This will be a quiet week for healthcare in DC with major hearings, confirmations and legislative votes not scheduled.
Last week was relatively calm as well. The House Ways and Means Committee heard testimony from hospital CEOs of HCA, ECU Health, Common Spirit and NY Presbyterian featuring accusations of price gauging and unnecessary costs. And a study that found an OpenAI model outperformed doctors in diagnostic reasoning stirred attention in the physician and healthcare tech worlds where AI’s a dirty word to some and salvation to others.
But, for healthcare, it was an uncharacteristic quiet week. No shutdown announcements akin to Spirit’s 2 a.m. Saturday advisory “winding down all operations.” No strikes by nurses or new megadeal announcements. No public announcements from CMS on new alternative payment models or final rules on reimbursement. But It’s a temporary calm before the tsunami building offshore. It’s the cumulative result of four convergent forces each capable of destabilizing the health economy on its own:
- The One Big Beautiful Bill (HR1) Medicaid cuts and work requirements start January 1, 2027: states are scrambling to be ready.
- Economists expect prices for gas, food and energy to be high into next year as a result of the war in Iran. Consumer confidence is at a modern-era low.
- The labor market is shifting toward the AI economy where server farms and worker displacement are immediate foci.
- And polling shows public erosion of trust and confidence in America’s major institutions at a 40-year low including its health system, Congress and even organized religion.
U.S. healthcare has much to be proud of: we justifiably tout our breakthrough meds and devices, Star Ratings, Top 100 lists and modern buildings. We remind legislators we’re the biggest private sector employer in the U.S. economy and, at every opportunity, our economic impact on communities. And, in every sector of our $5.6 trillion industry, we’re now talking about affordability (without defining it).
In April, I met with several health system Boards, limited partners in 2 healthcare investment funds and health officials in 3 states. The sentiments are the same: they’re concerned about the future and preparing for the worst. They’re asking their leaders and corporate strategists to do the impossible—avert the storm, at least for a little while. They’re confident public funds for healthcare are already stretched with no relief in sight. And they’re attempting contingency planning knowing their efforts might be moot given political volatility in DC and states.
Understandably, the appetite for risk taking in organizations and government agencies like these is relatively low. It’s safer to consolidate horizontally than vertically, cut costs, change incentives, modify reg’s slightly than attempt “newer, better, cheaper” solutions to well-known problems. Old playbooks are dependable. And, for healthcare’s operators, radical incrementalism disguised as transformation has served its interests well for 50 years as spending grew from 9% of the GDP in 1980 to 18% today. Bigger players in each sector have done well and pay their executives to keep it that way while the smaller players are collapsing.
Transformation of the system, and a clear destiny for its future are secondary to self-preservation in US healthcare today. Our investors and lenders expect it, Board compensation committees reward it, and our workforce depends on it.
Thus, until and unless elected officials, large (non-healthcare) employers and concerned community leaders act, it will not happen. And if neglected, the entire system will collapse in the next 10 years.
It’s a possibility few Boards of healthcare organizations seriously consider but growing numbers of concerned citizens fear. Like Spirit Airlines passengers and its 17,000 employees are experiencing, they’re SOL.
Paul
PS: I am in Alaska this week with the Southcentral Foundation, the Alaska Native-owned 501(c)(3) nonprofit that provides comprehensive outpatient and inpatient services to more than 70,000 Alaska Native and American Indian peoples living in the Indian Health Service’s Anchorage Service Unit. Two features of how SCF operates impress me: its purposeful blending of physical, mental, emotional and spiritual wellness in care management, and its Nuka System of Care ownership model in which individuals are customer owners, not patients. There are lessons to be learned from both.
HENRY KOTULA 