Category Archives: Public Perception

Gut Punches for Healthcare and Hospitals

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Bankruptcy, Center for Medicare and Medicaid Services (CMS), Deferred Healthcare, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Industry, Hospital, Hospital Industry, Medicaid Cuts, Medical Debt, Out of Pocket Expenses, Politics, Profit, Profit Margin, Profit Model, Profit Motive, Public Opinion, Public Perception, Shareholder Expectations, Sign of the Times, Underinsured, Uninsured, Wall Street • Tagged , , , , • Leave a comment
Gut Punches for Healthcare and Hospitals: The One Big Beautiful Bill Act and the CMS Proposed Rule

The healthcare industry is still licking its wounds from $1 trillion in federal funding cuts included in the One Big Beautiful Bill Act (OBBBA) signed into law July 4.

Adding insult to injury, the Center for Medicare and Medicaid services issued a 913-page proposed rule last Tuesday that includes unwelcome changes especially troublesome for hospitals i.e. adoption of site neutral payments, expansion of hospital price transparency requirements, reduction of inpatient-only services, acceleration of hospital 340B discount repayment obligations and more.

The combination of the two is bad news for healthcare overall and hospitals especially: the timing is precarious:

  • Economic uncertainty: Economists believe a recession is less likely but uncertainty about tariffs, fear about rising inflation, labor market volatility a housing market slowdown and speculation about interest rates have capital markets anxious. Healthcare is capital intense: the impact of the two in tandem with economic uncertainty is unsettling.
  • Consumer spending fragility: Consumer spending is holding steady for the time being but housing equity values are dropping, rents are increasing, student loan obligations suspended during Covid are now re-activated, prices for hospital and physicians are increasing faster than other necessities and inflation ticked up slightly last month. Consumer out-of-pocket spending for healthcare products and services is directly impacted by purchases in every category.
  • Heightened payer pressures: Insurers and employers are expecting double-digit increases for premiums and health benefits next year blaming their higher costs on hospitals and drugs, OBBBA-induced insurance coverage lapses and systemic lack of cost-accountability. For insurers, already reeling from 2023-2024 financial reversals, forecasts are dire. Payers will heighten pressure on healthcare providers—especially hospitals and specialists—as a result.

Why healthcare appears to have borne the brunt of the funding cuts in the OBBBA is speculative: 

Might a case have been made for cuts in other departments? Might healthcare programs other than Medicaid have been ripe for “waste, fraud and abuse” driven cuts? Might technology-driven administrative costs reductions across the expanse of federal and state government been more effective than DOGE- blunt experimentation?

Healthcare is 18% of the GDP and 28% of total federal spending: that leaves room for cuts in other industries.

Why hospitals, along with nursing homes and public health programs, are likely to bear the lion’s share of OBBBA’ cut fallout and CMS’ proposed rule disruptions is equally vexing.  Might the high-profile successes of some not-for-profit hospital operators have drawn attention? Might Congress have been attentive to IRS Form 990 filings for NFP operators and quarterly earnings of investor-owned systems and assume hospital finances are OK? Might advocacy efforts to maintain the status quo with facility fees, 340B drug discounts, executive compensation et al been overshadowed by concerns about consolidation-induced cost increases and disregard for affordability? Hospital emergency rooms in rural and urban communities, nursing homes, public health programs and many physicians will be adversely impacted by the OBBBA cuts: the impact will vary by state. What’s not clear is how much.

My take:

Having read both the OBBBA and CMS proposed rules and observed reactions from industry, two things are clear to me:

The antipathy toward the healthcare industry among the public  and in Congress played a key role in passage of the OBBBA and regulatory changes likely to follow. 

Polls show three-fourths of likely voters want to see transformational change to healthcare and two-thirds think the industry is more concerned with its profit over their care: these views lend to hostile regulatory changes. The public and the majority of elected officials think the industry prioritizes protection of the status quo over obligations to serve communities and the greater good.

The result: winners and losers in each sector, lack of continuity and interoperability, runaway costs and poor outcomes.

No sector in healthcare stands as the surrogate for the health and wellbeing of the population. There are well-intended players in each sector who seek the moral high ground for healthcare, but their boards and leaders put short-term sustainability above long-term systemness and purpose. That void needs to be filled.

The timing of these changes is predictably political. 

Most of the lower-cost initiatives in both the OBBBA changes and CMS proposals carry obligations to commence in 2026—in time for the November 2026 mid-term campaigns. Most of the results, including costs and savings, will not be known before 2028 or after. They’re geared toward voters inclined to think healthcare is systemically fraudulent, wasteful and self-serving.

