spending and have been similarly absent from important policy and antitrust discussions [36]. Too often in US health care, prices and costs are used interchangeably, but undergraduate students would learn the key difference between these concepts in their introductory microeconomics class, where confusing price and cost would be sure grounds for failure, though we seem to allow such confusion in our health policy discussions. The costs of care should be considered as the monetized costs of the inputs required to produce the good or service in question. To produce a pizza, that includes labor, ingredients such as dough, sauce, pepperoni, and the overhead that supplies the kitchen and the energy to heat the oven. It also includes the cost of any regulatory requirements such as satisfying building code and safety standards and insurance requirements, and so on To stay competitive, the pizza shop has an incentive to be efficient in its production and use of inputs since the consumer has many alternative pizza shops to choose from rather than paying a higher price for inefficient pizza production. Health care production is more complex, of course, with many different service types (e.g., preventive, acute, long-term care), specialty areas (e.g., cardiology, orthopedics, pediatrics, oncology), clinical diagnoses (e.g., diabetes, heart failure, behavioral health disorders), service locations (e.g., hospitals, outpatient clinics, pharmacies), and treatment regimens (e.g., office visits, pharmaceuticals, surgical procedures, preventive screenings). Most health care entities are best considered multiproduct firms that produce different lines of services and outputs, each of which has some common inputs (e.g., capital overhead) while also having specialized inputs (e.g., surgical equipment and specialized physician and nursing labor). While there are sometimes efficiencies associated with a single firm producing many products, these scope economies have proven elusive in health care. Price, on the other hand, is what one gets paid. Also taught in an introductory microeconomics course is that price is ideally determined—or set by the forces of supply and demand—and should be closely tied to efficient production. The classic example of where price is exactly equal to the marginal cost of production is in perfect competition, one of four market structures, the others being monopolistic competition, oligopoly, and monopoly. Perfect competition requires large numbers of firms in the same market, with homogeneous products, where the consumers only have a preference for the product but no preference for who produces it. The classic example is agricultural products, such as corn or wheat, where there is no product differentiation among producers/suppliers. In such a market, price converges to the minimum efficient cost of production, where the cost also includes a reasonable but not excessive profit margin and may mostly reflect the opportunity cost of using the needed resources in production. In perfect competition, an inefficient provider will be quickly forced to exit the business as there is no way to practically charge a higher price when there is no shortage of competitors selling an undifferentiated product at the efficient production price. The scenario of perfect competition is rarely applicable in health care, as services are often differentiated and delivered in areas where a large number of providers is neither commonplace nor sustainable. While certain services or products in health care, such as lab tests (e.g., complete blood count [CBC] screens), X-ray images, and amoxicillin can be considered homogenous, most health care services are heterogeneous, sometimes due to branding and marketing (i.e., advertisement that convinces patients and consumers that a physician offering primary care or pediatric office visits from one health system is superior to those from another health system) and because of the relationship nature of the provision of care. Similar marketing occurs in retail and consumer products where, for example, companies like Nike, Adidas, and Under Armour convince consumers that their shoes are superior relative to the competitor. This product differentiation, to the extent consumers perceive it, has been shown in economics to allow for a price that is higher than in perfect A for example, may have to and may be to pay more for an relative to a there is a to the to differentiated not the underlying incentive of the to produce the product or service since inefficient production the which is the difference between on and the cost of production. In most production are often well known or known as competitors are enough to products, and will companies to increase by production This that in due to differentiation, price are not the of inefficient production but rather are for market from to pay by consumers for differentiated health industries including health care systems, benefits and are currently at or or the introductory microeconomics also when companies operate in these structures, there is a for policy to that the pricing leverage is not and that the is which is both antitrust and price setting or price When there is a for to set or in the of the classic such as or should set prices at of efficient production. who that is not in health care in the United States are Health care is a and will seem to significant in setting it be how hospitals are paid plan premium or physician set by the for and we the set many health care prices in the United In the or has a of on its which how prices are set for different health care providers it is a fact that even when prices are by market supply and in some of health care, these prices are often tied to the prices set by the Economic and price setting be as more if there were that prices were being set based on efficient production. is that are For example, has hospital cost to price no one should cost of production with efficient cost production, or what a microeconomics would production at the efficient production prices set based on costs tied to inefficient production are prices that consumers and and should be set based on the most efficient production and Prices should also be set to in efficient production by health care providers to the of what the production to from in and information such as the use of in health care. In the production for any product or service can be but the that such as labor, and to be in the The cost in the cost associated with all of production. the production is the of needed inputs used in the production should the cost, or at to that cost, which also on the prices the pay for these In in using inputs to generate may within firms due to many such as in and (i.e., In having a certain level of which may appear to be can and to in the the recent should be a important in health care, to the health care delivery system in the United States can to a despite these a market still drives production efficiency For example, if rates an employer consider equipment or for labor, to the extent to overall production costs also have strong to be in production and and resources on research and to improve the production and lower prices for the inputs use in production by their It is these that can greater while It is also these production efficiencies that are are rarely delivered as a of allowed health care market consolidation and price setting in US health care has not for to or based on the production for this is significant information between those who set prices and pay for and care, and those who produce care, the that has healthcare to the supply This should and to with to better information and so as to more competition