Last week, venture capital firm General Catalyst announced its plan to acquire Summa Health, an Akron, OH-based integrated delivery system with three hospitals, a large medical group, a health plan, and an annual revenue of around $2B. The terms of the deal were not disclosed, though General Catalyst previously indicated it aimed to spend $1-3B to acquire a health system.
Pending regulatory approval, Summa will convert to a for-profit entity and become a fully owned subsidiary of General Catalyst’s recently launched Health Assurance Transformation Corporation (HATCo).
HATCo, under the leadership of former Intermountain Health CEO Marc Harrison, was founded with the intention of acquiring a health system to serve as a blueprint for General Catalyst’s vision of healthcare transformation.
The Gist:While there’s a dearth of evidence for what kind of health system makes a good venture capital investment, Summa’s concentrated footprint of integrated delivery assets, robust Medicare Advantage plan, and position in an aging, yet competitive, market certainly seem attractive given HATCo’s stated goals.
If it closes, the partnership will provide Summa with an influx of capital and General Catalyst with a “proving ground” for both its vision of healthcare transformation and its portfolio of technology solutions. But while it’s one thing to get Summa’s board to sign on, General Catalyst will now have to reckon with other important stakeholders.
Summa’s physicians will be the gatekeepers of change at the local level, and their buy-in will be required for any continued push toward value-based care or successful product roll-out.
And, behind the scenes, General Catalyst will have to convince its investors that this longer-term play to rethink care delivery will offer financial returns worth the wait.
Forget the much-discussed prospect of a soft landing for the U.S. economy. In 2023, there was no landing at all.
Why it matters:
Big economic rules broke last year. The latest data to confirm that is the new GDP report showing very strong economic growth to conclude 2023, even amid a big cooldown in inflation.
Mainstream economists and policymakers believed a period of below-trend growth would be necessary to make progress on inflation.
Instead, above-trend growth in 2023 coincided with inflation falling sharply, reflecting improvement in the economy’s supply potential.
Driving the news:
The economy expanded at a 3.3% annualized rate in the fourth quarter, well above the 2% forecasters expected. That followed the previous quarter’s blockbuster 4.9% growth.
GDP was 3.1% higher in the fourth quarter than a year earlier.
That represents an acceleration from 0.7% GDP growth in 2022, and trounced the growth rates of most other advanced countries — and the 1.8%-ish rate that economists consider the United States’ long-term trend.
Details:
The fourth quarter’s hot growth resulted from bustling activity across the economy.
Consumers spent more on goods and services, with personal consumption expenditures rising at a 2.8% annualized pace. That was responsible for nearly 2 percentage points of the fourth quarter’s GDP rise.
Businesses spent on equipment, factories and intellectual property at a solid pace, with nonresidential fixed investment increasing at 1.9% — up from the previous quarter.
The intrigue:
For two years now, Fed officials have spoken of the need for a period of below-trend growth to bring inflation into line. Now, they face the decision of whether to cut rates — to essentially declare victory on inflation — even as below-trend growth is nowhere to be seen.
A flourishing labor market, strong productivity gains and supply-side improvements — more workers joining the workforce, for instance — has (at least so far) meant the economy can keep growing at a solid pace without risking a pickup in price pressure.
“[W]e had significant supply-side gains with strong demand,” Fed chair Jerome Powell said in his December press conference, adding that potential growth may have been higher than usual “just because of the healing on the supply side.”
“So that was a surprise to just about everybody,” Powell said.
What they’re saying:
“This report feels like a supersonic Goldilocks: very strong GDP reading with cool inflation,” Beth Ann Bovino, chief economist at U.S. Bank, tells Axios. “Good news is good news.”
“With high productivity levels, we can have strong growth with less inflation. That was the case during the last soft landing in the 90s,” Bovino adds.
Private equity (PE) acquisitions in healthcare have exploded in the past decade. The number of private equity buyouts of physician practices increased six-fold from 2012-2021. At least 386 hospitals are now owned by private equity firms, comprising 30% of for-profit hospitals in the U.S.
Emerging evidence shows that the influence of private equity in healthcare demands attention. Here’s what’s in the latest research.
What is private equity?
There are a few key characteristics that differentiate private equity firms from other for-profit companies. At a 2023 event hosted by the NIHCM Foundation, Assistant Professor of Health Care Management at The Wharton School at the University of Pennsylvania Dr. Atul Gupta explained these factors:
Financial engineering. PE firms primarily use debt to finance acquisitions (that’s why they’re often known as “leveraged buyouts”). But unlike in other acquisitions, this debt is placed on the balance sheet of the the target company (ie. the physician practice or hospital).
Short-term goals. PE firms make the majority of their profits when they sell, and they look to exit within 5-8 years. That means they generally look for ways to cut costs quickly, like reducing staff or selling real estate.
Moral hazard. PE companies can make a big profit even if their target firm goes bankrupt. This is different from most investments where the success of the investor depends on how well the target company does.
The nature of private equity itself has serious implications for healthcare, in which the health of communities depends on the long-term sustainability and quality improvement of hospitals and physician practices. But are these concerns borne out in the real world?
PE acquisition and adverse events
A recent study in JAMA from researchers at Harvard Medical School and the University of Chicago analyzed patient mortality and the prevalence of adverse events at hospitals acquired by private equity compared to non-acquired hospitals. The study used Medicare claims from more than 4 million hospitalizations from 2009-2019, comparing claims at 51 PE-acquired hospitals and 249 non-acquired hospitals to serve as controls.
In-hospital mortality decreased slightly at PE-acquired hospitals compared to controls, but not 30-day mortality. This may be because the patient mix at PE-acquired hospitals shifted more toward a lower-risk group, and transfers to other acute care hospitals increased.
However, there were concerning results for patient safety. The rate of adverse events at PE-acquired hospitals compared to control hospitals increased by 25%, including a 27% increase in falls, 38% increase in central line-associated bloodstream infections (CLABSI), and double the rate of surgical site infections. The authors found the rates of CLABSI and surgical site infections at PE-acquired hospitals alarming because overall surgical volume and central line placements actually decreased.
What could be behind these higher rates of adverse events after PE acquisition? In a Washington Post op-ed, Dr. Ashish Jha, dean of the School of Public Health at Brown University, writes that it’s down to two things: staffing levels and adherence to patient safety protocols. “Both cost money, and it is not a stretch to connect cuts in staffing and a reduced focus on patient safety with an increased risk of harm for patients,” he writes.