And they’re just the start: officials across the Departments of Health and Human Services, Justice, Commerce, Labor and Veterans Affairs will add to the lists.

Buckle up.

The Next 100 Days: What Healthcare Should Expect

Posted on by • Posted in Economy, Funding, Health Insurance Industry, Health System, Hospital, Hospital Industry, Investing, Investment, Medicare, Medicare Advantage, Public Health, Public Opinion, Public Perception, Supreme Court, Wall Street • Leave a comment
The Next 100 Days: What Healthcare Should Expect

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

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

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

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

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

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

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

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

The State of Trust in Public Health in America

Posted on by • Posted in Centers for Disease Control & Prevention (CDC), Misinformation, Mislead, Misleading, Public Health, Public Health Crisis, Public Opinion, Public Perception, Public Safety, Public Trust, Vaccination, Vaccine, Vaccine Distribution, Vaccine Efficacy, Vaccine Hesitancy Rate, Vaccine Safety, Vaccine Skepticism • Leave a comment

https://www.kaufmanhall.com/insights/infographic/state-trust-public-health-america

In light of the recent confirmation of Secretary Kennedy to lead HHS and new survey data on trust in public health, this graphic highlights Americans’ declining positive perception of public health officials. Among respondents’ personal doctors, the CDC and their state and local public health officials, trust in all three, regardless of political identification, has decreased from June 2023 to January 2025. 

Respondents trusted their doctors more than public health officials, and there is less difference by political identification. In 2025, only 61% of surveyed Americans reported that they trusted the CDC. That prevalence drops to 39% among Republicans and increases to 85% among Democrats.

Another important public health indicator, the percentage of kindergarteners with vaccine exemptions, also illustrates the challenging place in which public health officials find themselves. During the 2023-2024 school year, about 3.3% of kindergartners received an exemption, an increase from 2022-2023 that still does not provide a complete picture. Exemption rates vary widely by state, with 6 states having exemption rates more than double the median. These differences are a reflection of how easy it is to receive an exemption in some states rather than a clear trend.

The shift also underscores how easily an outbreak could occur in some states. Alarmingly, the perceived importance of vaccines has dramatically decreased, from 94% in 2001 to 69% in 2024. 

We will have to wait and see what Kennedy, long considered a vaccine skeptic, does regarding vaccines, but amid immense distrust in the healthcare system, providers’ role of giving thorough, honest information to their patients is more important than ever.

Why thousands cheered a tragedy: unpacking America’s healthcare anguish

Posted on by • Posted in Health Policy, Healthcare Reform, Public Good, Public Health, Public Health Crisis, Public Health Strategy, Public Perception, Public Trust, State of the Union • Leave a comment

https://www.linkedin.com/pulse/why-thousands-cheered-tragedy-unpacking-americas-robert-pearl-m-d–apdhc/

The murder of UnitedHealthcare CEO Brian Thompson in December 2024 represented a horrific and indefensible act of violence. As a physician and healthcare leader, I initially declined to comment on the killing. I felt that speculating about the shooter’s intent would only sensationalize a terrible act.

Regardless of the circumstances, vigilante violence has no place in a free and just society.

Now, more than a month later, I feel compelled to address one aspect of the story that has been widely misunderstood: the public’s reaction to the news of Thompson’s murder. Specifically, why tens of thousands of individuals “liked” and “laughed” at a post on Facebook announcing the CEO’s death.

What causes someone to ‘like’ murder?

News analysts have attributed the social media response to America’s “simmering anger” and “frustration” with a broken healthcare system, pointing to rising medical costs, insurance red tape and time-consuming prior authorization requirements as justifications.

These are all, indeed, problems and may explain some of public’s reaction. Yet these descriptions grossly understate the lived reality for most of those affected. When I speak with individuals who have lost a child, parent or spouse because of what they perceive as an unresponsive and uncaring system, their pain is raw, intense. What they feel isn’t frustration—it’s agony.

By framing healthcare’s failures in terms of statistical measures and policy snafus, we reduce a deeply personal crisis to an intellectual exercise. And it’s this very detached, cognitive approach that has allowed our nation to disregard the emotional devastation endured by millions of patients and their families.

When journalists, healthcare leaders and policymakers cite eye-popping statistics on healthcare expenditures, highlight exorbitant insurer profits or deride the bloated salaries of executives, they leave out a vital part of the story. They omit the unbearable human suffering behind the numbers. And I fear that until we approach healthcare as a moral crisis—not merely an economic or political puzzle to solve—our nation will never act with the urgency required to relieve people’s profound pain.

