68 health systems with strong finances

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Here are 68 health systems with strong operational metrics and solid financial positions, according to reports from credit rating agencies Fitch Ratings, Moody’s Investors Service and S&P Global in 2023. 

AdventHealth has an “AA” rating and stable outlook with Fitch. The rating reflects the  Altamonte Springs, Fla.-based system’s strong financial profile, characterized by still-adequate liquidity and moderate leverage, typically strong and highly predictable profitability, Fitch said. 

Advocate Aurora Health has an “AA” rating and stable outlook with Fitch. The Downers Grove, Ill.- and Milwaukee-based system’s rating reflects a very strong financial profile in the context of an already sound market position and geographic reach that was enhanced after merging with Charlotte, N.C.-based Atrium Health, Fitch said.    

AnMed Health has an “AA-” rating and stable outlook with Fitch. The Anderson, S.C.-based system has maintained strong performance through the COVID-19 pandemic and current labor market pressures, Fitch said.  

AtlantiCare has an “AA-” rating and stable outlook with Fitch. The Atlantic City, N.J.-based system has a strong balance sheet with solid liquidity position and low debt burden, Fitch said. 

Atrium Health has an “AA-” rating and stable outlook with S&P Global. The Charlotte, N.C.-based system’s rating reflects a robust financial profile, growing geographic diversity and expectations that management will continue to deploy capital with discipline. 

Banner Health has an “AA-” and stable outlook with Fitch. The Phoenix-based system’s rating highlights the strength of its core hospital delivery system and growth of its insurance division, Fitch said. 

BayCare Health System has an “AA” rating and stable outlook with Fitch. The Tampa, Fla.-based system’s rating reflects its excellent financial profile supported by its leading market position in a four-county area and the ability to sustain a solid operating outlook in the face of inflationary sector headwinds, Fitch said. 

Bayhealth has an “AA” rating and stable outlook with Fitch. The rating reflects the strength of the Dover, Del.-based system’s market positions and the stability of its financial profile, Fitch said.  

Beacon Health System has an “AA-” rating and stable outlook with Fitch. The rating reflects the strength of the South Bend, Ind.-based system’s balance sheet, the rating agency said.   

Berkshire Health has an “AA-” rating and stable outlook with Fitch. The Pittsfield, Mass.-based system has a strong financial profile, solid liquidity and modest leverage, according to Fitch. 

Bryan Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Lincoln, Neb., system’s leading and growing market position as a regional referral center with strong expense flexibility and cash flow, Fitch said.  

Cape Cod Healthcare has an “AA-” and stable outlook with Fitch. The Hyannis, Mass.-based system’s rating reflects a dominant market position in its service area and historically solid operating results, the rating agency said. 

Carle Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Urbana, Ill.-based system’s distinctly leading market position over a broad service area, Fitch said. 

CaroMont Health has an “AA-” rating and stable outlook with S&P Global. The Gastonia, N.C.-based system has a healthy financial profile and robust market share in a competitive region.  

CentraCare has an “AA-” rating and stable outlook with Fitch. The St. Cloud, Minn.-based system has a leading market position, and its management’s focus on addressing workforce pressures, patient access and capacity constraints will improve operating margins over the medium term, Fitch said. 

Children’s Health System of Texas has an “AA” and stable outlook with Fitch. The Dallas-based system’s rating reflects its solid operating performance in 2022, resulting from inpatient, outpatient and surgical volume growth, as well as one-time support from pandemic-era stimulus funding, Fitch said. 

Children’s Minnesota has an “AA” rating and stable outlook with Fitch. The Minneapolis-based system’s broad reach within the region continues to support long-term sustainability as a market leader and preferred provider for children’s health care, Fitch said. 

Concord (N.H.) Hospital has an “AA-” rating and stable outlook with Fitch. The rating reflects the strength of Concord’s leverage and liquidity assessment and Fitch’s assessment that two recently acquired hospitals will be strategically and financially accretive. 

Cone Health has an “AA” rating and stable outlook with Fitch. The rating reflects the expectation that the Greensboro, N.C.-based system will gradually return to stronger results in the medium term, the rating agency said.

Cottage Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Santa Barbara, Calif.-based system’s leading market position and broad reach in a service area that exhibits modest population growth but consistently high demand for acute care services, Fitch said. 

Deaconess Health System has an “AA” rating and stable outlook with Fitch. The Evansville, Ind.-based system demonstrated operating cost flexibility through the pandemic and recent labor and inflationary pressure, Fitch said. 