Social responsibility impact
Private equity acquisitions may have a negative effect on patient safety, but what about social responsibility? In a recent report from PE Stakeholder on the impact of Apollo Global Management’s reach into healthcare, the authors use the Lown Institute Hospitals Index to understand hospitals owned by Apollo perform on social responsibility. Lifepoint Health, a health system owned by Apollo, was ranked 222 out of 296 systems on social responsibility nationwide. And in Virginia, North Carolina, and Arizona, some of the worst-ranked hospitals in the state for social responsibility are those owned by Lifepoint Health, the PE Stakeholder report shows.
Apollo Global Management is the second largest private equity firm in the United States, with $598 billion total assets under management, according to thereport. The PE stakeholder report outlines concerning practices by Apollo, including putting high levels of debt that lowers hospitals’ credit ratings and increases their interest rates, cutting staff and essential healthcare services, and selling off real estate for a quick buck. If we care about hospital social responsibility we should clearly be concerned about private equity acquisitions.
The bigger picture
Private equity buyouts did not come from out of nowhere, so what does this trend tell us about our healthcare system? PE acquisitions are in many ways a symptom of larger issues in healthcare, such as increasing administrative burden, tight margins, and lack of regulation on consolidation. For owners of private physician practices that face a lot of administrative work, deciding to sell to a PE firm to reduce this workload and focus on patient care (not to mention, getting a hefty payout) is a tempting proposal.
In the Washington Post, Ashish Jha describes what made his colleague decide to sell his practice to a PE firm: “The price he was getting was very good, and he was happy to outsource the headache of running the business (managing billing, making sure there was adequate coverage for nights and weekends, etc.).”
“In many ways, private equity is both a response to and an accelerator of broader health system trends – one in which consolidation is happening quickly, care is being delivered by larger and larger entities, and corporate influence is growing.”Jane M. Zhu, MD, MPP, MSHP, Associate Professor of Medicine at Oregon Health & Science University, at NIHCM Foundation Event
PE buyouts are also indicative of a larger trend, what some researchers call the “financialization” of health. As Dr. Joseph Bruch at the University of Chicago and colleagues describe in the New England Journal of Medicine, financialization refers to the “transformation of public, private, and corporate health care entities into salable and tradable assets from which the financial sector may accumulate capital.”
Financialization is a sort of merging of the financial and healthcare sectors; not only are financial actors like private equity buying up healthcare providers, but healthcare institutions are also acting like financial firms. For example, 22 health systems have investment arms, including nonprofit system Ascension, which has its own private equity operation worth $1 billion. The financialization of healthcare is also reflected in the boards of nonprofit hospitals. A 2023 study of US News top-ranked hospitals found that a plurality of their board members (44%) were from the financial sector.
What we can do about it?
What can we do to mitigate harms caused by PE acquisitions? In Health Affairs Forefront, executive director of Community Catalyst Emily Stewart and executive director of the Private Equity Stakeholder Project Jim Baker provide some policy ideas to stop the “metastasizing disease” of private equity:
Joint Liability. Currently PE firms can put all of their debt on the balance sheet of the firm they acquire, letting them off the hook for this debt and making it harder for the acquired company to succeed. “Requiring private equity firms to share in the responsibility of the debt…would prevent them from making huge profits while they are saddling hospitals and nursing homes with debts that ultimately impact worker pay and cut off care to patients,” write Stewart and Baker.
Regulate mergers. Private equity acquisitions often go under the radar because the acquisitions are small enough to not be reported to authorities. But the U.S. Federal Trade Commission could be more aggressive in evaluating mergers and buyouts by PE, as they have done recently in Texas, where a PE firm has been buying up numerous anesthesia practices.
Transparency of PE ownership. It can be hard to know when hospitals are bought by a PE firm. The Department of Health and Human Services could require disclosure of PE ownership for hospitals as they have done for nursing homes.
Remove tax loopholes. The carried interest loophole allows PE management fees to be taxed at as capital gains, which is a lower rate than corporate income. Closing this loophole would remove a big incentive that makes PE buyouts so attractive for firms.
“It is clear that the problem is not the lack of solutions but rather the lack of political will to take on private equity,” write Steward and Baker.
We need not to not only stem the tide of PE acquisitions sweeping through healthcare, but address the financialization of healthcare more broadly, to put patients back at the center of our health system.
Three critical healthcare struggles will define the year to come with cutthroat competition and intense disputes being played out in public:
1. A Nation Divided Over Abortion Rights
2. The Generative AI Revolution In Medicine
3. The Tug-Of-War Over Healthcare Pricing American healthcare, much like any battlefield, is fraught with conflict and turmoil. As we navigate 2024, the wars ahead seem destined to intensify before any semblance of peace can be attained. Let me know your thoughts once you read mine.
Modern medicine, for most of its history, has operated within a collegial environment—an industry of civility where physicians, hospitals, pharmaceutical companies and others stayed in their lanes and out of each other’s business.
It used to be that clinicians made patient-centric decisions, drugmakers and hospitals calculated care/treatment costs and added a modest profit, while insurers set rates based on those figures. Businesses and the government, hoping to save a little money, negotiated coverage rates but not at the expense of a favored doctor or hospital. Disputes, if any, were resolved quietly and behind the scenes.
Times have changed as healthcare has taken a 180-degree turn. This year will be characterized by cutthroat competition and intense disputes played out in public. And as the once harmonious world of healthcare braces for battle, three critical struggles take centerstage. Each one promises controversy and profound implications for the future of medicine:
1. A Nation Divided Over Abortion Rights
For nearly 50 years, from the landmark Roe v. Wade decision in 1973 to its overruling by the 2022 Dobbs case, abortion decisions were the province of women and their doctors. This dynamic has changed in nearly half the states.
This spring, the Supreme Court is set to hear another pivotal case, this one on mifepristone, an important drug for medical abortions. The ruling, expected in June, will significantly impact women’s rights and federal regulatory bodies like the FDA.
Traditionally, abortions were surgical procedures. Today, over half of all terminations aremedically induced, primarily using a two-drug combination, including mifepristone. Since its approval in 2000, mifepristone has been prescribed to over 5 million women, and it boasts an excellent safety record. But anti-abortion groups, now challenging this method, have proposed stringent legal restrictions: reducing the administration window from 10 to seven weeks post-conception, banning distribution of the drug by mail, and mandating three in-person doctor visits, a burdensome requirement for many. While physicians could still prescribe misoprostol, the second drug in the regimen, its effectiveness alone pales in comparison to the two-drug combo.