A pain beyond reason

In Dante’s Inferno, hell is a place where suffering is eternal and the cries of the damned go unheard. For countless Americans who feel trapped in our healthcare system, that metaphor rings true. Their anguish and pleas for mercy are met with silence.

It is this sense of abandonment and powerlessness, not mere frustration, that fuels both a desperate rage and an anger at a system and its leaders who appear not to care. The response isn’t one of glee—it’s a visceral reaction born of pain and unrelenting remorse.

As a clinician, I’ve seen life-destroying pain in my patients—and even within my own family. When my cousin Alan died in his twenties from a then-incurable cancer, my aunt and uncle were powerless to save him. Their grief was profound, unrelenting and eternal. They never recovered from the loss. But Alan’s death, heartbreaking as it was, stemmed from the limits of science at the time.

What millions of Americans endure today is different. Their loved ones die not because cures don’t exist but because the healthcare system treats them like a number. Bureaucratic inefficiencies, profit-driven delays and systemic indifference produce avoidable tragedies.

To appreciate this depth of pain, imagine standing behind a chain-link fence, watching someone you love being tortured. You scream and plead for help, but no one listens. That is what healthcare feels like for too many Americans. And until all of us acknowledge and feel their pain, little will improve.

Curing America’s indifference

When we focus solely on cold numbers—the millions who’ve lost Medicaid coverage, the hundreds of thousands of avoidable deaths each year, or the life-expectancy gap between the U.S. and other nations—we strip healthcare of its humanity.

But once we stop framing these failures as bureaucratic inefficiencies or frustrations and, instead, focus on the devastation of having to watch a loved one suffer and die needlessly, we are forced to confront a moral imperative. Either we must act with urgency and resolve the problem or admit we simply don’t care.

In the halls of Congress, lawmakers continue to weigh modest reforms to prior authorization requirements and Medicaid spending—baby steps that won’t fix a system in crisis. The truth is that without bold, transformative action, healthcare will remain unaffordable and inaccessible for millions of families whose anguish will grow.

Here are three examples of the scale of transformation required:

  1. Reverse the obesity epidemic with a two-part strategy. Congress will need to tax ultra-processed, sugary foods that drive hundreds of billions of dollars in healthcare costs each year. In parallel, lawmakers should cap the manufacturer-set price of weight-loss medications like Ozempic and Wegovy to be no higher than in peer nations.
  2. Change clinician payments from volume to value. Current fee-for-service payment systems incentivize unnecessary tests, treatments and procedures rather than better health outcomes. Transitioning to pay-for-value would reward healthcare providers, and specifically primary care physicians, who successfully prevent chronic diseases, better manage existing conditions, and reduce complications such as heart attacks, strokes and kidney failure.
  3. Empower patients and save lives with generative AI. Tools like ChatGPT can help reduce the staggering 400,000 annual deaths from misdiagnoses and 250,000 more from preventable medical errors. By integrating AI into healthcare, we can enable at-home care, continuous disease monitoring and personalized treatment, making medical care safer, more accessible and more efficient.

If elected officials, payers and regulators fail to act, they will have chosen to perpetuate the unbearable pain and suffering patients and families endure daily. They need to hear the cries of people. The time for transformative action is now.

In Healthcare, Most think We’re Shrewd and They’re Screwed

Posted on by • Posted in Artificial Intelligence, Excessive Executive Compensation, Executive Compensation, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Misinformation, Out of Pocket Expenses, Out-of-Network, Price Transparency, Profit, Profit Motive, Public Health Crisis, Public Opinion, Public Oversight, Public Perception, Public Trust, State of the Union, Underinsured • Leave a comment
In Healthcare, Most think We’re Shrewd and They’re Screwed

I never met Brian Thompson. His senseless death is first and foremost a human tragedy.

Second, it’s a business story that continues to unfold. Speculation about the shooter’s motive and whereabouts runs rampant.

But media attention has seized on a larger theme: the business of health insurance and its role in U.S. healthcare. 

Headlines like these illustrate the storyline that has evolved in response to the killing: health insurance is part of a complicated industry where business practices are often geared to corporate profit.

In this coverage and social media postings, health insurer denials are the focal point: journalists and commentators have seized on the use of Artificial intelligence-based tools used by plans like United, Cigna, Aetna and most others to approve/deny claims and Thompson’s role as CEO of UHG’s profitable insurance division.

The bullet-casing etchings “Deny. Defend. Depose” is now a T-shirt whistle to convey a wearer’s contempt for corporate insurers and the profit-seeking apparatus in U.S. healthcare. 

Laid bare in the coverage of Brian’s death is this core belief: the majority of Americans think the U.S. health system is big business and fundamentally flawed.

