Category Archives: Market Trends

Health system finances looking up

Posted on by • Posted in Financial Performance, Financial Pressure, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Market Outlook, Market Trends, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue • Leave a comment
https://www.beckershospitalreview.com/finance/health-system-finances-looking-up.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=1727F7626990D7P

Fitch Ratings Senior Director Kevin Holloran dubbed 2022 the worst operating year ever and most nonprofit health systems reported large losses. However, the losses are shrinking and some systems have even reported gains during 2023 so far.

Cleveland Clinic reported $335.5 million net income for the first quarter of the year, compared with a $282.5 million loss over the same period in 2022. The health system reported revenue of $3.5 billion for the quarter. Cleveland Clinic has 321 days cash on hand, which puts it in a strong position for the future.

Boston-based Mass General Brigham reported $361 million gain for the second quarter ending March 31, which is up from a $867 million loss in the same period last year. The health system reported quarterly revenue jumped 11 percent year over year to $4.5 billion. The system’s quarterly loss on operations was down significantly this year, hitting $8 million, compared to $183 million last year.

Renton, Wash.-based Providence reported first quarter revenues were up 5.1 percent in 2023 to $7.1 billion, and operating loss is also moving in the right direction. The system reported $345 million operating loss in the first quarter of 2023, down from $510 million last year.

All three systems cited ongoing labor shortages and labor costs as a challenge, but are working on initiatives to reduce expenses. Cleveland Clinic and Mass General Brigham reported operating margin improvement to nearly positive numbers.

Kaiser Permanente, based in Oakland, Calif., also reported operating income at $233 million for the first quarter of the year, an increase from $72 million operating loss over the same period last year. The system is focused on advancing value-based care for the remainder of the year and its health plan grew more than 120,000 members year over year.

Even more regional systems are stemming their losses. SSM Health, based in St. Louis, went from a $57.4 million loss for the first quarter of 2022 to $16.5 million quarterly loss this year. Revenue increased 13.3 percent to $2.5 billion for the quarter, with increased labor expenses and inflation on supply costs continuing to weigh on the system.

UCHealth in Aurora, Colo., also reported a first quarter income of $61.8 million and revenue of more than $5 billion.

Not every system is seeing losses decline. Chicago-based CommonSpirit Health, which reported larger operating losses in the first quarter year over year, hitting $658 million and $1.1 billion for the nine-month’s end March 31. The system was able to reduce contract labor costs, but still finds hiring a challenge and spent time last year recovering from a cybersecurity incident.

Hospitals face a long road to financial recovery from the pandemic as inflation persists and labor shortages become the norm, but movement in the right direction is welcome.

Kaiser+Geisinger: Our take on the formation of Risant Health

Posted on by • Posted in Federal Trade Commission (FTC), Health System, Hospital, Hospital Industry, Kaiser Permanente, Market Consolidation, Market Trends, Mergers & Acquisitions, Value Based Care Model, Value-Based Healthcare • Leave a comment
https://www.advisory.com/daily-briefing/2023/04/27/kaiser-geisinger?utm_source=member_db&utm_medium=email&utm_campaign=2023apr27&utm_content=member_headline_final_x_x_x_x&elq_cid=4838956&x_id=0033b00002owB9sAAE

Kaiser Permanente  on Wednesday announced it is acquiring Geisinger Health, and Geisinger will operate independently under a new subsidiary of Kaiser called  Risant Health.

Deal details

The combination of the two companies will need to be reviewed by federal and state agencies, but if approved, the two companies will have more than $100 billion in combined annual revenue.

Geisinger will operate independently as part of Risant Health, which will be headquartered in Washington, D.C. and will be led by Geisinger president and CEO Jaewon Ryu. The health systems said they intend to acquire four or five more hospital systems to fold into Risant in an effort to reach $30 billion to $35 billion in total revenue over the next five years.

In an interview, Ryu and Kaiser chair and CEO Greg Adams said Risant will specifically target hospital systems already working to move into value-based care.