Should the Supreme Court overrule and overturn the FDA’s clinical expertise on these matters, abortion activists fear the floodgates will open, inviting new challenges against other established medications like birth control.
In response, several states have fortified abortion rights through ballot initiatives, a trend expected to gain momentum in the November elections. This legislative action underscores a significant public-opinion divide from the Supreme Court’s stance. In fact, a survey published in Nature Human Behavior reveals that 60% of Americans support legal abortion.
Path to resolution: Uncertain. Traditionally, SCOTUS rulings have mirrored public opinion on key social issues, but its deviation on abortion rights has failed to shift public sentiment, setting the stage for an even fiercer clash in years to come. A Supreme Court ruling that renders abortion unconstitutional would contradict the principles outlined in the Dobbs decision, but not all states will enact protective measures. As a result, America’s divide on abortion rights is poised to deepen.
2. The Generative AI Revolution In Medicine
A year after ChatGPT’s release, an arms race in generative AI is reshaping industries from finance to healthcare. Organizations are investing billions to get a technological leg up on the competition, but this budding revolution has sparked widespread concern.
In Hollywood, screenwriters recently emerged victorious from a 150-day strike, partially focused on the threat of AI as a replacement for human workers. In the media realm, prominent organizations like The New York Times, along with a bevy of celebs and influencers, have initiated copyright infringement lawsuits against OpenAI, the developer of ChatGPT.
The healthcare sector faces its own unique battles. Insurers are leveraging AI to speed up and intensify claim denials, prompting providers to counter with AI-assisted appeals.
But beyond corporate skirmishes, the most profound conflict involves the doctor-patient relationship. Physicians, already vexed by patients who self-diagnose with “Dr. Google,” find themselves unsure whether generative AI will be friend or foe. Unlike traditional search engines, GenAI doesn’t just spit out information. It provides nuanced medical insights based on extensive, up-to-date research. Studies suggest that AI can already diagnose and recommend treatments with remarkable accuracy and empathy, surpassing human doctors in ever-more ways.
Path to resolution: Unfolding. While doctors are already taking advantage of AI’s administrative benefits (billing, notetaking and data entry), they’re apprehensive that ChatGPT will lead to errors if used for patient care. In this case, time will heal most concerns and eliminate most fears. Five years from now, with ChatGPT predicted to be 30 times more powerful, generative AI systems will become integral to medical care. Advanced tools, interfacing with wearables and electronic health records, will aid in disease management, diagnosis and chronic-condition monitoring, enhancing clinical outcomes and overall health.
3. The Tug-Of-War Over Healthcare Pricing
From routine doctor visits to complex hospital stays and drug prescriptions, every aspect of U.S. healthcare is getting more expensive. That’s not news to most Americans, half of whom say it is very or somewhat difficult to afford healthcare costs.
But people may be surprised to learn how the pricing wars will play out this year—and how the winners will affect the overall cost of healthcare.
Throughout U.S. healthcare, nurses are striking as doctors are unionizing. After a year of soaring inflation, healthcare supply-chain costs and wage expectations are through the roof. A notable example emerged in California, where a proposed $25 hourly minimum wage for healthcare workers was later retracted by Governor Newsom amid budget constraints.
Financial pressures are increasing. In response, thousands of doctors have sold their medical practices to private equity firms. This trend will continue in 2024 and likely drive up prices, as much as 30% higher for many specialties.
Meanwhile, drug spending will soar in 2024 as weight-loss drugs (costing roughly $12,000 a year) become increasingly available. A groundbreaking sickle cell disease treatment, which uses the controversial CRISPR technology, is projected to cost nearly $3 million upon release.
To help tame runaway prices, the Centers for Medicare & Medicaid Services will reduce out-of-pocket costs for dozens of Part B medications “by $1 to as much as $2,786 per average dose,” according to White House officials. However, the move, one of many price-busting measures under the Inflation Reduction Act, has ignited a series of legal challenges from the pharmaceutical industry.
Big Pharma seeks to delay or overturn legislation that would allow CMS to negotiate prices for 10 of the most expensive outpatient drugs starting in 2026.
Path to resolution: Up to voters. With national healthcare spending expected to leap from $4 trillion to $7 trillion by 2031, the pricing debate will only intensify. The upcoming election will be pivotal in steering the financial strategy for healthcare. A Republican surge could mean tighter controls on Medicare and Medicaid and relaxed insurance regulations, whereas a Democratic sweep could lead to increased taxes, especially on the wealthy. A divided government, however, would stall significant reforms, exacerbating the crisis of unaffordability into 2025.
Is Peace Possible?
American healthcare, much like any battlefield, is fraught with conflict and turmoil. As we navigate 2024, the wars ahead seem destined to intensify before any semblance of peace can be attained.
Yet, amidst the strife, hope glimmers: The rise of ChatGPT and other generative AI technologies holds promise for revolutionizing patient empowerment and systemic efficiency, making healthcare more accessible while mitigating the burden of chronic diseases. The debate over abortion rights, while deeply polarizing, might eventually find resolution in a legislative middle ground that echoes Roe’s protections with some restrictions on how late in pregnancy procedures can be performed.
Unfortunately, some problems need to get worse before they can get better. I predict the affordability of healthcare will be one of them this year. My New Year’s request is not to shoot the messenger.
Private equity firm Apollo Global Management’s ownership of two large health systems — Louisville, Ky.-based ScionHealth and Brentwood, Tenn.-based Lifepoint Health — downgrades hospital services, hurts workers and puts patients at risk, according to a study published Jan. 11 by the Private Equity Stakeholder Project.
Since acquiring Lifepoint in 2018 and spinning off ScionHealth in 2021, Apollo has consolidated ownership of 220 hospitals in 36 states, with a workforce of about 75,000 employees. Many of the hospitals have experienced service cuts, layoffs, poor quality ratings and regulatory investigations, according to the report.
The report comes amid rising scrutiny of private equity hospital ownership.
In December, the Senate Budget Committee launched an investigation into the effects of private equity ownership on hospitals that specifically mentioned Apollo’s ownership of Lifepoint. Iowa Sen. Chuck Grassley and Rhode Island Sen. Sheldon Whitehouse requested “documents and detailed answers” about certain hospital transactions and the degree to which private equity firms are calling the shots at hospitals.
A Harvard Medical School-led study published Dec. 26 in JAMA also found that hospitals that are bought by private equity-backed companies are less safe for patients. On average, patients at private equity-purchased facilities had 25.4% more hospital-acquired conditions, according to the study.