As noted in last week’s Gallup Poll, and in previous polling by Pew, Harris, Kaiser Family Foundation and Keckley, only one in three Americans believe the health system performs well. Accessibility, costs, price transparency and affordability are dominant complaints. They believe the majority of health insurers, hospitals and prescription drug companies put their financial interests above the public’s health and wellbeing. They accept that the health system is complex and expensive but feel helpless to fix it.

This belief is widely held: its pervasiveness and intensity lend to misinformation and disinformation about the system and its business practices. 

Data about underlying costs and their relationship to prices are opaque and hard to get. Clinical innovation and quality of care are understood in the abstract: self-funded campaigns touting Top 100 recognition, Net Promoter Scores are easier. The business of healthcare financing and delivery is not taught: personal experiences with insurers, hospitals, physicians and drugs are the basis for assessing the system’s effectiveness…and those experiences vary widely based on individual/household income, education, ethnicity and health status.  

The majority accept that operators in every sector of healthcare apply business practices intended to optimize their organization’s finances. Best practices for every insurer, hospital, drug/device manufacturer and medical practice include processes and procedures to maximize revenues, minimize costs and secure capital for growth/innovation. 

But in healthcare, the notion of profit remains problematic: how much is too much? and how an organization compensates its leaders for results beyond short-term revenue/margin improvement are questions of growing concern to a large and growing majority of consumers.

In every sector, key functions like these are especially prone to misinformation, disinformation and public criticism:

  • Among insurers, provider credentialing, coverage allowance and denial management, complaint management and member services, premium pricing and out-of-pocket risks for enrollees, provider reimbursement, prior authorization, provider directory accuracy, the use of AI in plan administration and others.
  • Among hospitals, price setting, employed physician compensation, 340B compliance, price and cost transparency, revenue-cycle management and patient debt collection, workforce performance composition, evaluation and compensation, integration of AI in clinical and administrative decision-making, participation in gainsharing/alternative payment programs, clinical portfolio and others.
  • And across every sector, executive compensation and CEO pay, Board effectiveness, and long-term strategies that balance shareholder interests with broader concern for the greater good.

The bottom line:

The public is paying attention to business practices in healthcare. The death of Brian Thompson opened the floodgate for criticism of health insurers and the U.S. healthcare industry overall. It cannot be ignored. The public thinks industry folks are shrewd operators and they’re inclined to conclude they’re screwed as a result.

Hospitals at a Crossroad: Reactive Navigation or Proactive Orchestration?

Posted on by • Posted in 2024 Election Issues, American Hospital Association (AHA), Bankruptcy, Board, Financial Stewardship, Financial Viability, Financially Distressed, Health System, Healthcare Reform, Hospital, Hospital Industry, Leadership, Leadership Investment, Leadership Problem Solving, Leadership Transformation, Leadership Vision, Medicaid, Medicare, Public Opinion, Public Perception, Utilization Trends • Leave a comment
Hospitals at a Crossroad: Reactive Navigation or Proactive Orchestration?

This is National Hospital week. It comes at a critical time for hospitals:

The U.S. economy is strong but growing numbers in the population face financial insecurity and economic despair. Increased out-of-pocket costs for food, fuel and housing (especially rent) have squeezed household budgets and contributed to increased medical debt—a problem in 41% of U.S. households today. Hospital bills are a factor.

The capital market for hospitals is tightening: interest rates for debt are increasing, private investments in healthcare services have slowed and valuations for key sectors—hospitals, home care, physician practices, et al—have dropped. It’s a buyer’s market for investors who hold record assets under management (AUM) but concerns about the harsh regulatory and competitive environment facing hospitals persist. Betting capital on hospitals is a tough call when other sectors appear less risky.

Utilization levels for hospital services have recovered from pandemic disruption and operating margins are above breakeven for more than half but medical inflation, insurer reimbursement, wage increases and Medicare payment cuts guarantee operating deficits for all. Complicating matters, regulators are keen to limit consolidation and force not-for-profits to justify their tax exemptions. Not a pretty picture.

And, despite all this, the public’s view of hospitals remains positive though tarnished by headlines like these about Steward Health’s bankruptcy filing last Monday:

The public is inclined to hold hospitals in high regard, at least for the time being. When asked how much trust and confidence they have in key institutions to “to develop a plan for the U.S. health system that maximizes what it has done well and corrects its major flaws,” consumers prefer for solutions physicians and hospitals over others but over half still have reservations:

A Great DealSomeNot Much/None
Health Insurers18%43%39%
Hospitals27%52%21%
Physicians32%53%15%
Federal Government14%42%44%
Retail Health Org’s21%51%28%

The American Hospital Association (AHA) is rightfully concerned that hospitals get fair treatment from regulators, adequate reimbursement from Medicare and Medicaid and protection against competitors that cherry-pick profits from the health system.