According to Adams, Risant Health “is a way to really ensure that not-for-profit, value-based community health is not only alive but is thriving in this country.”

“If we can take much of what is in our value-based care platform and extend that to these leading community health systems, then we extend our mission,” Adams said. “We reach more people, we drive greater affordability for health care in this country.”

Why we’re ‘cautiously optimistic’ about this acquisition 

Just when you thought healthcare couldn’t get more interesting, Kaiser and Geisinger announce their union through newly established Risant Health. At first pass, it is hard to see a downside with this deal — and that’s something that raises my “spidey-senses.”

Kaiser and Geisinger are coming together through a vehicle that could allow them to clear an increasingly skeptical  Federal Trade Commission. It affords two health systems — both in comparatively weaker financial positions than before the pandemic — the ability to get bigger through the merger. Its pitch is decidedly hospital- (and in the future provider) led, with Geisinger retaining its brand and elevating its CEO to the head of Risant. It also gives Geisinger and future partners the latitude to pursue their own payer relationships.

In addition, it is ostensibly a play to increase providers’ control over the nature and pace of value-based care (VBC) adoption. In its press release, Kaiser acknowledges that its closed network model of care management hasn’t scaled well to other markets. And Geisinger, with its own health plan and a track-record of developing its own VBC incentives, is no neophyte and brings a clear wealth of expertise.

Without a doubt, the offer to future partners is compelling: “Come for the size and stay for the value-based care.” But like all things in life, it’s all in the details. And that’s where my “spidey-sense” kicks in.

Partnership and affiliation models alone do not make the hard work of VBC easier. While this emerging group could become a valuable, provider-led clearing house for VBC concepts, applying them in communities remains a stubborn challenge that requires individual work and leadership.

The true test of the concept will come when the first new partner joins. How they decide to participate and whether the model has the right mix of scale and flexibility is what I’ll be watching closely. The overall objective and success measure of this endeavor remains somewhat opaque, but I would say that the concept has real legs here. Right now, I’m leaning toward “cautiously optimistic.”

National ASC chains look to dominate growing market

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Competition, For-Profit, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Share, Market Trends, Operating Margin, Operating Performance, Operating Revenue, Private Equity • Leave a comment

https://mailchi.mp/73102bc1514d/the-weekly-gist-may-19-2023?e=d1e747d2d8

As care continues to shift to lower cost ambulatory surgery centers (ASCs), the graphic above looks at recent growth and consolidation in the ASC market. 

From 2012 to 2022, the five largest operators increased their collective ownership of ASC facilities from 17 to 21 percent, and were responsible for over 50 percent of total facility growth in that period. 

While physicians still fully own over half of the nation’s ASCs, the national chains tend to run larger, multispecialty facilities responsible for an outsized proportion of procedures and revenue. 

The likes of Tenet, Optum, and HCA are betting big on ASCs, banking on projections that the market will grow by over 60 percent in the next seven years. 

(Though AmSurg’s parent company, Envision Healthcare, filed for bankruptcy, AmSurg is buying Envision’s remaining ASCs to retain its significant foothold in the market.)

While many high-revenue specialties, notably orthopedics and gastroenterology, have already seen a significant shift to ASCs, cardiology is one of the most promising service lines for ASC growth, with some predicting that a third of cardiology procedures will be performed in ambulatory settings in the next few years. 

The shift of surgeries from hospitals to ASCs is daunting for health systems, who stand to lose half or more of the revenue from each case—if they’re able keep the procedure within the system. 

In the meantime, low-cost ASC operators will continue to add new facilities that deliver high margins to fuel their growth.

The imperative to “parallel process” mergers and integration

Posted on by • Posted in Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Trends, Mergers & Acquisitions, Post Merger Integration • Leave a comment

https://mailchi.mp/55e7cecb9d73/the-weekly-gist-may-12-2023?e=d1e747d2d8

Given the somewhat frantic pace at which transactions are happening in healthcare these days, with insurers buying up primary care assets, private equity firms rolling up specialty practices, hospital systems looking to consolidate, and everyone circling around digital players, it’s little surprise that we’ve begun to hear some angst among health system executives about their ability to keep pace.