“Apollo’s purchase of these hospital systems follows a disturbing pattern of harm caused by the growing influence of private equity in the healthcare sector,” PESP Healthcare Director Eileen O’Orady, said in a news release. “Private equity’s utmost priority to maximize short-term profit over the long-term viability of the companies it controls leads to excessive debt, cost cutting, worse outcomes for patients and deteriorating working conditions for employees. Apollo’s management of its hospitals seems to follow the usual playbook.”
The study, “Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers,” was developed in conjunction with the American Federation of Teachers and the International Association of Machinists and Aerospace Workers. Clickhere to access the full report.
Apollo, Lifepoint and ScionHealth did not respond to Becker’s request for comment.
The Nelson A. Rockefeller Institute of Government is a public policy think tank founded in 1981 that conducts cutting-edge research and analysis to inform lasting solutions to the problems facing New York State and the nation.
Introduction & Definitions
In 2023, I noted10 trends within three broad categories in healthcare worth watching and provided a mid-year update on those trends. They included: the impact of unwinding the Public Health Emergency on insurance coverage, healthcare workforce shortages, price inflation, declining margins at hospitals, private equity in healthcare, consolidations, alternate payment models, attention to health equity, digital telehealth expansion, and the expansion of non-traditional providers in healthcare. These trends continue to be worth watching in 2024.
More significant than any one of these trends is the combined interaction of the trends in the industry overall—what I’ll call a “mega-trend,” which results in a trifurcation of the industry. Currently, there are parts of the healthcare industry struggling to exist. This is due to different factors, including high expenses, staffing challenges, and a lack of access to capital and technology, among other things. I call the types of healthcare entities that fall into this category “Today” entities because they exist now but may or may not exist in the future. In contrast, there is another set of entities in healthcare that have emerged in the last five or so years. They are becoming larger through consolidation and integration, and have greater access to capital and technology. I call these types of healthcare entities the “Tomorrow” entities because their size, resources, and forward-looking strategies are changing the future of healthcare.
In between these two categories, are existing and traditional entities in healthcare that seek sustaining strategies. I call these entities the “Striving Survivors” whose success and ability to persevere is still an open question. Most look like the healthcare entities of Today, but what distinguishes them is their ability to partner, use technology, and diversify what they offer. To understand the mega–trend phenomena of this trifurcation in healthcare and what’s happening within and across each of these three categories, this blog dissects how the trends I highlighted in 2023 are impacting the Today and the Tomorrow entities and discusses how the Striving Survivors are attempting to keep pace as the healthcare industry evolves.
The “Today” Healthcare Entities
As noted in my 2023 blog,price inflation and expense growth—particularly as they relate toworkforce and labor costs—were two trends impacting existing healthcare organizations. Today’s healthcare entities are heavily reliant on people, and, unsurprisingly, increased expenses for personnel, which had a major impact on organizations’ bottom lines for the past few years, as did general inflation and increased supply prices. However, for some providers, revenue and patient volume have returned to levels comparable to pre–pandemic. According to Kaufman Hall, a healthcare consulting firm, by the end of 2023, some hospitals’ margins were beginning to stabilize.
In looking at what may happen in 2024 for providers, however, the return of patient volume and, therefore, more predictable revenue may not be enough to yield positive margins. This is because expenses are predicted to be challenging. Industry experts estimate that healthcare prices will grow 7 percent in the coming year. The estimate reflects increases in pharmaceutical costs, growing provider expenses given the high labor and supply costs noted earlier, and insurer rate increases.
Another challenge to the healthcare entities of Today is the availability of capital to make strategic investments. More of this capital is now being provided by private equity firms, an estimated $750 billion in the last decade. To secure capital in the private market, bond rating agencies typically favor larger providers because they are less risky. This, among other factors, has contributed to growing consolidation in the industry among physician groups, insurers, and hospitals. Not only do these entities need capital for projects like upgrades to existing facilities, but to also make strategic investments. Such investments include acquisitions of other providers or companies that add to the revenue base, or technologies that allow improvements in care delivery.
The Today entities are increasingly challenged with adapting to consumer demands for tech–enabled care options. Consumers want more tech–supported smart applications that allow them to book appointments or get assistance with care more quickly via chatbots. Consumers also want new options for care at home—including hospital–at–home, which provides acute care in a home-based setting, and home–based care. As noted in my November blog on AI in healthcare, access to such technologies is not only creating further separation between healthcare entities, but can also create further inequities among consumers.
The “Tomorrow” Healthcare Entities
With the challenges for the healthcare entities of Today outlined above, it is important to note that those same challenges are not as significant for the healthcare players of Tomorrow. This is because most are substantial in size and have sufficient revenue, technology, and capital resources—often in the form of private equity. And many of them did not start in healthcare. They include, for example, Amazon—which started as an online bookstore and now has annual revenues of over $500 billion, CVS—which started as a retail pharmacy and now has revenues close to $300 billion; Uber—which started as a tech-enabled taxi-like transport application and now has revenues of over $30 billion, and Microsoft—which started as computer company but has expanded into healthcare with annual revenues of over $200 billion.
Some of these companies have entered healthcare by partnering with, or acquiring companies already in the sector such as Amazon’s 2023 acquisition of One Medical, a tech–enabled primary care entity; the 2022 partnership between United Health Group and Change Healthcare, a technology company; and CVS’s official 2023 acquisition of Signify, a home health organization. This was on top of CVS’s earlier (2018) merger with health insurance company Aetna, and its 2022 partnership announcement with Uber with the stated aim of improving access to care and decreasing health inequities in underserved communities across the country. Other entities have increased their footprint in healthcare by launching their products, such as Microsoft’s 2020 launch of Cloud services, specifically for healthcare. Some of these companies are now collaborating, including the 2021 partnership between CVS Health and Microsoft, which was designed to customize care further, enable frontline workers to more easily access and use data, and digitize operations.
In addition to these large nontraditional healthcare entities, the health insurance industry has also experienced large–scale consolidation and diversification that enables them to compete. One of the most notable companies in the world of healthcare integration is the nation’s largest insurer, United Health Group (UHG). UHG continued to outpace provider margins, with 2023 third quarter margins for UHG at levels 14 percent higher year-over-year. The continued growth at UHG was largely due to the increasing number of individuals served and a growing provider base of 90,000 physicians, or 10 percent of all physicians nationwide. This contrasts with one of the largest provider margins (Kaiser) whose 2023 third-quarter margin was only $239 million, an improvement from the $1.5 billion loss they experienced in the third quarter from the previous year. Although no other insurers are as big as UHG, the next biggest including, Aetna, Anthem, Cigna, and Humana all had 2023 third–quarter net incomes ranging from $1 billion to $1.4 billion.