Duke University Health System has an “AA-” rating and stable outlook with Fitch. Fitch projects the Durham, N.C.-based system will benefit from the integration of the former Private Diagnostic Clinic and from North Carolina’s recently enacted Medicaid expansion and Healthcare Access and Stabilization Program. 

El Camino Health has an “AA-” rating and stable outlook with Fitch. The Mountain View, Calif.-based system has a history of generating double-digit operating EBITDA margins, driven by a solid market position that features strong demographics and a very healthy payer mix, Fitch said. 

Franciscan Health has an “AA” rating and stable outlook with Fitch. The rating reflects the Mishawaka, Ind.-based system’s strong and stable balance sheet, favorable payer mix, and leading or near leading market share in its service areas, Fitch said. 

Froedtert Health has an “AA” rating and stable outlook with Fitch. The rating reflects the Milwaukee-based system’s maintenance of a strong, albeit compressed, operating performance and a robust liquidity position, Fitch said. 

Geisinger has an “AA-” credit rating and stable outlook with S&P. The Danville, Pa.-based system enjoys strong integration and value-based care experience, the ratings agency said.

Hackensack Meridian Health has an “AA-” rating and stable outlook with Fitch. The Edison, N.J.-based system’s rating is supported by its strong presence in its large and demographically favorable market, Fitch said.  

Harris Health System has an “AA” rating and stable outlook with Fitch. The Houston-based system has a “very strong” revenue defensibility, primarily based on the district’s significant taxing margin that provides support for operations and debt service, Fitch said.

Hoag Memorial Hospital Presbyterian has an “AA” rating and stable outlook with Fitch. The Newport Beach, Calif.-based system’s rating is supported by a leading market position in its immediate area and very strong financial profile, Fitch said.  

Intermountain Health has an “Aa1” rating and stable outlook with Moody’s. The Salt Lake City-based system’s rating is reflected by its distinctly leading market position in Utah and strong absolute and relative cash levels, Moody’s said.   

Inspira Health has an “AA-” rating and stable outlook with Fitch. The Mullica Hill, N.J.-based system’s rating reflects its leading market position in a stable service area and a large medical staff supported by a growing residency program, Fitch said. 

IU Health has an “AA” rating and stable outlook with Fitch. The Indianapolis-based system has a long track record of strong operating margins and an overall credit profile that is supported by a strong balance sheet, the rating agency said. 

Lucile Packard Children’s Hospital has an “AA-” rating and stable outlook with Fitch. The rating reflects the Palo Alto, Calif.-based hospital’s role as a nationally known, leading children’s hospital, Fitch said. It also benefits from resilient clinical volumes and a solid market position, as well as its relationship with Stanford University and Stanford Health Care. 

Kaiser Permanente has an “AA-” and stable outlook with Fitch. The Oakland, Calif.-based system’s rating is driven by a strong financial profile, which is maintained despite a challenging operating environment in fiscal year 2022. 

Mayo Clinic has an “Aa2” rating and stable outlook with Moody’s. The Rochester, Minn.-based system’s credit profile characterized by its excellent reputations for clinical services, research and education, Moody’s said.

McLaren Health Care has an “AA-” rating and stable outlook with Fitch. The Grand Blanc, Mich.-based system has a leading market position over a broad service area covering much of Michigan and a track-record of profitability despite sector-wide market challenges in recent years, Fitch said.

McLeod Regional Medical Center has an “AA-” rating and stable outlook with Fitch. The rating reflects the Florence, S.C.-based system’s very strong financial profile assessment, historically strong operating EBITDA margins and its solid market position, Fitch said.   

MemorialCare has an “AA-” rating and stable outlook with Fitch. The rating reflects the Fountain Valley, Calif.-based system’s strong financial profile and excellent leverage metrics despite its weaker operating performance, Fitch said. 

Memorial Sloan-Kettering Cancer Center has an “AA” rating and stable outlook with Fitch. The rating reflects Fitch’s expectation that the New York City-based system’s national and international reputation as a premier cancer hospital will continue to support growth in its leading and increasing market share for its specialty services. 

Midland (Texas) Health has an “AA-” rating and stable outlook with Fitch. The rating reflects Midland’s exceptional market position and limited competition for acute-care services and growing outpatient services, Fitch said.  

Monument Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Rapid City, S.D.-based system’s dominant inpatient market share and excellent market position across its geographically broad service area, Fitch said. 

Munson Healthcare has an “AA” rating and stable outlook with Fitch. The rating reflects the strength of the Traverse City, Mich.-based system’s market position and its leverage and liquidity profiles.  