“Some of these disruptors are focused entirely on M&A strategies,” one CEO told us recently. “My team still has to run a complex health system at the same time. It takes us forever to get deals done.”

The concern is legitimate: for many health systems, M&A has been a one-at-a-time proposition. Evaluating and completing an acquisition takes many months, if not a year or more—and the integration of even a relatively small entity into a larger health system often takes longer. 
 
There is a growing sentiment that the pace of single, sequential mergers and acquisitions will not allow health systems to keep pace. 

One CFO shared, “We did a large merger a decade ago, and we’re just at the point of feeling like we act as a single system. We’re looking at one or two others, and we can’t delay the next opportunity because we’re still working to integrate the last.”

His strategy: systems aiming to build a super-regional organization should “rapidly build the network and integrate it once you have all the pieces”. It’s a strategy, he said, that is serving vertically integrated payers like CVS and UHG well. To keep pace in a consolidating market, health systems must maintain a pipeline of potential partners that fit with their vision. But we’re also wary of “saving” all the integration until the deals are done.

Rather, health systems looking to rapidly expand must be able to “parallel process” multiple acquisitions and integration. With smaller financial reserves compared to payer behemoths, health systems need mergers to generate value more quickly. And moreover, as providers are held to a higher standard by regulators, new partnerships will benefit from demonstrating value to consumers and communities.  

Kaiser Permanente to acquire Geisinger, form company to operate other nonprofit systems

Posted on by • Posted in Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Trends, Mergers & Acquisitions • Leave a comment
https://www.healthcaredive.com/news/kaiser-permanente-acquire-geisinger-form-risant-health/648710/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-04-26%20Breaking%20News:%20Healthcare%20%5Bissue:49989%5D&utm_term=Healthcare%20Dive

Dive Brief:

  • Kaiser Permanente is acquiring Geisinger Health and forming a new nonprofit to buy and operate other value-oriented nonprofit systems, the organizations announced Wednesday.
  • The new nonprofit, Risant Health, will operate separately from Kaiser Permanente. Geisinger will become part of Risant but maintain its own name and mission, according to a press release.
  • Geisinger president and CEO Jaewon Ryu will be CEO of Risant as the transaction closes, subject to regulatory review. Risant will have its headquarters in Washington, D.C..

Dive Insight:

Risant represents an opportunity for Kaiser, which currently operates in eight states and Washington, D.C., to expand its reach nationwide through targeted acquisitions of nonprofit community health systems, as smaller hospitals continue to struggle in a difficult operating environment.

About half of all U.S. hospitals finished last year with negative margins, according to consultancy Kaufman Hall.

Kaiser, which reported $95 billion in revenue in 2022, plans to spend $5 billion on Risant over the next five years, and add five or six health systems to Risant over that period, according to reports.

Kaufman Hall said recently it expects a “new wave of transaction activity” and a growing number of cross-regional partnerships.

Pennsylvania-based Geisinger has 10 hospital campuses and a health plan that covers more than 500,000 members. It has more than 25,000 employees. Both Geisinger and Kaiser reported operating losses last year, as supply and labor expenses rose.

Kaiser in 2022 posted a $4.5 billion net loss, compared to a prior-year gain of $8.1 billion.

Federal and state regulators still need to approve the deal, the financial terms of which were not disclosed. It’s likely to face a high bar for approval as regulators more aggressively scrutinize hospital mergers.

What Hospital Systems Can Take Away From Ford’s Strategic Overhaul

Posted on by • Posted in Board, Capital, Caution, Clinical Treatment Process, Competition, Cost Management, Cost Reduction, Cost Structure, Death by a Thousand Cuts, Downsized, Downsizing, Duty of Care, Financial Distress, Financial Performance, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Hospital Portfolio, Labor Spend Management, Leadership, Leadership Crisis, Leadership Vision, Macro Economic Developments, Market Outlook, Market Trends, Market Uncertainty, Mission, Mission Critical, Operating Income, Operating Margin, Operating Metrics, Outpatient Care, Private Equity, Reduction in Force, Reluctance, Right Size, Strategy • Leave a comment
What Hospital Systems Can Take Away From Ford’s Strategic Overhaul

On today’s episode of Gist Healthcare Daily, Kaufman Hall co-founder and Chair Ken Kaufman joins the podcast to discuss his recent blog that examines Ford Motor Company’s decision to stop producing internal-combustion sedans, and talk about whether there are parallels for health system leaders to ponder about whether their traditional strategies are beginning to age out.

