Category Archives: Funding

The Next 100 Days: What Healthcare Should Expect

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The Next 100 Days: What Healthcare Should Expect

The Trump administration is moving into its second 100 days facing conditions more problematic than its first 100. For healthcare, this period will define the industry’s near-term future as changes in three domains unfold:

  • The Economy: The economy is volatile and consumer confidence is waning. The impact of tariffs on U.S. prices remains an unknown and escalating tension between the Ukraine and Russia, Israel and Palestine, Pakistan and India are worrisome. Household debt is mounting as student loans, medical debt and housing costs imperil financial security for more than half of U.S. households. The 3 major stock indices remain in the red YTD, prospects for a recession are high and investors are increasingly cautious. Net impact on healthcare organizations and public programs: negative, especially those without strong balance sheets and access to affordable private capital.
  • The Courts: Recent opinions by the Supreme Court and District Courts suggest a willingness to challenge the administration’s Executive Orders on immigrant deportation and due process, threats and funding cuts aimed at law firms and universities considered “woke” and layoffs initiated by DOGE and more. Court challenges will slow the administration’s agenda and create uncertainty in workplaces. Net impact: negative. Uncertainty paralyses planning and operations in every public and private healthcare organization.
  • The Public Mood: The afterglow of the election has dissipated and the public’s mood has shifted from guarded optimism to anxiety and despair. The public’s uncertain about tariffs and worried about household expenses. Net impact: negative. Healthcare affordability and prices are major concerns to consumers: the majority (76%) think the system is more concerned about profitability than patient care (Jarrard).

Current events in these areas portend headwinds for most public and private healthcare organizations where attention in the next 100 days will be focused in these areas:

  • Oversight: New rules, programmatic priorities, key personnel appointments and re-organization in HHS, CMS, the FDA and VA: RFKJ’s MAHA plans and Commission appointees, Oz’ affinity for Medicare Advantage predisposition toward value-based care and Makary’s overhaul of the FDA’s drug oversight process will be “on the table” in the next 100 days.
  • Funding: Healthcare funding in the FY 2026 federal budget. The GOP-controlled House and Senate can pass a budget with minimal support from Dem’s that reflects a serious effort to reduce the federal debt ($37 trillion/123% of GDP– up from $20 trillion in 2017). Healthcare cuts expected to be significant though rumored massive cuts to Medicaid unlikely.
  • States: State healthcare referenda and executive actions: states are evaluating price controls on drugs and hospitals, reparations from insurers for delays and prior-authorizations, scope of practice restrictions and more. Topping the watchlist in most states is Medicaid funding and potential fallout from discontinued ACA marketplace subsidies factored into the FY 2026 budget being finalized by the GOP-led Congress in DC.
  • SCOTUS: Supreme Court decisions will be handed down or before June 30 when SCOTUS’ 2024 term ends including Braidwood Management v. Becerra which will determine whether the Affordable Care Act’s requirement that private insurers cover preventive services without cost-sharing will continue. The court will also opine to the authority of the HHS secretary to appoint members of the U.S. Preventive Services Task Force. The potential impact of these decisions on coverage, insurance premiums and access to preventive health services is pervasive.
  • Financial markets: Capital markets are in a watchful waiting mode as US trade policy unfolds, inflation fluctuates, the fed’s interest rate determination is disclosed and consumer spending reacts. Private investing in healthcare remains opportunistic though deal flow is shifting and risk thresholds tightening.
  • Polls: Polls draw the attention of media and elected officials. They influence how organizations prioritize advocacy strategies, address consumer complaints and concerns and manage reputations. As reflected in numerous national polls, trust in the system and its key players—insurers, hospitals, drug companies—is at a historic low.

Each sector in U.S. healthcare will be impacted differently: Three face the strongest headwinds:

  • Hospitals: Hospitals face enormous financial challenges, especially not-for-profits, safety net, rural and veteran’s hospitals. Last week’s unfavorable SCOTUS decision against hospitals alleging DSH under-payments will cost $1 billion per year. Congressional adoption of site neutral payment policy could cost $15 billion/year. Drug prices, labor costs, insurer payment cuts and red-tape will negate operating margins and lower investment income knee-capping growth and innovation plans. Complicating matters, employed physicians will demand higher pay and more control.  And Congressional budget-creators believe the sector’s 31% share of total healthcare spending makes it ripe for cuts attributable to “waste, fraud and abuse”.
  • Insurers: Medicare Advantage (which enjoys support by key administrators including CMS’ Mehmet Oz) has become a lightening rod of insurer criticism alongside prior authorization policies that restrict care. Coverage remains key to household financial security but insurers are seen as barriers to rather than facilitators of evidence-based cost-effective care. And the concentration of power in corporate titans (United, Humana, Cigna, CVS, Centene and others) is viewed with skepticism.
  • Public Health: Public health is not a priority in the U.S. health system despite recognition that social determinants account for 70% of the system’s $5 trillion spending. Most programs are funded by state and local governments with federal support limited. Public health is not seen as an investment and, in some settings treated with disdain as welfare or waste. As Mayors and Governors develop plans for the rest of 2025 and through 2026, public health cuts will be likely as federal co-funding becomes scarce.

The next 100 days will define the national agenda for the mid-term election in November 2026, reflect the solidarity of the MAGA movement and show the impact of tariffs on inflation, consumer prices and the public’s mood.

Healthcare leaders will be watching closely. All will be impacted.