MyMichigan Health has an “AA-” rating and stable outlook with Fitch. The Midland-based system reflects the system’s market position as the largest provider of acute care services and its leading market position in a sizable geographic area covering 25 counties in mid and northern Michigan, the rating agency said. 

North Mississippi Health Services has an “AA” rating and stable outlook with Fitch. The Tupelo-based system’s rating reflects its very strong cash position and strong market position, Fitch said. 

NewYork-Presbyterian Hospital has an “AA” rating and stable outlook with Fitch. The rating reflects the New York City-based system’s market position as one of New York’s major academic healthcare systems with a reputation that extends beyond the region, Fitch said. 

Novant Health has an “AA-” rating and stable outlook with Fitch. The Winston-Salem, N.C.-based system has a highly competitive market share in three separate North Carolina markets, Fitch said, including a leading position in Winston-Salem (46.8 percent) and second only to Atrium Health in the Charlotte area.  

NYC Health + Hospitals has an “AA-” rating with Fitch. The New York City system is the largest municipal health system in the country, serving more than 1 million New Yorkers annually in more than 70 patient locations across the city, including 11 hospitals, and employs more than 43,000 people. 

OhioHealth has an “AA+” rating and stable outlook with Fitch. The Columbus-based system has an exceptionally strong credit profile, very favorable leverage metrics and reliably strong profitability, Fitch said.    

Orlando (Fla.) Health has an “AA-” rating and stable outlook with Fitch. The system’s upgrade from “A+” reflects the continued strength of the health system’s operating performance, growth in unrestricted liquidity and excellent market position in a demographically favorable market, Fitch said.  

Phoenix Children’s Hospital has an “AA-” and stable outlook with Fitch. The rating reflects its position as a distinct leading provider of pediatric health services in a growing primary service area, Fitch said. 

The Queen’s Health System has an “AA” rating and stable outlook with Fitch. The Honolulu-based system’s rating reflects its leading state-wide market position, historically strong operating performance and diverse revenue streams, the rating agency said. 

Rush System for Health has an “AA-” and stable outlook with Fitch. The Chicago-based system has a strong financial profile despite ongoing labor issues and inflationary pressures, Fitch said. 

Saint Francis Healthcare System has an “AA” rating and stable outlook with Fitch. The Cape Girardeau, Mo.-based system enjoys robust operational performance and a strong local market share as well as manageable capital plans, Fitch said. 

Salem (Ore.) Health has an “AA-” rating and stable outlook with Fitch. The system has a “very strong” financial profile and a leading market share position, Fitch said. 

Sanford Health has an “AA-” rating and stable outlook with Fitch. The Sioux Falls, S.D.-based system rating reflects its leading inpatient market share positions in multiple markets and strong overall financial profile, the rating agency said. 

Stanford Health Care has an “AA” rating and stable outlook with Fitch. The Palo Alto, Calif.-based system’s rating is supported by its extensive clinical reach in the greater San Francisco and Central Valley regions and nationwide/worldwide destination position for extremely high-acuity services, Fitch said. 

SSM Health has an “AA-” rating and stable outlook with Fitch. The St. Louis-based system has a strong financial profile, multi-state presence and scale, with solid revenue diversity, Fitch said.  

St. Clair Health has an “AA-” rating and stable outlook with Fitch. The rating reflects the Pittsburgh-based system’s strong financial profile assessment, solid market position and historically strong operating performance, the rating agency said. 

St. Tammany Parish Hospital has an “AA-” rating and stable outlook with Fitch. The rating reflects the Covington, La.-based system’s strong operating risk assessment and very strong financial profile supported by consistently robust operating cash flows, Fitch said.  

Texas Medical Center has an “AA-” rating and stable outlook with Fitch. The rating reflects the Houston-based system’s profitable service enterprise, its long and collaborative relationship with strong university, nonprofit and medical industry partners, and sizable financial reserve levels, Fitch said. 

TriHealth has an “AA-” rating and stable outlook with Fitch. The Cincinnati-based system’s rating reflects its broad reach, high-acuity services and stable market position in a highly fragmented and competitive market, Fitch said.  

UChicago Medicine has an “AA-” rating and stable outlook with Fitch. The rating reflects the system’s broad and growing reach for high-acuity services and the considerable benefits it receives from its high degree of integration with the University of Chicago, Fitch said.   

UCHealth has an “AA” rating and stable outlook with Fitch. The Aurora, Colo.-based system’s margins are expected to remain robust, and the operating risk assessment remains strong, Fitch said.  