It can rightfully assert that declining operating margins in hospitals are symptoms of larger problems in the health system: flawed incentives, inadequate funding for preventive and primary care, the growing intensity of chronic diseases, medical inflation for wages, drugs, supplies and technologies, the dominance of ‘Big Insurance’ whose revenues have grown 12.1% annually since the pandemic and more. And it can correctly prove that annual hospital spending has slowed since the pandemic from 6.2% (2019) to 2.2% (2022) in stark contrast to prescription drugs (up from 4% to 8.4% and insurance costs (from -5.4% to +8.5%). Nonetheless, hospital costs, prices and spending are concerns to economists, regulators and elected officials.

National health spending data illustrate the conundrum for hospitals: relative to the overall CPI, healthcare prices and spending—especially outpatient hospital services– are increasing faster than prices and spending in other sectors and it’s getting attention: that’s problematic for hospitals at a time when 5 committees in Congress and 3 Cabinet level departments have their sights set on regulatory changes that are unwelcome to most hospitals.

My take:

The U.S. market for healthcare spending is growing—exceeding 5% per year through the next decade. With annual inflation targeted to 2.0% by the Fed and the GDP expected to grow 3.5-4.0% annually in the same period, something’s gotta’ give. Hospitals represent 30.4% of overall spending today (virtually unchanged for the past 5 years) and above 50% of total spending when their employed physicians and outside activities are included, so it’s obvious they’ll draw attention.

Today, however, most are consumed by near-term concerns– reimbursement issues with insurers, workforce adequacy and discontent, government mandates– and few have the luxury to look 10-20 years ahead.

I believe hospitals should play a vital role in orchestrating the health system’s future and the role they’ll play in it. Some will be specialty hubs. Some will operate without beds. Some will be regional. Some will close. And all will face increased demands from regulators, community leaders and consumers for affordable, convenient and effective whole-person care.

For most hospitals, a decision to invest and behave as if the future is a repeat of the past is a calculated risk. Others with less stake in community health and wellbeing and greater access to capital will seize this opportunity and, in the process, disable hospitals might play in the process.

Near-term reactive navigation vs. long-term proactive orchestration–that’s the crossroad in front of hospitals today. Hopefully, during National Hospital Week, it will get the attention it needs in every hospital board room and C suite.

PS: Last week, I wrote about the inclination of the 18 million college kids to protest against the healthcare status quo (“Is the Health System the Next Target for Campus Unrest?” The Keckley Report May 6, 2024 www.paulkeckley.com). This new survey caught my attention:

According to the Generation Lab’s survey of 1250 college students released last week, healthcare reform is a concern. When asked to choose 3 “issues most important to you” from its list of 13 issues, healthcare reform topped the list. The top 5:

  1. Health Reform (40%)
  2. Education Funding and access (38%)
  3. Economic fairness and opportunity (37%)
  4. Social justice and civil rights (36%)
  5. Climate change (35%)

If college kids today are tomorrow’s healthcare workforce and influencers to their peers, addressing the future of health system with their input seems shortsighted. Most hospital boards are comprised of older adults—community leaders, physicians, et al.

And most of the mechanisms hospitals use to assess their long-term sustainability is tethered to assumptions about an aging population and Medicare. 

College kids today are sending powerful messages about the society in which they aspire to be a part. They’re tech savvy, independent politically and increasingly spiritual but not religious. And the health system is on their radar.

Hospitals declare War on Corporate Insurance: Handicapping the Players

Posted on by • Posted in 2024 Election Issues, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Share, Public Opinion, Public Perception • Leave a comment
Hospitals declare War on Corporate Insurance: Handicapping the Players

At the Annual Meeting of the American Hospital Association in DC last week, its all-out attack on “corporate insurance” was a prominent theme. In the meeting recap, AHA CEO Rick Pollack made the influential organization’s case:

“This year, there was special focus on educating policymakers that our health care system is suffering from multiple chronic conditions. These include continued government underpayment, cyberattacks, workforce shortages, broken supply chains, access to behavioral health, and irresponsible behavior by corporate commercial health insurance companies, among others — that put access to services in serious jeopardy.”

The AHA’s declaration of war came on the heels of last week’s Congressional investigation of Change Healthcare’ (UnitedHealth Group subsidiary) cybersecurity breech and the widely-noticed earnings release by Elevance (aka Anthem) that featured prominently its plans to build a $4 billion business unit focused on primary care and chronic care management. Per company CEO Gail Boudreaux:

“This will help us continue through having a focus on advanced primary care; it’s still very much focused on our chronic patients and complex patients. We are still building specialty care enablement, which is another very important component of what we’re trying to prime through… In time, Elevance Health will have full ownership of what we expect will be a leading platform for value-based care delivery and physician enablement at scale.”