The Striving Survivors
Not all traditional healthcare entities are being left behind; I call these the Striving Survivors. They may currently be considered Today entities, but they are attempting to put in place strategies so they can be Tomorrow entities in the future. Here are three primary strategies that may help these entities survive into the future:
Partnering—The number of independent hospitals as well as the number of independent physician groups has shrunk dramatically in the past decade, and there is increasing pressure for both to consider merging. A report by Kaufman Hall prepared at the request of the American Hospital Association, shows that merging can have advantages such as creating economies of scale, improving leverage to bargain for better payments from increasingly large insurance companies, and allowing better access to capital markets. Other advantages to partnering include diversifying what services can be offered to patients, allowing providers to assume risk for the care of a larger population, or leveraging complementary strengths for strategic investments. Although many of these consolidations used to be regional in nature (providers would merge with neighboring providers), new mergers are occurring across broader geographic areas, as was the case with the merger of west–coast–based Kaiser and Pennsylvania-based Geisinge.
Maximizing Technology—Striving Survivors are also seeking to compete and survive into the future by partnering to maximize technology. Technologies like telehealth, remote monitoring, artificial intelligence, and hospital–at–home, are growing because they are delivering care in ways that are preferable to consumers. As recently noted by Deloitte, “Adopting new technologies and business models—while under sustained financial pressure—might be the biggest challenge health care executives will face in 2024.” The good news for the healthcare players of Today is the use of data and technology in new and creative ways can counteract some of their current financial and care delivery challenges. Technology can make care more convenient for consumers, reduce costs, or provide care in places where it is sometimes inaccessible. Some recent examples of partnerships between technology companies and today’s healthcare entities include women’s health tech startup Tia’s partnership with Common Spirit, one of the largest healthcare systems in the country. Similarly, Strive Health is managing kidney patients for Bon Secours Mercy Health; Carbon Health is providing tech–enabled urgent care for Milwaukee–based Froedtert Health. Even Best Buy, a home electronics store, has begun offering homecare through several partnerships, including, for example, Mass General Brigham.
Revenue Diversification—Revenue diversification has long been a growth strategy in many industries. Up until recently, there hasn’t been the same pressure for such diversification for healthcare entities. That is changing, in part, because many of the healthcare entities of Tomorrow come from non–health–related industries. Diversification can occur using either of the strategies noted above (partnership or maximizing the use of technology). Diversification might also include providing services in areas of healthcare where demand is growing (e.g. urgent care or outpatient instead of legacy inpatient services). It might also include services that are not currently widely used but are likely to become more commonplace in the future, such as precision medicine or hospital–at–home.
Conclusion
In 2024, it will not only be important for healthcare policymakers to monitor single trends such as the continued focus on health equity, the expansion of alternate payment models, or the cost of the healthcare workforce, but it will also be important to understand how trends may be interacting with each other to create larger market trends. Such is the case for the emergence of non-traditional players in healthcare, the influx of private equity, digital expansion, and major consolidations— which when combined —are resulting in a mega trend of trifurcation of the industry into Today, Tomorrow, and Striving entities in healthcare that are seeking to survive into the future. For healthcare policymakers, all these trends along with their interaction will be worth monitoring and understanding so that effective policies can be developed that result in a healthcare system that supports innovation, protects patients, reduces inequities, and results in better health outcomes at lower cost.
The new year dawned on a health insurance industry beset by challenges.
Only 7% of health plan executives view 2024 positively after being hammered by the coronavirus pandemic, regulatory turbulence and rising cost pressures, according to a Deloitte survey.
Costs are spiking, and health insurers remain uncertain how the lingering effects of COVID-19 will impact care utilization. Medicaid redeterminations are rewriting the coverage landscape state by state, while Medicare Advantage — the darling of payers’ business sheets — experiences significant regulatory upheaval.
Meanwhile, 2024 is a presidential election year. That’s adding more political uncertainty into the picture as Washington hammers payers over claims denials and the business practices of pharmacy benefit units.
Here’s what experts see coming down the pike for health insurers this year.
The uninsured rate will go up
The number of Americans without insurance coverage is almost certainly going to rise this year as states overhaul their Medicaid rolls, experts say.
During the pandemic, continuous enrollment protections led a record number of people to enroll in Medicaid. But earlier this year, states resumed checking eligibility for the safety-net program. Around 14.4 million Americans have been removed from Medicaid due to the redeterminations process, many for administrative reasons like incorrect paperwork despite remaining eligible.
“We are going to see an increase in the uninsured rate for children and probably adults as well as a consequence,” said Joan Alker, executive director of the Georgetown University Center for Children and Families.
The question is how big of an increase, experts said. Redeterminations began in April, but lagging information and state differences in data reporting has made it difficult to determine where individuals are turning for coverage, and in what numbers.
Early signs suggest some people losing Medicaid have found plans in the Affordable Care Act exchanges, though it’s probably “a very small percentage,” Alker said. More than 20 million people have signed up for ACA coverage since open enrollment began in November — an all-time high, according to data released by the Biden administration in early January.
Experts say the growth is due in part to redeterminations, along with the effects of more generous federal subsidies. Those subsidies are slated to expire in 2025, meaning ACA enrollment should stay elevated until then.
But it’s unlikely everyone who loses Medicaid will find a home on the marketplaces. The cost of family coverage without an employer remains out of reach for many Americans. It’s also too early to determine how many people terminated from Medicaid have shifted into employer coverage — that data should also emerge as 2024 continues, said Matt Fiedler, a senior fellow with the Brookings Schaeffer Initiative on Health Policy.
Federal regulators have also taken a number of actions to try and curb improper procedural Medicaid losses, like cracking down on states with high levels of child disenrollments. Yet, procedural terminations are unlikely to improve significantly this year, experts said.
“We do see a very hopeful trend” in some states, like Washington and Oregon, embracing longer periods of continuous eligibility, Alker noted.
The government has ramped up ACA marketplace outreach, which — along with macro forces like a strong labor market — are positive signs that individuals no longer eligible for Medicaid may find alternative coverage, whether in the ACA exchanges or through employment.
But “it’s likely we’ll see an increase in the uninsured rate. I think the question is how much,” Fiedler said.