production efficiency and the potential value to of enhanced competition in health care by an to the significant production improvements that in in the These improvements from and the of as well as to the of certain inputs such as and and the power of that developed that the and the than Health care from similar that would how inputs are used and the types of inputs that are used in to costs while quality and For example, the use of different types of labor, the of care, and as well as the of of are all for that should lower prices in and A for markets is to information pricing and to information both production and production costs industries but is often known in industries and that consumers are paying a price for their Health care is on both paid for health care services and the cost to produce those services. good data the inputs used in the efficient cost of production in health care is key to regulatory (e.g., price setting by when increasing competition in the may not be (e.g., due to a supply of specialty care providers in certain Although there have been by economists to production and cost in health care, and these have important insights our and the to health care production and cost are still far from what is needed for policy More information has available on pricing and costs, to sources such as and the by the for and the information from these sources has significant limitations that to those analyses based on such information A better would data available for all at the level that would allow for the of studies at the service rather than all services for a for In the an to provide such hospital price (i.e., data, but this has been to what was In terms of the prices the such as what for under these are and in are tied to the resources needed to produce hospital care, but would that these rates are tied to efficient production or that production at the of we what we a key be better data for multiple provider and antitrust Two types of data are payment what in insurance is allowed also data on the costs of production, for the inputs used in production (i.e., the production as well as the paid for those While this it is in so each is in we also to the of service for which price and cost data is in health care, by the is how best to what the of service is for both health care and for health care most other industries where there is a single price for a (e.g., and in many of service have been used in health care. In because of the of there is a difference between an or and the paid or after insurance the United States that one of the with the of the recent hospital and insurance price has been the reporting of prices for different of service with some hospitals reporting prices for an of care while others prices for a per the of service as a of care by an hospital for a clinical that requires for example, code to a total or other based on in the underlying clinical and other payment care that is in the hospital setting but does not other care to this clinical that occurs or after the what some an of care are also based on clinical procedures, as by or For example, code is for the of a which may in an or in a primary care and code which may also other services such as a complete blood count lab code is also the concept of the relative value which is used by to how should be paid based on three primary factors including the required by the the office overhead and to the clinical care and the cost of insurance The concept of a payment to a provider is an example of a to providers for all care that is needed by a of a within a of The key point is that different of services in a of payment schemes that are to to production costs, and efficient production costs, and are confusing to Arnold et al. how the literature has used data sources and to what to hospital prices when provider markets consolidate merger and acquisition [21]. The literature has used multiple a of of which are but are by what is available to and This that in some prices have been estimated by total hospital by the number of In other hospital charge data were and for estimated average in allowed paid. Arnold et al. used allowed paid from data from three large over studies still information from all and still to single pricing for the hospital rather than prices for clinical service lines within a multiproduct firm that many patients for many different of course, would to have the most level of data all providers and for all and by service but this has proven elusive for or The price was supposed to hospitals to of from each the associated insurance products by each such data were reported and and be this a to in paid within and providers for services and of services. the data have been with many problems to since price and costs are not the same one can not if production is efficient by prices Instead, more are needed the costs of production by while being clear to these costs for the of service as This is in health care production because most health care delivery produce multiple outputs, and many of these (e.g., surgical can be differentiated significant in the cost and production efficiency health care providers, even providers, often consider their production information as and likely would It is also not clear that the cost systems used by many health care providers are of the level of production inputs used and the costs of those at the service this is a opportunity that efficiencies and better payment and would be of value to antitrust requires hospitals to cost there is some for seeking more data to production costs, and so a more enhanced does not seem While the of such data collection is the scope of this and a and data reporting system may not be in the under and the of having data to health care production costs should not only be but also a quality and product (e.g., would the analyses of production efficiency and such information should be and reported by for analyses and and policy would data on the inputs including cost from providers all service lines as well as within service in an data The and its for and have to value for federal health care by payment such as the and under its In these should be to production efficiency since more efficient care utilization relative to and and to cost for a these are tied to cost by utilization rather than by production efficiencies by production and other should consider these to a more incentive to in care production so that providers that are The same can be of premium which has been in the literature and has been for how premiums are set the of relative to premiums to the of to and efficient providers would be a in the is also in insurance and to more closely payment to production efficiency, and the of better price data, as should allow for a greater to at better or worse efficiency for service care and In that have so far not been at such as pricing should more to with better data and an on production Health care costs in the United States to a significant for such as and Medicaid, and patients and While in health and including the cost of to the cost so the we pay for to as the price of that our payment systems providers in a of including for services all the way up to a clinical of care in the hospital or even a payment In this sense then, Anderson et the Prices likely still is not so because we still enough if and how prices in US healthcare to production costs, or the to which our prices are and inefficient production, which it our and better information production costs in a market sector that is another two decades by spending more on health care while high would like to for on an of this The authors no of Data not applicable to this article as no were or the