What to know about the latest inflation report

Posted on by • Posted in Federal Reserve, Federal Reserve Board, Inflation, Interest Rates, Labor Market, Labor Spend Management, Market Outlook, Market Trends, Market Uncertainty • Leave a comment

Inflation moderated notably in March as a decline in gas prices helped to pave the way for the slowest pickup in prices in nearly two years, providing relief for many American consumers and a positive talking point for President Biden.

The Consumer Price Index climbed 5 percent in the year through March, down from 6 percent in February. That marked the slowest pace since May 2021.

Still, the details of the report underlined that inflation retains concerning staying power under the surface: A so-called core index that aims to get a clearer sense of price trends by stripping out food and fuel costs, both of which can be volatile, picked up by 5.6 percent from a year earlier. That was up slightly from February’s 5.5 percent increase, and it marked the first acceleration in the yearly number since September.

The mixed signals in the fresh inflation data — which, taken as a whole, suggested that price increases are meaningfully moderating but the progress remains gradual — come at a challenging economic moment for the Federal Reserve. The central bank is the government’s main inflation fighter, and it has been trying to wrestle price increases back under control for slightly more than a year, raising interest rates to nearly 5 percent from near zero as recently as March 2022 to slow the economy and weigh down costs.

Officials are now assessing how their policy changes are working, and they are trying to gauge how much more they need to do to ensure that price increases come fully under control. Inflation has been slowing after peaking at about 9 percent last summer, but the process has been a slow one. It remains a long way back to the 2 percent inflation that was normal before the onset of the pandemic in 2020.

Uncertainty over how quickly and completely price increases will cool is being compounded by recent developments. A series of high-profile bank blowups last month could slow the economy, but it is unclear by how much. Some Fed officials are urging caution in light of the turmoil, even as others warn that the central bank should keep its foot on the economic brake and remain focused on its fight against rising prices.

The new data “solidifies the case for the Fed to do another hike in May, and to proceed cautiously from here,” said Blerina Uruci, chief U.S. economist at T. Rowe Price, later adding that “it will take time to bring inflation down.”

Fed officials target 2 percent inflation, which they define using a different index: the Personal Consumption Expenditures measure, which uses some data from the consumer price measure but is calculated differently and released a few weeks later. That measure has also been sharply elevated.

While Wednesday’s report showed an uptick in core inflation on an annual basis — one that economists had largely expected — Ms. Uruci said that it also offered some encouraging signs. The core inflation measure slowed slightly on a monthly basis, when the March figures were compared to those in February.

And a few important services prices, which the Fed is watching closely for a sense of whether price increases are poised to fade, cooled notably. Rent of primary residences picked up 0.5 percent compared to the prior month, down from 0.8 percent in the previous reading, for instance. Housing inflation broadly is expected to slow in 2023, and that appears to be starting to take hold.

“There are signs in the details to suggest we’re making some progress toward slowing inflation,” Ms. Uruci said. “It’s not where it needs to be, but it’s progress.”

But those hopeful signs do not mean that inflation will fade smoothly and rapidly. The slowdown in the overall index, for instance, may not last: A big chunk of the decline is owed to a drop in gas prices that may not be sustained.

And a few other indexes continued to show quick price increases, including new vehicles and hotel rooms.

As they try to bring inflation to heel, some central bankers have suggested that they may need to further raise interest rates.

The Fed’s latest estimates, released shortly after the collapse of Silicon Valley Bank and Signature Bank in March, suggested that officials could lift rates another quarter-point this year, to just above 5 percent. The central bank will announce its next policy decision on May 3.