Increasing vigilance around costs
Healthcare costs are projected to grow much faster in 2024 than the historical average, fueled by inflation, supply chain disruption and labor pressures increasing provider wages. Those costs are burdening employers already stressed by worker mental health and deferred preventive screenings that could worsen health conditions down the line.
As a result, employers are investing heavily in mental health and substance use disorder services. Seven out of ten employers say mental healthcare access is a priority in 2024, and employers say they’ll turn to virtual care providers to address the need, according to a Business Group on Health survey.
As a result, employers are increasingly demanding integrated platforms combining different benefits, continuing a pivot away from the point solutions they were deluged with during the pandemic. Payers are racing to meet that need.
This year, UnitedHealthcare plans to integrate more than 20 standalone products into a “supported benefits platform,” said Dan Kueter, CEO of the payer’s employer and individual business, during an investor day in November.
Cigna, which focuses on employer-sponsored plans, plans to add more services to its behavioral health navigator to help employers personalize the platform for their employees this year, said CEO David Cordani during a November earnings call.
For their part, health insurers are likely to raise premiums and combat hospital reimbursement hikes in 2024 to control costs, according to credit rating agency Fitch Ratings.
However, that outlook is complicated by uncertainty around how much elevated care utilization seen in 2023 will continue. Some payers, like UnitedHealth and Humana, are forecasting high utilization, while others like CVS have said they expect it to drop.
More payers might pursue mergers and acquisitions or build out internal musculoskeletal management programs to control costs, said Prateesh Maheshwari, a managing director at venture capital firm Maverick Ventures. Hip and knee surgeries were an oft-cited driver of utilization last year.
Still, publicly traded health insurance companies could see their margins moderately decrease in 2024, Fitch said.
GLP-1 coverage will increase — slowly
Surging demand for GLP-1s means insurance coverage for the drugs is expected to increase next year, putting more stress on the nation’s pressured healthcare payment system. GLP-1s, or glucagon-like peptide-1 drugs, have historically been used to treat diabetes but have shown efficacy in weight loss.
The drugs are exceedingly expensive, butthat hasn’t stopped peoplefrom trying to get theirhands on GLP-1s — off-label or not. TD Cowen predicts GLP-1 sales could reach $102 billion by 2030, with $41 billion of that for obesity.
More private payers are considering covering the drugs next year, though the doors to coverage aren’t being thrown wide open. According to a November survey by the International Foundation of Employee Benefit Plans, while 76% of employers provide GLP-1 drug coverage for diabetes, just 27% provide coverage for weight loss.
Yet, 13% are considering adding coverage for weight loss.
As insurance coverage increases, payers will ensure only eligible patients are accessing the drugs through checks like step therapy, said Nathan Ray, head of healthcare M&A at consultancy West Monroe. As a result, access could remain restricted.
Payers will also tie coverage for GLP-1s to additional behavioral management programs. That trend has proved a gold rush for chronic condition management companies and telehealth providers, which have rushed to stand up new business lines for weight loss that include GLP-1s.
“Things like this, that include the opportunity for medication along with the accompaniment of behavioral change, is where I think the market will go in 2024,” said Heather Dlugolenski, Cigna’s U.S. commercial strategy officer.
Proponents of weight loss medication are also eyeing a potential overturn of the ban on Medicare coverage of weight loss drugs next year. A growing number of lawmakers (and drugmakers standing to profit from Medicare coverage) have come out in support of a bill introduced in 2023 to allow Medicare to cover anti-obesity drugs.
The bill is unlikely to be prioritized given Washington has a lot on its plate during the election year, but passage isn’t out of the realm of possibility, experts said.
Medicare Advantage will continue to grow under Washington’s watchful eye
In MA, the government contracts with private insurers to manage the care of Medicare seniors. MA has become increasingly popular, swelling to cover 31 million people last year — a boon for insurers offering the coverage, which can be twice as profitable for private payers than other types of plans.
As such, MA plans have been advertising heavily, trumpeting their supplemental benefits like gym memberships or subsidized groceries. Seniors find those benefits attractive, Brookings’ Fiedler said, and may not understand that MA plans may not cover as much medical care as traditional Medicare.
”My best bet would be MA enrollment in the near term continues to grow,” Fiedler said. “I don’t think we’re at the ceiling yet.”
Despite elevated costs in 2023 from seniors using more medical care, insurers generally didn’t cut back on plan benefits this year as they continue to compete for members.
Yet, the program hasn’t been without its complications. Payers cried foul last year over tweaks to MA rates, star ratings and reimbursement audits, with Humana and Elevance suing to stop the changes.
MA “should remain a key long-term growth driver for managed care, but we see a more challenging setup in 2024 as weaker funding, risk coding changes, and lower Star ratings combine to pressure margins,” J.P. Morgan analysts wrote in an outlook report published late last year.
Insurers were also plagued in 2023 by congressional hearings and lawsuits over their claims reviews processes, sparking criticism that seniors may not be receiving the care they’re due.
Scrutiny from Washington around such practices is likely to continue.
“We are seeing both in the Senate and House a lot of interest in peeling back the layers of the onion of how big health plans are operating their Medicare Advantage programs. That’s going to continue to be an issue,” said Reed Stephens, a healthcare chair at law firm Winston & Strawn who focuses on risk.
Though it’s unlikely that legislation will be passed reforming MA, Reed said. Overall, regulatory and political turbulence should subside somewhat this year.
The rate and marketing changes were “short of the last train out of the station,” said Brookings’ Fiedler. “The administration is unlikely to want a big fight with MA plans in an election year.”
The Mark Cuban effect: Payers with PBMs will launch more ‘transparent’ options
Major pharmacy benefit managers will introduce more options billed as transparent and cost-effective to retain clients after some turned to upstart competitors last year.
PBM clients are clamoring for outcomes-based pricing, with structures tying PBM compensation to measures like adherence, according to a J.P. Morgan survey from late 2023. Clients also want transparency, whether more data sharing or full administration models.
The changes aren’t revolutionary, but they hint at ongoing distrust of major PBMs from benefits teams, J.P. Morgan said.
UnitedHealth’s Optum Rx, Cigna’s Express Scripts and CVS Caremark — which together control 80% of prescriptions in the U.S. — have all recently launched new programs, partnerships or models they say are more affordable and transparent to meet the demand.
The industry is likely to see more moves along those lines in 2024, experts say — especially as Congress considers legislation to reform PBMs. The Lower Costs, More Transparency Act passed the House in December. The bill is seen as unlikely to clear the Senate, but specific measures, like forced PBM transparency, could make it into larger legislative packages.