University of Kansas Health System has an “AA-” rating and stable outlook with S&P Global. The Kansas City-based system has a solid market presence, good financial profile and solid management team, though some balance sheet figures remain relatively weak to peers, the rating agency said. 

Virtua Health has an “AA-” rating and stable outlook with Fitch. The rating is supported by the Marlton, N.J.-based system’s leading market position in a stable service area and the successful integration of the Lourdes Health System, Fitch said.  

VHC Health has an”AA-” rating and stable outlook with Fitch. The Arlington-based system has demonstrated strong operating cost flexibility, growth in high acuity service lines and an expanding outpatient footprint, Fitch said.  

WellSpan Health has an “Aa3” rating and stable outlook with Moody’s. The York, Pa.-based system has a distinctly leading market position across several contiguous counties in central Pennsylvania, and management’s financial stewardship and savings initiatives will continue to support sound operating cash flow margins when compared to peers, Moody’s said.

Willis-Knighton Health System has an “AA-” rating and stable outlook with Fitch. The Shreveport, La.-based system has a “dominant inpatient market position” and is well positioned to manage operating pressures, Fitch said.

New Kaiser hospital could cost up to $1.5B

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Oakland, Calif.-based Kaiser Permenante’s new hospital development in Sacramento, Calif., could cost as much as $1.48 billion, Sacramento Business Journal reported Dec. 11.

The project costs 50% more than when the health system first announced the new hospital six years ago. The 310-bed hospital building is expected to cost $924.4 million. When Kaiser assessed the building part of the project in 2018, it projected that it would cost $749.5 million.

Currently, Kaiser operates a 287-bed hospital in the area. However, it does not meet California’s earthquake compliance standards.

StoneBridge Healthcare, nonprofit offer $706M for Tower Health

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StoneBridge Healthcare, a hospital turnaround firm, is looking to enter a management contract with Delaware-based WoodBridge, a nonprofit organization, to acquire West Reading, Pa.-based Tower Health for $706 million, the Philadelphia Business Journal reported Dec.12.

WoodBridge, a sister organization to StoneBridge, was expected to share a nonbinding agreement in principle with Tower Health on Dec. 12, which includes the intent to purchase the system’s assets, the publication reported.

An initial cash payment of $550 million, including the assumption of finance leases with liabilities of $156 million, and a commitment of hiring nearly all the system’s 11,000 employees are featured in the proposed deal.

Tower Health operates Reading Hospital, Pottstown Hospital and Phoenixville Hospital. St. Christopher’s Hospital for Children in Philadelphia is also under the system in partnership with Drexel University. 

If all goes well, the plan would involve StoneBridge negotiating a management agreement with WoodBridge, Joshua Nemzoff, founder and CEO of StoneBridge, told the Journal. However, Mr. Nemzoff said WoodBridge is only interested in acquiring the Reading, Pottstown and Phoenixville hospitals.

This is not the first time that StoneBridge has attempted to acquire the system. Last November, the firm offered Tower Health $675 million, which was turned down. StoneBridge, in partnership with Allentown, Pa.-based Lehigh Valley Health Network, also made two conditional offers in 2021 to acquire the system’s assets for $600 million, which were also declined. 

Formed in 2020, StoneBridge’s mission is to purchase and turn around acute care hospitals that are in significant economic distress. The firm currently does not own or operate any hospitals. Like StoneBridge, WoodBridge also hasn’t completed hospital deals, and will have its own separate board of directors, the publication reported.

Becker’s has reached out to StoneBridge Healthcare and Tower Health for comments on the potential acquisition.

The Affordable Care Act is Back on Stage: What to Expect

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The Affordable Care Act is Back on Stage: What to Expect

In the last 2 weeks, the Affordable Care Act (ACA) has been inserted itself in Campaign 2024 by Republican aspirants for the White House:

  • On Truth Social November 28, former President Trump promised to replace it with something better: “Getting much better Healthcare than Obamacare for the American people will be a priority of the Trump Administration. It is not a matter of cost; it is a matter of HEALTH. America will have one of the best Healthcare Plans anywhere in the world. Right now, it has one of the WORST! I don’t want to terminate Obamacare, I want to REPLACE IT with MUCH BETTER HEALTHCARE. Obamacare Sucks!!!!” 
  • Then, on NBC’s Meet the Press December 3, Florida Governor Ron DeSantis offered “We need to have a healthcare plan that works,” Obamacare hasn’t worked. We are going to replace and supersede with a better plan….a totally different healthcare plan… big institutions that are causing prices to be high: big pharma, big insurance and big government.”