To industry watchers, the war is no surprise.

It’s been simmering for years but most recently inflamed as operating margins for most hospitals eroded while profits among corporate insurers led by Big 6 (UnitedHealth, Humana, CVS-Aetna, Elevance, Cigna, Centene) swelled at double-digit rates.

To outsiders, it’s not quite so clear.

Big names (Brands) are prominent in both. Corporatization seems embedded in the business models for both. And both appear complicit in well-documented beliefs that the health system is failing as unnecessary higher costs make it less accessible, affordable and effective.

As the War intensifies, each combatant is inclined to make their cases aggressively contrasting “us” against “them.” Here’s where things stand today:

ConsiderationHospitalsCorporate InsurersAdvantage
Public StandingHospitals enjoy relatively strong public support but growing discontent about their costs, prices and household affordability. Hospitals blame insurers & drug companies for increasing health costs.Increased attention to affordability, value and low prices is a threat.Insurers enjoy reasonably high support among middle & high-income consumers who think it necessary to their financial security. Insurers blame drug companies, hospitals and unhealthy consumer behaviors for increased health costs.It’s a tossup. Though polls show trust in hospitals is higher than insurers, both are declining especially among younger, urban and low-middle income consumers
Regulatory positioningScrutiny of business practices & the impact of consolidation on consumer prices, workforce wage compression, competition et al is significant and increasing in 5 Congressional Committees and 3 Federal agencies. Hospitals also face state and local regulatory challenges around pricing, community benefits, et al.Compliance with plan transparency rules, prior authorization requirements, Medicare Advantage marketing & coverage, and antitrust are targets. Levels of Congressional attention to business practices are relatively low. Insurers are primarily overseen by states, so the regulatory landscape varies widely except.Insurers enjoy regulatory advantages today not withstanding current attention to UnitedHealth Group.  Hospitals are “soft targets” for state legislatures, Congress and investigators in state and federal agencies.
Confidence of capital markets in their core businesses: Hospitals: inpatient, outpatient careInsurers: group & individual coverage, claims data commercializationThe acute sector, especially rural & systems operating in low-growth markets, face insurmountable headwinds due to reimbursement cuts, value-based purchasing initiatives by Medicare and private insurers and clinical innovations that drive demand away from inpatient care. Hospital Outpatient services are profitable for the near term despite growing competition from privately investors.  The consolidation of power, financial strength & influence among the corporate insurers is assuring to lenders & investors who value their performance and support their vertical integration expansion role.  Lenders and investors favor “corporate insurers” over others. The potential (likelihood) that hospitals will lose on high profile revenue-enhancer issues (facility fees, site neutral payments, et al) and restrict tax exemptions for NFP hospital operators is concerning to the capital markets.  
Relationships with Physicians Hospitals employ 58% of physicians directly & relate to all. Regulations (i.e. Stark Laws, et al), capital deployment for hospital programs and administrative overhead are factors of high importance to physicians seeking clinical autonomy & financial security.  Hospitals are a viable option to physicians seeking income security though not without concern.Insurers employment of physicians plus contractual relationships with network physicians are transactional. Physicians inclined toward business relationships with “corporate insurers” believe their role in healthcare’s future is more stable than that of hospitals based on the belief hospitals are wasteful and non-responsive to physician input.Hospitals enjoy a relationship advantage with most physicians. Corporate insurers enjoy a transactional relationship with physicians that’s premised on shared views about the future of the system vs. hospitals that focus on protecting the past. Hospitals enjoy a near-term advantage but the long-term is uncertain.
Unity of voiceRelatively strong around “chronic ailments” of the system but unclear about long-term destination and limited to universal hospital concerns (i.e. 340B) vs. cohort issues (tax exemptions for not for profits). The delineations between not-for-profit, investor-owned and public/government restricts the strength of hospital voice overall as each seeks unique recognition and regulatory protections.Corporate insurers have corporate boards, broader membership, stronger balance sheets and scale. Their messaging is customized to their key customers and influencers and aligned with but not controlled by their trade groups. And they direct considerable resources to their proprietary messaging strategies.Corporate insurers have fewer constraints in their messaging and enjoy an advantage in opining to issues that resonate with consumers (prices, quality, value).
Long-term Vision for the U.S. Health SystemA private connected system of health in which hospitals coordinate and provide services for patients across the continuum of their care: preventive, chronic, acute and long-term.A private system of comprehensive, customized products and services that operates efficiently, effectively and in the interests of all consumers.The public and Congress aren’t sure which is better positioned to develop a “new” system of health.