The passing of measures around transparency could satisfy politicians’ need for a win when it comes to drug pricing without creating meaningful reform in the sector, according to Jefferies analyst Brian Tanquilut.
Yet, momentum to do something about high drug costs will certainly carry into this year. Presidential candidates on both sides of the aisle are expected to wield the issue on the campaign trail.
“The companies in those markets are going to have to stay nimble and keep on their toes,” said Winston & Strawn’s Stephens.
M&A, especially vertical integration, carries on
Companies like UnitedHealth, CVS and Humana will continue building out networks of physical care sites in 2024. New M&A guidelines from the Department of Justice and Federal Trade Commission could raise the bar for merger approvals, but the value proposition for insurers to acquire healthcare providers is too high for them to be dissuaded, experts said.
Payers will continue to pursue as many deals “as they can find willing, available targets,” said West Monroe’s Ray.
By directing members to owned locations for medical needs, health insurers can essentially pay themselves for providing a service, keeping more revenue in-house. As a result, payers — especially those with a large presence in MA, which incentivizes organizations to better manage cost — will stay on the hunt for acquisition targets.
While healthcare M&A was relatively slow in 2023, 68% of senior leaders in the sector expect deal volume to rise in 2024, according to a survey by investment bank Jefferies.
Optum — which employs or is affiliated with around one-tenth of all doctors in the U.S. — is already eyeing M&A. The health services arm of UnitedHealth is currently pursuing an acquisition of a physician-owned clinic chain in Oregon, even as it comes off a number of big provider buys in 2023, including the multi-billion-dollar acquisitions of home health providers Amedisys and LHC Group.
Cigna has also said it plans to look for smaller strategic acquisitions to grow its business, after a potential merger with rival Humana crumbled late last year.
UnitedHealth is bracing for a struggle next year with the financial effects of shifting Medicare Advantage payment rates.
The health insurance giant released 2024 guidance on Tuesday that included a number of less favorable metrics than analysts expected.
During the company’s investor day in New York City on Wednesday, UnitedHealth executives blamed the outlook on an MA rate change issued by regulators earlier this year that insurers slam as a payment cut.
Pressured metrics include slower MA membership growth, lower margins at UnitedHealthcare and a higher medical loss ratio. UnitedHealth forecast a 2024 MLR of 84%, a full percentage point higher than analysts’ consensus expectation.
Despite the MA headwind, UnitedHealthcare’s financial targets overall still came in in-line or ahead of analyst expectations.
MA rates ‘ripple’ through UnitedHealth’s 2024
UnitedHealth is a behemoth in the U.S. healthcare industry, with one of the largest pharmacy benefits managers, an expanding healthcare IT arm and a growing presence in care delivery, including a network of tens of thousands of physicians.
UnitedHealth is also the dominant health insurer in many markets, including in MA. The Minnesota-based company is the largest provider of the privately-run Medicare plans.
Management has said they expect their share of the market to grow as more seniors age into the government insurance program and select MA over traditional Medicare.
However, UnitedHealth is now saying that MA growth could be depressed next year thanks to a rate notice from the CMS that’s deeply unpopular with insurers.
Earlier this year, the CMS finalized MA rates for 2024 that regulators said should result in a 3.3% increase in revenue for health insurers in the program. The changes also include a new approach to risk adjustment meant to curb upcoding, a practice where insurers inflate their members’ sicknesses to get higher payments from the government.
However, insurers have said the changes, which are being phased in over the next three years, will result in a net decrease to MA revenue overall.
“That rate notice has a material impact in terms of revenues associated with our Medicare Advantage portfolio, and as you can see that ripples through the metrics of the organization,” CEO Andrew Witty said during UnitedHealth’s investor day.
UnitedHealthcare, UnitedHealth’s health insurance division, now expects slower Medicare revenue and membership growth next year than analysts expected.
UnitedHealth expects to add between 325,000 and 375,000 Medicare Advantage members next year, representing almost 4% growth at the midpoint — “well below our model,” commented JP Morgan analyst Lisa Gill in a note.
That’s compared to 11% membership growth year to date in 2023, according to CMS data cited in a TD Cowen note. Previously, UnitedHealth leadership said they expected to grow above the overall MA industry growth rate in 2024, so “this appears to be a disappointment,” TD Cowen analyst Gary Taylor wrote.
However, “we are not materially surprised to see the slower growth rate in 2024 given the changes with the risk adjustment,” Gill said.
Some payers have said the rate changes could force them to cut benefits in MA. Yet, UnitedHealth has spent the last six months reconfiguring its plans in response to the rate notice, looking for ways to contain costs without curtailing benefits, Witty said.
UnitedHealthcare should bring in about $303 billion in revenue next year, mostly driven by Medicaid upside, the company said. TD Cowen’s Taylor noted he was unsure why UnitedHealth forecast the Medicaid improvement, given Medicaid payers are shedding members as states recheck eligibility for the safety-net insurance coming out of the COVID-19 pandemic.
UnitedHealth thinks its Medicaid enrollment will drop by up to 200,000 members next year due to redeterminations, the company said.
Eye on Optum Health
UnitedHealth leadership devoted half of their investor day to talking about the insurer’s plans to expand value-based care arrangements — a “core objective” for the next several years, Witty said.
A key actor in striving for that objective is Optum Health, UnitedHealth’s care delivery network that’s under the umbrella of its health services business Optum.
Optum released stronger 2024 guidance than analysts expected. Much of that growth is due to better-than-expected margins for Optum Health, analysts said.
Currently, Optum Health has about 4 million lives in fully accountable payment arrangements — a number that’s nearly doubled from 2021, said UnitedHealthcare CEO Brian Thompson during the investor day.
Optum Health expects to add another 750,000 lives by the end of next year.
”You should expect us to grow that number substantially each year,” Thompson said. “Our long-term ambition is to transition as many people as possible into value-based care.”
Overall, UnitedHealth expects 2024 adjusted profit of $27.50 to $28 a share, largely in line with what analysts expected.
Expected revenue is $400 billion to $403 billion, higher than Wall Street consensus.
Jersey City, N.J.-based CarePoint Health and Hudson Regional Hospital in Secaucus, N.J., have signed a letter of intent to combine under a new management company, Hudson Health System, which will incorporate the acute care facilities of both organizations.
Hudson Health System would be a four-hospital system that includes both nonprofit and for-profit hospitals in an innovative new model and continue to be in-network with all major payers.