On Tuesday, John C. Williams, the president of the Federal Reserve Bank of New York, said that the Fed had more work to do in bringing down price increases and suggested that the central bank’s March forecast for one more quarter-point rate move was still a “reasonable starting place.”

But Austan D. Goolsbee, the president of the Federal Reserve Bank of Chicago, suggested that recent bank failures could make it tougher for businesses and consumers to access credit, slowing the economy, stoking uncertainty and creating a “need to be cautious.”

“We should gather further data and be careful about raising rates too aggressively until we see how much work the headwinds are doing for us in getting down inflation,” Mr. Goolsbee said.

Higher interest rates have made it much more expensive to borrow money to buy a house or expand a business. That is slowing economic activity. As demand cools and the labor market softens, wage growth is also moderating.

That could help to pave the way for cooler inflation. When wages are climbing quickly, companies might charge more to try to cover their labor bills, and their customers are likely to be able to afford the steeper prices. But as households become more strapped for cash, it could become harder for businesses to raise prices without scaring away shoppers.

Healthcare added 34K jobs in March as temp nursing demand wanes

Posted on by • Posted in Health System, Hospital, Hospital Industry, Job, Job Market, Labor Shortages, Labor Spend Management, Market Outlook, Market Trends, Nurse Agency Staffing, Nurse Travelers, Operating Expenses, Operating Income, Operating Margin • Leave a comment
https://www.healthcaredive.com/news/healthcare-added-34k-jobs-march-temp-nursing-demand-wanes/647196/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-04-10%20Healthcare%20Dive%20%5Bissue:49508%5D&utm_term=Healthcare%20Dive

Dive Brief:

  • Healthcare job growth continued to climb in March with the industry adding 34,000 jobs last month, according to a report released from the Bureau of Labor Statistics on April 7. 
  • The job growth is lower than the six-month average monthly job gain of 54,000 in healthcare. Home health services and hospitals recorded the most gains, adding 15,000 and 11,000 jobs, respectively. 
  • The BLS report comes as demand for temporary nurses declines with median rates of temp staff billing down, according to a report out last week from Jefferies.

Dive Insight:

Labor shortages have been a continuing obstacle for hospitals and health systems, after the coronavirus pandemic spurred industry job reductions and clinicians left the field due to burnout. Temporary nurse staffing agencies swooped in to ease labor shortages, with hospital systems paying higher rates to temp agencies to staff their floors. 

Hospitals ended last year with negative margins, driven by labor expenses that rose as much as 36% compared with pre-pandemic levels. The average weekly rate for travel nurses reached $3,900 in January 2022, according to staffing platform Vivian Health, prompting lawmakers and industry groups to ask the White House to investigate nurse staffing agencies.

But hospitals may be catching a break from labor and temporary staffing pressures. Data from private healthcare staffers, including Aya Healthcare and Fastaff, show that demand for temporary nurses declined by 2.2%, with median bill rates dropping 2.9% week over week, according to the Jefferies report.

The accelerated decline in demand and bill rates could be a sign of labor woes easing, especially for nurse-dependent hospital operators like HCA Healthcare, according to the report.

“As we see order and bill rate data for temp nurses decline, we are gaining optimism that nurse-dependent healthcare providers such as hospitals [HCA Healthcare, Community Health Systems, Tenent Healthcare] and post-acute players [Amedisys, Encompass Health, Enhabit] will begin to see labor headwinds ease, which should help these companies achieve or exceed earnings goals this year,” the report said.

While labor shortages have battered HCA Healthcare and CHS, both operators suggested in recent earnings reports that labor pains could be easing. HCA reported in January that it was decreasing its nursing turnover and CHS reported in October that it had made progress in reducing its contract labor expenses.

Hospitals continue gaining jobs

Reports have showed that labor shortages appear to be easing this year, with a December report from Fitch Ratings noting that staffing shortages at nonprofit hospitals appeared to be incrementally waning.