This war has been simmering. It’s now a blaze. The outcome is uncertain despite the considerable resources both will spend to win.

Stay tuned.

Paul

P.S. Last week, I participated in Scottsdale Institute’s Annual Leadership Summit in Arizona. It’s 62 institutional members and corporate partners include most of the major not-for-profit health systems and the biggest names in healthcare information technology solutions.

I left with two strong impressions I’ll share:

1-How GenAI and HCIT influence the future of healthcare services delivery is very much speculative but no-less certain. It’s a work in process for everyone.

2- To navigate its evolution, knowledge sharing (and mistake sharing) among those in the trenches is essential. SI afforded a great venue for both, and also a platform for those of us who are easily overwhelmed by all this to ask honest questions and get candid answers.

Check it out. http://www.scottsdaleinstitute.org.

Is Private Equity the Solution or the Problem in Healthcare?

Posted on by • Posted in Affordability, Cherry Picking, Health Policy, Lobbyist, Market Consolidation, Market Power, Mergers & Acquisitions, Price Transparency, Pricing Leverage, Private Equity, Public Good, Public Health, Public Opinion, Public Perception • Leave a comment
Is Private Equity the Solution or the Problem in Healthcare?

Of late, private equity investors in healthcare services have faced intense criticism that their business practices have compromised patient safety and raised costs for consumers. March 5, the FTC, DOJ and HHS announced the launch of an investigation into the inner workings of PE in healthcare. It comes on the heels of U.S. Senate investigations in their Finance, HELP and Budget Committees to explore legislative levers they might pull to address their growing concerns about affordability, competition and accountability in the industry.

PE funds don’t welcome the spotlight. 

Their business model lends to misinformation and disinformation: company takeovers by new owners are rarely treated as good news unless the circumstance under prior ownership was dire. Even then, attention shifts quickly to the fairness of the PE business model playbook: acquire the asset on favorable terms, replace management, reduce operating costs, grow and the sell in 5-7 years at a profit using debt to finance the deal along the way. In exchange, the PE fund’s General Partner gets an annual management fee of 2% plus 20% of the value they create when they sell the company or take it public, and favorable tax treatment (carried interest) on their gain.

Concern about PE in healthcare services comes at a particularly delicate time: hospitals. nursing homes, outpatient care, medical practices, clinics et al) are still feeling the after-effects of the pandemic, proposed reimbursement bumps by Medicare for hospitals and physicians do not offset medical inflation and the Change Healthcare cybersecurity breach February 21 has created cash flow issues for all.

Concern about PE ownership was high already.

Innovations funded through PE-backed organizations have been drowned out by the steady drip of peer reviewed and industry-sponsored studies a causal relationship between PE ownership decreased quality and patient safety and increased prices and worker discontent. Nonetheless, PE-owns 4% of hospitals (among 36% that are investor-owned, 13% of medical practices and 6% of nursing homes today and they’re increasing in all cohorts of health services.

Here are the facts:

Private equity enjoys significant influence in public policy including healthcare. Direct lobbying activity by PE funds in Congress and state legislatures is well-funded and effective, especially by the It is increasingly 20 global fund sponsors that control 46% of assets under management. Cash on hand and fund-raising by PE are strong and healthcare remains an important but non-exclusive target of PE investing.

2023 was a down year for PE, 2024 will be strong: the IPO market and sponsor- to sponsor transactions dipped, and deal values shrank. Even with interest rates remaining high, returns exceeded overall growth in the stock market for deals consummated. At the same time, PE raised $1.2 trillion last year and has $2.6 trillion of dry powder to invest. Healthcare services will be a target as PE deal activity increases in 2024.

In U.S. healthcare, PE investments are significant and increasing.  Technology-enabled services that lower unit costs and AI-based solutions that enable standardization and workforce efficiency will garner higher valuations and greater PE interest than traditional services. Valuations will recover from record 2023 lows and dry powder will be deployed for roll-ups despite antitrust concerns and government investigations. Congress will investigate the impact on PE on patient safety, prices and competition and, in tandem with FTC and DOJ issue guidance: compliance will be mandated and financial penalties added. But displacement of PE in health services is unlikely.