The who’s who of funders: 3 key relationships to watch

Posted on by • Posted in Decision Making Authority, Funding, Funding Partner, Health Insurance Industry, Health System, Hospital, Hospital Industry, Physician, Physician Aggregator, Physician Alignment, Physician Independence, Private Equity, Value Proposition • Leave a comment

https://www.advisory.com/blog/2021/09/physician-group-funders

We recently shared an updated perspective on the independent physician landscape. Notably absent from this map, but an important player in this space, are entities, like health plans, private equity, and health systems, who partially or wholly fund some independent physician groups.

We intentionally left these funders off the map because they don’t work in a uniform way with all physician groups. The reality is that funders have their handprints all over this map—and just knowing what type of funder you’re working with doesn’t necessarily tell you how they work with physician groups.

Funders work across the physician landscape because they recognize two things:

  • First, in order to play in today’s physician market, funders need to be flexible in how they work with physicians in order to appeal to the wide variety of groups and build a bigger market presence.
  • Second, building or buying these physician group archetypes outright is not the only way to work with them. Many funders instead opt to invest in them—either through dollars or resources.

Key funders to watch

There are three key funders we track the closest: private equity, health plans, and health systems. Below are brief overviews of how they commonly work with independent groups and our predictions for where you might see them go next.

Private equity (PE): Consistent approach with still to be proven outcomes

The goal of PE firms is to make money on their investments. To do this, these firms buy shares of practices in order to have partial ownership. In return, physician groups get the capital they need to make investments—investments that in theory drive profits for both the physician shareholders and the PE investors. Unlike other funders, PE is rarely associated with full acquisition.

Two of the places we’ve seen the most private equity investment are in consolidation of specialty practices (usually at the national level) or value-based care investments in primary care practices (across all archetypes).

Private equity is gaining traction as a physician group partner because they often try to preserve some degree of physician autonomy and they’ve learned to nuance their investments and pitches based on the group they’re seeking to work with.

We predict: PE will continue to back the full range of archetypes on this map—investing in both independent groups directly and the national archetypes.

What we’ll be watching:

  • What will happen to the handful of major PE investments in the independent physician group space that will be reaching their 5-7 year mark
  • What level of physician autonomy will PE firms continue to preserve as PE gains stronger footholds in the physician landscape

Health plans: The most eager to transform (incrementally)

Health plans are often predominantly associated with a single physician archetype for a given plan. For example, when you think about UnitedHealthcare, you might think of their sister company, OptumCare, and an aggregation strategy. Or, you might think of Blues plans most commonly as service partners.

However, when you dig deeper, the story is much more nuanced. Plans and their parent companies like UnitedHealth Group do often aggregate practices, but they also sell and integrate services via service partner models. And several Blues plans are now building practices from the ground up. To top it off, some plans are even adopting an investment strategy like Anthem with Privia.

Perhaps more than any other funder, health plans often adopt a range of strategies to develop their physician strategy and maintain their existing networks. And even cases where plans aren’t funding entities themselves, they’re thinking of new ways to work with the growing range of physician groups.

We predict: Health plans will move away from a uniform approach to physician practice partnership and towards more multifaceted approaches to appeal to a wide range of providers.

What we’ll be watching:

  • Will health plans diversify their suite of approaches based on the groups they’re pursuing
  • Will health plans tailor their value proposition for each partnership approach

Health systems: Playing catch up to evolve

We often tend to think about health systems as aggregators—they buy independent physician groups and add them to their employed medical groups. But we’re seeing two physician market shifts that are causing health systems to move away from a one-size-fits-all approach.

One, the remaining independent groups are growing in size and, two, they are less willing to be acquired. On top of that, as private equity firms and payers continue to diversify their strategies, health systems must adapt to keep pace—or risk being seen as the least attractive partner.

As a result, more health systems are telling us about their new approaches to physician partnerships, like starting an MSO to act as a service partner or convening coalitions between themselves and independent groups.

We predict: Health systems will face increasing pressure to diversify how they are operating with physician groups. Similar to health plans, we expect to see a pivot away from an aggregation-only approach. To learn more, read our take on how health systems and independent groups should think about partnership.

What we’ll be watching:

  • How quickly will health systems stand up additional partnership approaches
  • Will health systems in markets where they’re the dominant partner proactively adjust their partnership approach versus wait for the market to shift first

Your checklist to work successfully with today’s physician groups

As you evaluate your partnership strategy, here’s our starter list of questions to ask yourself:

  1. Clarify your partnership goals:
    • What are my organization’s goals for physician partnership broadly?
    • What are the archetypes I currently fund or partner with?
    • Do these archetypes serve my organization’s stated goals? 
  2. Identify the right partnership approaches for your organization
    • What new archetypes should I build or work with to advance my organization’s goals and target new physician groups?
    • Do I need to build this archetype myself or is it better to fund one that exists?
    • If funding, should I wholly own or invest in the archetype? 
  3. Define your value proposition to physicians
    • Have I adjusted my value proposition for each of the archetypes I fund or partner with?
    • Am I clearly articulating my value proposition in a way that speaks to physicians’ needs and wants?
    • Does my value proposition align with what I’m actually delivering? For example, if I say I’m preserving autonomy, how am I doing that?
    • How does my value proposition compare and compete with others in the market? 
  4. Map out the power dynamics of the archetypes you want to work with
    • Who has the ultimate decision-making power in the organization? (Hint: Decision-making power gets more diffuse as you move from right to left, national chain to service partner.)
    • Who are the key stakeholders who influence decision-making?