Regulation of Consolidation

Posted on by • Posted in Antitrust, Federal Trade Commission (FTC), Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Share, Market Trends, Monopoly, Monopoly Behavior • Leave a comment

Jaime King On Consolidation and Competition — The Trials and Triumphs of Health Care Antitrust Law New England Journal of Medicine March 18, 2023; 388:1057-1060 DOI: 10.1056/NEJMp2201629

 “Over the past 30 years, health care consolidation has gone largely unchecked by federal and state antitrust enforcers, which has resulted in higher prices, stagnant quality of care, and limited access to care for patients. Similarly, consolidation has contributed to the availability of fewer employment options, limited wage growth, longer hours, and staff shortages for health care providers.

Antitrust law is designed to prevent such harms, but its failure to evolve alongside the health care industry has led to pervasive consolidation, which now necessitates regulation in some markets to address market-power abuses that competitive forces can no longer govern…

Although mergers are often justified with promises of improved quality or patient access, evidence supporting these claims is lacking.

Clinical integration as envisioned in accountable care organizations, for example, requires substantial oversight, training, and investment that goes well beyond the financial integration involved in most mergers. Most studies have found either no changes or a reduction in quality after provider mergers. Consolidation can also limit access to care; post-merger facility closures, reductions in charity care, and elimination of abortion and other reproductive health services have often occurred.

Consolidation among insurers also affects health care prices and quality. Insurers with market power can increase premiums above competitive levels by exercising monopoly power or can push provider payments below competitive levels by exercising monopsony power. Lower premiums are commonly found in areas with more insurers, whereas in the absence of competition, insurers that obtain price concessions from providers may not pass savings on to consumers.4 Some evidence suggests, however, that moderate amounts of insurer consolidation may be associated with improved patient experience, since providers in such markets have an incentive to compete on quality.

Given the health care industry’s growing complexity, future oversight could involve a combination of more responsive antitrust enforcement and creative regulatory interventions. Combining competitive and regulatory forces may offer the only hope for controlling health care prices, restoring high-quality care, protecting health care workers, and preserving and expanding access to care.”

Affordable Care Act 2.0: New Trends and Issues, New Urgency

Posted on by • Posted in ACA, Affordability, Competition, Health Insurance Coverage Adequacy, Health Policy, Innovation, Integrated Delivery System, Market Consolidation, Market Trends, Market Uncertainty, Private Equity, Supreme Court • Leave a comment
Affordable Care Act 2.0: New Trends and Issues, New Urgency

Thursday marks the 13th anniversary of the signing of the Affordable Care Act– perhaps the most consequential healthcare legislation since LBJ’s passage of the Medicare Act in 1965. Except in healthcare circles, it will probably go unnoticed.

World events in the Ukraine and China President Xi Jinping’s visit to Russia will grab more media attention. At home, the ripple effects of Silicon Valley Bank’s bankruptcy and the stability of the banking system will get coverage and former President Trump’s arrest tomorrow will produce juicy soundbites from partisans and commentators. Thus, the birthday of Affordable Care Act, will get scant attention.

That’s regrettable: it offers an important context for navigating the future of the U.S. health system. Having served as an independent facilitator between the White House and private sector interests in 2009-2010, I recall vividly the events leading to its passage and the Supreme Court challenge that affirmed it:

  • The costs and affordability of healthcare and growing concern about the swelling ranks of uninsured were the issues driving its origin. Both political parties and every major trade group agreed on the issues; solving them not so easy.
  • Effective messaging from special interests about the ACA increased awareness of the law and calcified attitudes for or against. Misinformation/disinformation about the “Patient Protection and Affordable Care Act” morphed to a national referendum on insurance coverage and the cost-effectiveness of the ACA’s solution (Medicaid expansion, subsidies and insurance marketplaces). ‘Death panels. government run healthcare and Obamacare’ labels became targets for critics: spending by special interests opposed to the law dwarfed support by 7 to 1. Differences intensified: Emotions ran high. I experienced it firsthand. While maintaining independence and concerns about the law, I received death threats nonetheless. Like religion, the ACA was off-limits to meaningful discussion (especially among the majority who hadn’t read it).
  • And after Scott Brown’s election to the vacant Massachusetts seat held by Ted Kennedy in January, 2010, the administration shifted its support to a more-moderate Senate Finance Committee version of the law that did not include a public option or malpractice reforms in the House version. Late-night lobbying by White House operatives resulted in a House vote in favor of the Senate version with promises ‘it’s only the start’. Through amendments, executive orders, administrative actions and appropriations, it would evolve with the support of the Obama team. It passed along party lines with the CBO offering an optimistic view it would slow health cost escalation by reducing administrative waste, implementation of comparative effectiveness research to align evidence with care, increased insurance coverage, changing incentives for hospitals and physicians and more.

The Affordable Care Act dominated media coverage from August 2009 to March 2010. In the 2010 mid-term election, it was the issue that catapulted Republicans to net gains of 7 in the Senate, 63 in the House and 6 in Governor’s offices. And since, Republicans in Congress have introduced “Repeal and Replace” legislation more than 60 times, failing each time.

Today, public opinion about the ACA has shifted modestly: from 46% FOR and 40% against in 2010 to 55% FOR and 42% against now (KFF). The national uninsured rate has dropped from 15.5% to 8.6% and Medicaid has been expanded in 39 states and DC. Lower costs, increased affordability and quality improvements owing to the ACA have had limited success.

Key elements of the ACA have not lived up to expectations i.e. the Patient Centered Outcome Research Institute, the National Quality Strategy, Title V National Healthcare Workforce Task Force, CMMI’s alternative payment models and achievement of Level 3 interoperability goals vis a vis ONCHIT, CHIME et al. So, as the 2024 political season starts, the ACA will get modest attention by aspirants for federal office because it addressed big problems with blunt instruments. Most recognize it needs to be modernized based on trends and issues relevant to healthcare in 2030 and beyond.

Trends like…

  • Self-diagnostics and treatment by consumers (enabled by ChatGPT et al).
  • Data-driven clinical decision-making.
  • Integration of non-allopathic methodologies.
  • The science of wellbeing.
  • Complete price, cost and error transparency.
  • Employer and individual insurance coverage optimization.
  • And others.

Issues like….

  • The role and social responsibility of private equity in ownership and operation of services in healthcare delivery and financing.
  • The regulatory framework for local hospitals vs. Regional/nation health systems, and between investor-owned and not-for-profit sponsorship.
  • The role and resources for guided self-care management and virtual-care.
  • Innovations in care delivery services to vulnerable populations using technologies and enhanced workforce models.
  • Modernization of regulatory environments and rules of competition for fully integrated health systems, prescription drug manufacturers, health insurers, over-the counter therapies, food as medicine, physician ownership of hospitals, data ownership, tech infomediaries that facilitate clinical decision-making, self-care, professional liability and licensing and many others.
  • Integration of public health and local health systems.
  • The allocation of capital to the highest and best uses in the health system.
  • The sustainability of Medicare and role of Medicare Advantage.
  • The regulatory framework for disruptors”.
  • And many others.

These trends are not-easily monitored nor are the issues clear and actionable. Most are inadequately addressed or completely missed in the ACA.

Complicating matters, the political environment today is more complicated than in 2010 when the ACA became law. The economic environment is more challenging: the pandemic, inflation and economic downturn have taken their toll. Intramural tensions in key sectors have spiked as each fights for control and autonomy i.e. primary care vs. specialty medicine, investor-owned vs. not-for-profit hospitals, retail medicine & virtual vs. office-based services, carve-outs, direct contracting et al . Consolidation has widened capabilities and resources distancing big organizations from others. Today’s media attention to healthcare is more sophisticated. Employers are more frustrated. And the public’s confidence in the health system is at an all-time low.

“ACA 2.0” is necessary to the system’s future but unlikely unless spearheaded by community and business leaders left out of the 1.0 design process. The trends and issues are new and complicated, requiring urgent forward thinking.