  PublisherOA PDFDOI

• Does hospital consolidation promote quality?

  Health Care Management Review · 2025-11-14

  article1st authorCorresponding

  ISSUE: Two of the most important healthcare management topics studied over the past 37 years are hospital consolidation and quality. The specifics of consolidation's impact on quality are buried in a "black box" of organizational changes that typically follow consolidation. Academic researchers, both inside and outside health care, question the quality benefits. The paper discusses why quality benefits are not often observed. CRITICAL THEORETICAL ANALYSIS: Strategy and management theory are ambivalent about consolidation's impact on quality (i.e., suggest both positive and negative effects). Such ambivalence is evident in a two-stage conceptual model of how consolidation might impact quality. Consolidation is accompanied by strategic initiatives and organizational changes that can involve quality-promoting investments but may also harm quality. INSIGHT/ADVANCE: The paper documents the ambivalent effects of consolidation on quality, which repeatedly manifest themselves in theory, a conceptual model, and several literature reviews. One explanation for the mixed results are methodological issues that hamper model estimation; another explanation is the two-stage conceptual model. In the first stage, hospitals consolidate to pursue organizational changes and strategic goals, some of which may target quality. In the second stage, such changes can exert quality impacts, but not necessarily. Most research focuses on the second stage rather than the first; research on the first is more indirect. PRACTICE IMPLICATIONS: Hospital executives and researchers should not assume that consolidation will yield quality improvements. Executives often espouse quality improvement as a goal of consolidation but may or may not invest in quality improvement initiatives. Even when they do, such initiatives may not lead to higher quality.

  PublisherDOI

• Vertical Integration and Physicians: <i>Caveat Venditor? Caveat Emptor?</i>

  NEJM Catalyst · 2025-11-19

  article1st authorCorresponding
  PublisherDOI

• Hospital consolidation and quality: Opening the behavioral black box

  Social Science & Medicine · 2025-09-14

  article
  PublisherDOI

• Equity Investment in Physician Practices: What's All This Brouhaha?

  Journal of Health Politics Policy and Law · 2024-02-07 · 5 citations

  articleSenior author

  There have been two waves of equity-based investment in physician practices. Both used a combination of public and private sources but in different mixes. The first investment wave, in the 1990s, was led by public equity and physician practice management companies, with less involvement by private equity (PE). The second investment wave followed the Affordable Care Act and was led by PE firms. It has generated concerns of wasteful spending, less cost-effective care, and initiatives harmful to patient welfare. This article compares the two waves and asks if they are parallel in important ways. It describes the similarities in the players, driving forces, acquisition dynamics, spurs to consolidation, types of equity involved, models to organize physicians, and levels of market penetration achieved. The article then tackles three unresolved issues: Does PE investment differ from other investment vehicles in concerning ways? Does PE possess capabilities that other investment vehicles lack and confer competitive advantage? Does physician practice investment offer opportunities for supernormal profits? It then discusses ongoing trends that may disrupt PE and curtail its practice investment. It concludes that past may be prologue, that is, what happened during the 1990s may well repeat, suggesting the PE threat is overblown.