The transaction is expected to strengthen CarePoint’s financial position and improve patient care and outcomes across the hospitals, according to John Rimmer, CarePoint’s chief medical officer, said in a Jan. 12 news release.
“Hudson County is the most diverse and dynamic community in New Jersey, and its residents deserve nothing less than exceptional care, affordable access, the most advanced specialties and technology, and the highest caliber physicians to serve patients’ needs, especially the underserved communities that rely on our facilities,” said CarePoint President and CEO Achintya Moulick, MD, who will be president and CEO of Hudson Health System. “With adequate state support, I believe we can build a hospital system that will deliver on its core mission.”
The letter of intent is the precursor to a new organizational structure and operating plan that will require approval from the New Jersey State Department of Health. Hudson Health System would be a four-hospital system that includes Hudson Regional, Bayonne Medical Center, Hoboken University Medical Center and Christ Hospital in Jersey City.
“This new system expands our mutual impact far beyond and far sooner than what we could ever have achieved separately,” Hudson Regional CEO Nizar Kifaieh, MD, said. “The possibilities are enormous and will energize the entire medical community to deliver that much more to the patients.”
More details about Hudson Health System are expected to be announced in the coming days.
By the end of this week, we’ll know a lot more about the economic trajectory for U.S. healthcare in 2024: it may cause indigestion.
Digesting deal announcements and industry prognostics from last week’s 42nd JPM conference in San Francisco. Notably, with the exceptions of promising conditions for weight loss drugs, artificial intelligence and biotech IPOs, the outlook is cautionary for providers and inviting for insurers and retail health. Expanded conflicts in Ukraine and Gaza loom as threats. The U.S. trade relationship with China and its growing tension with Taiwan poses an immediate threat to the U.S. healthcare supply chain for raw materials in drugs, OTC products, disposables. U.S. public opinion about its institutions is arguably shaped in part in social media: TikTok is owned by Chinese internet tech company ByteDance and operates in 150 countries. The 16 not for profit health system presentations at JPM sounded a chorus in unison: ‘our core business—hospital care– is not sustainable. We need deals with private capital to stay afloat.’ By contrast, national insurers and retailers sang a different tune: ‘the market is receptive to our products and services that are cheaper, better and more easily accessed through digital platforms. The status quo is outdated’.
Digesting results from today’s Iowa GOP Caucus which serves as a gatekeeper for Presidential candidate wannabes. In the run-up to Campaign 2024, polls show voters interested in abortion rights and affordability. But specific health system reforms have not surfaced to date in this election cycle and understandably: per the November 2023 Keckley Poll, 76% of U.S. adults agree that “Most politicians avoid healthcare issues because solutions are complicated and they fear losing votes” vs. 6% who disagree. Thus, the Iowa results might narrow the President contestant pool, but it will do little to clarify U.S. health policies in 2025 and beyond.
Digesting takeaways from the World Economic Forum (WEF) in Davos. The annual confab draws world leaders and big-name consultancies and bankers who want to rub elbows with them. It’s notable that the WEF pre-conference Global Risk Survey indicated growing concern about a looming “global catastrophe” and its agenda includes sessions on women’s health, misinformation and artificial intelligence—all central to healthcare’s future. The world is small: 8 billion inhabitants in 195 countries. There’s growing global attention to healthcare and recognition that the integration of social services (nutrition, housing, transportation, et al) and elimination of structural barriers that limit access are necessary to the effectiveness of their systems. The U.S. lacks both though it’s the world’s most expensive system. Thus, U.S.-based solutions to enhance clinical efficacy for specialty care are accessible to global markets at prices significantly lower than what U.S. taxpayers pay because their government’s refuse to pay U.S. rates.
Digesting where Congress lands this week on the fiscal 2024 budget. A deal was reached tentatively yesterday on a short-term funding bill that would avert a partial government shutdown this Friday. The $1.6 trillion continuing resolution funds the government through March 1 and March 8 and includes $886B for defense and $704B for other total discretionary programs. While payments for social security and Medicare are not impacted, most other federal health programs are impacted and therefore caught in the Congressional crossfire between budget hawks wary of the ballooning federal deficit ($34 trillion) and progressives who think the federal government spends too much on the ‘have’s’ and not enough, including health and social services, on its ‘have not’s.’ And this deal is TENTATIVE!
My take:
The cumulative effect of these events in economic indigestion for the entire U.S. economy and especially for those of us who work in its healthcare industry. So, for the balance of 2024, the realities for U.S. healthcare are these:
Public support for the health system is eroding. Trust and confidence in the U.S. health system is low. No sector in U.S. healthcare is immune though some (community hospitals, public health programs, independent physicians) are more favorably viewed than others. Confidence in government agencies (CDC, FDA, CMS) is fractured due to misinformation and disinformation. ‘Not-for-profit’ designation is a meaningful distinction to some but secondary to characteristics more readily understood and valued.
Federal policies toward healthcare are increasingly antagonistic. They’re popular and in most cases, bipartisan. Federal policies that expand price transparency (drugs, hospitals, health insurance), constrain on consolidation (horizontal) and private equity investing, expose/reduce conflicts of interest, address workforce resilience (compensation, work-rules) and protect consumers will be prominent. Beyond these, court actions and budgetary negotiations will define/refine federal health policies. Notably, the rumored DOJ antitrust action against Apple will be a closely watched barometer as will the government’s attention toward Microsoft given its leading role in ChatGPT and AI platform Copilot et al.
The big players enjoy advantages over smaller players. It’s a buyer’s market for them. The corporatization of U.S. healthcare has rewarded big operators in each sector and punished smaller, independent operators. More regulation, higher operating costs, escalating administrative complexity and shifting demand require capital that’s increasingly unaffordable/inaccessible to less credit-worthy players. In 2024, in every sector, bigger fish will eat the smaller as readily-accessible private capital is deployed to welcoming sellers. But mechanisms whereby ‘independents’ are protected and growing disparity in how care is financed and delivered will be a prominent concern to policymakers.
Regrettably, an off-the-shelf Pepto-Bismol is not available to the U.S. system. It is complex, fragmented, inequitable and expensive, but also profitable for many who benefit from the status quo.
So, the conclusion that can be deduced from the four events this week is this: economic indigestion in U.S. healthcare will persist this year and beyond because there is no political will nor industry appetite to fix it. Darwinism aka ‘survival of the fittest’ is its destiny unless….???
HENRY KOTULA 