Some notable data:

  • Private equity funds have $2.49 trillion of cash on hand to invest—up 7% from 2022. They raised $1.2 trillion globally in 2023. 26% of its global dry powder is more than 4 years old—undeployed.
  • Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn. 40% of the companies waiting to be sold are at least four years old. Last year, the combined value of companies that the industry sold privately or on public markets fell 44% and the value of companies sold to other buyout groups fell 47%.
  • Private equity investments in almost every sector in healthcare are significant, and until lately, increasing. Last year, deals were down 16.2% (from 940 to 788) cutting across every sector. In some sectors, like physician services, PE deals were tuck-in’s to their previous platform investments increasing from 75 deals in 2012 to 484 deals in 2021.
  • PE investments in US healthcare exceeded $1 trillion in the last 10 years. Investments in healthcare services i.e. acute, long-term, ambulatory and physician services– have been less profitable to investors than PE investments in technology, devices and therapeutics (based on the ratio of Enterprise Value to EBITDA) but exceed equity-market returns overall.
  • Peer reviewed studies have shown causal relationships between private equity ownership of hospitals, nursing homes and medical practices with lower operating costs, higher staff turnover, high prices and higher profits.

My take:

Like it or not, private equity investment in healthcare is here to stay. The likelihood of higher taxes paid by employers and individuals to fund the health system is nil. The majority (69%) of the public think it wasteful and inefficient (See Polling below). The majority believe it puts its profits above all else. The majority think it needs major change. That’s not new, but it’s felt more intensely and more widely than ever.

That means accommodation for private capital, including private equity, is not a major concern to voters: the prices they pay matters more than who owns the organization.

Tighter regulation of private equity, including more rights given to the Limited Partners who invest in the PE funds and limitations on public officials who become fund advisors, are likely. Bad actors will be vilified by regulators and elected officials. Media scrutiny of specific PE funds and their GPs will intensify as PE public reporting regulations commence. And investments made by not-for-profit multi-hospital systems and independent hospitals will be critical elements in upcoming Congressional and regulatory policy setting about their community benefit accountability and tax exemptions.

The public’s major concern about its healthcare industry is affordability. To the extent PE-backed solutions offer lower-cost, higher-value alternatives on a playing field that’s level with respect to equitable access and demand-management, they will be at the table.

To the extent PE-backed solutions cherry-pick the system’s low-hanging fruit at the expense of patient safety and affordability sans any regulatory restriction, they’ll breed public discontent from those they choose to ignore.

So, the reality is this: PE’s focus is generating profits for its GP and their LPs. Doing business in a socially responsible way is a fund’s prerogative. Some do it better than others.

PE is part of healthcare’s solution to its poorly structured, perpetually inadequate and mal-distributed funding. But creating a level playing field through meaningful regulatory reform is necessary first.

PS Among the stickier issues facing hospitals is site-neutral payments. Hospitals oppose the proposal reasoning the overhead structure for their outpatient services (HOPD) include indirect & direct costs for services provided those unable to pay i.e. emergency services. Proponents of the change argue that what’s done is the key, not where it’s done, and uniform pricing is common sense. Leavitt Partners has advanced a compromise: a Unified Ambulatory Payment System for HOPDs, ASCs and physician clinics that would be applied to 66 services starting

Kids killed in gun accidents most often found weapon in the bedroom: CDC

Posted on by • Posted in Centers for Disease Control & Prevention (CDC), Children's Health, Children's Safety, Gun Child Deaths, Gun Related Deaths, Gun Storage, Gun Unintentional Deaths, Gun Violence Healthcare Costs, Public Perception, Public Understanding • Leave a comment
https://www.axios.com/2023/12/14/gun-deaths-children-accidental-cdc?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Children and teens involved in unintentional fatal shootings most commonly found the gun inside or on top of a nightstand, under a mattress or pillow, or on top of a bed, according to a new federal study.

Why it matters: 

The data from the Centers for Disease Control and Prevention, which covers nearly 20 years of deadly firearm accidents among America’s youth, demonstrates why putting a gun out of sight or out of reach is not “safe storage,” federal researchers said.

  • It underscores the need for policymakers, health experts and parents to promote safe gun storage, they said.

The big picture: 

Previous research has shown guns are the leading cause of death among kids in the U.S., reaching a record high in 2021.

By the numbers: 

Using data recorded between 2003 and 2021 by the National Violent Death Reporting System, researchers identified more than 1,250 unintentional gun deaths among kids.

  • The vast majority involved guns that were unlocked (76%), and most of those unlocked firearms were also loaded (91%).
  • Two-thirds (67%) of unintentional gun injury deaths among kids occurred when the shooter was playing with the gun or showing it to others.
  • In 30% of deaths, guns were found around nightstands and other sleeping areas.
  • Guns were also most commonly found on top of a shelf or inside a closet (18.6%) or inside a vehicle (12.5%).