  PublisherDOI

• Big Med's Spread

  Milbank Quarterly · 2023-03-29 · 14 citations

  articleOpen access1st authorCorresponding

  Policy Points Hospital executives posit a number of rationales for system mergers which lack any basis in academic evidence. Decades of academic research question whether system combinations confer public benefits. Antitrust authorities need to continue to closely scrutinize these transactions. Recently, mergers of hospital systems that span different geographic markets are on the rise. Economists have alerted policymakers about the potential impacts such cross‐market mergers may have on hospital prices. We suggest there are other reasons for concern that scholars have not often confonted. Cross‐market mergers may be conducted for purely self‐serving reasons of organizational growth that increases executive compensation. Combinations of sellers should have clear advantages to consumers. System executives and their boards should bear the burden of proof. Federal regulators and state attorney generals should be cognizant that rationales for cross‐market systems advanced by merging parties are unlikely to be operative or dominant in merger decision making. Policymakers should be careful about passing legislation that encourages hospitals to consolidate. Context There is a growing trend of combinations among hospital systems that operate in different geographic markets known as cross‐market mergers. Economists have analyzed these broader systems in terms of their anticompetitive behavior and pricing power over insurers. This paper evaluates the benefits advanced by these new hospital systems that speak to a different set of issues not usually studied: increased efficiencies, new capabilities, operating synergies, and addressing health inequities. The paper thus “looks under the hood” of these emerging, cross‐market systems to assess what value they might bestow and upon whom. Methods The paper examines recently announced cross‐market mergers in terms of their supposed benefits, as expressed by the systems’ executives as well as by industry consultants. These presumed benefits are then evaluated against existing evidence regarding hospital system outcomes. Findings Advocates of cross‐market hospital mergers cite a host of benefits. Research suggests these benefits are nonexistent. Additional evidence suggests other motives may be at play in the formation of cross‐market mergers that have nothing to do with efficiencies, synergies, or community benefits. Instead these mergers may be self‐serving efforts by system chief executive officers (CEOs) to boost their compensation. Conclusions Cross‐market hospital mergers may yield no benefits to the hospitals involved or the communities in which they operate. The boards of hospital systems that engage in these cross‐market mergers need to exercise greater diligence over the actions of their CEOs.

  PublisherOA PDFDOI

• Summary: GPOs’ Pro-competitive and Welfare-Generating Benefits

  2022-01-01

  book-chapter1st authorCorresponding
  PublisherDOI

• Seemed Like a Good Idea

  Cambridge University Press eBooks · 2022-07-14 · 3 citations

  book

  Consumers, public officials, and even managers of health care and insurance are unhappy about care quality, access, and costs. This book shows that is because efforts to do something about these problems often rely on hope or conjecture, not rigorous evidence of effectiveness. In this book, experts in the field separate the speculative from the proven with regard to how care is rendered, how patients can be in control, how providers should be paid, and how disparities can be reduced – and they also identify the issues for which evidence is currently missing. It provides an antidote to frustration and a clear-eyed guide for forward progress, helping health care and insurance innovators make better decisions on deciding whether to go ahead now based on current evidence, to seek and wait for additional evidence, or to move on to different ideas. It will be useful to practitioners in hospital systems, medical groups, and insurance organizations and can also be used in executive and MBA teaching.

  PublisherDOI

• Caution: Entering Dark Territory

  2022-01-01

  book-chapter1st authorCorresponding
  PublisherDOI

• GPO Performance: A Review of the Literature

  2022-01-01 · 1 citations

  review1st authorCorresponding
  PublisherDOI

Recent grants

• NIH Grant R01HS009237

  NIH · $264k · 1998

Frequent coauthors

• Katherine Baicker

  81 shared

• James Joo

  University of Chicago

  81 shared

• Heidi Allen

  Stanford University

  81 shared

• Julia Adler‐Milstein

  University of California, San Francisco

  81 shared

• Michelle M. Mello

  Stanford University

  81 shared

• Jin Kim

  College of Saint Rose

  81 shared

• Jeffrey A. Alexander

  Mayo Clinic in Arizona

  46 shared

• Ronald Andersen

  33 shared

Awards & honors

• Board of Institute of Medicine, Health Services Research Sec…
• Arthur Anderson Distinguished Visitor, University of Cambrid…
• Teacher of the Year, Administrative Medicine Program, School…
• Edwin Crosby Memorial Fellowship, Hospital Research and Educ…
• Udall Fellowship, Udall Center for Public Policy (1990-91)