It’s no surprise. Health costs and affordability rank behind the economy as top issues for Republican voters per the latest Kaiser Tracking Poll. And distaste with the status quo is widespread and bipartisan: per the Keckley Poll (October 2023), 70% of Americans including majorities in both parties and age-cohorts under 65 think “the system is fundamentally flawed and needs major change.” To GOP voters, the ACA is to blame.

Background:

The Affordable Care Act (aka Obamacare aka the Patient Protection and Affordable Care Act) was passed into law March 23, 2013. It is the most sweeping and controversial health industry legislation passed by Congress since Lyndon Johnson’s Medicare and Medicaid Act (1965). Opinions about the law haven’t changed much in almost 14 years: when passed in 2010, 46% were favorable toward the law vs. 40% who were opposed. Today, those favorable has increased to 59% while opposition has stayed at 40% (Kaiser Tracking Poll).

Few elected officials and even fewer voters have actually read the law. It’s understandable: 955 pages, 10 major sections (Titles) and a plethora of administrative actions, executive orders, amendments and legal challenges that have followed. It continues to be under-reported in media and misrepresented in campaign rhetoric by both sides. Campaign 2024 seems likely to be more of the same.

In 2009, I facilitated discussions about health reform between the White House Office of Health Reform and the leading private sector players in the system (the American Medical Association, the American Hospital Association, America’s Health Insurance Plans, AdvaMed, PhRMA, and BIO). The impetus for these deliberations was the Obama administration’s directive that systemic reform was necessary with three-aims:  reduce cost, increase access via insurance coverage and improve the quality of care provided by a private system. In parallel, key Committees in the House and Senate held hearings ultimately resulting in passage of separate House and Senate versions with the Senate’s becoming the substance of the final legislation. Think tanks on the left (I.e. the Center for American Progress et al.) and on the right (i.e. the Heritage Foundation) weighed in with members of Congress and DC influencers as the legislation morphed. And new ‘coalitions, centers and institutes’ formed to advocate for and against certain ACA provisions on behalf of their members while maintaining a degree of anonymity.

So, as the ACA resurfaces in political discourse in coming months, it’s important it be framed objectively. To that end, 3 major considerations are necessary to have a ‘fair and balanced’ view of the ACA:

1-The ACA was intended as a comprehensive health reform legislative platform. It was designed to be implemented between 2010 and 2019 in a private system prompted by new federal and state policies to address cost, access and quality. It allowed states latitude in implementing certain elements (like Medicaid expansion, healthcare marketplaces) but few exceptions in other areas (i.e.individual and employer mandates to purchase insurance, minimum requirements for qualified health plans, et al). The CBO estimated it would add $1.1 trillion to overall healthcare spending over the decade but pay for itself by reducing demand, administrative red-tape and leveraging better data for decision-making. The law included provisions to…

  • To improve quality by modernizing of the workforce, creating an Annual Quality Report obligation by HHS, creating the Patient Centered Outcome Research Institute and expanding the the National Quality Forum, adding requirements that approved preventive care be accessible at no cost, expanding community health centers, increasing residency programs in primary care and general surgery, implementing comparative effectiveness assessments to enable clinical transparency and more.
  • To increase access to health insurance by subsidizing coverage for small businesses and low income individuals (up to 400% of the Federal poverty level), funding 90% of the added costs in states choosing to expand their Medicaid enrollments for households earning up to 138% of the poverty level, extending household coverage so ‘young invincibles’ under 26 years of age could stay on their parent’s insurance plan, requiring insurers to provide “essential benefits” in their offerings, imposing medical loss ratio (MLR) mandates (80% individual, 85% group) and more.
  • To lower costs by creating the CMS Center for Medicare and Medicaid Innovation to construct 5-year demonstration pilots and value-based purchasing programs that shift provider incentives from volume to value, imposing price and quality reporting and transparency requirements and more.

The ACA was ambitious: it was modeled after Romneycare in MA and premised on the presumption that meaningful results could be achieved in a decade. But Romneycare (2006) was about near-universal insurance coverage for all in the Commonwealth, not the triple aim, and the resistance calcified quickly among special interests threatened by its potential.

2-The ACA passed at a time of economic insecurity and hyper-partisan rancor and before many of the industry’s most significant innovations had taken hold. The ACA was the second major legislation passed in the first term of the Obama administration (2009-2012); the first was the $831 billion American Recovery and Reconstruction Act (ARRA) stimulus package that targeted “shovel ready jobs” as a means of economic recovery from the 2008-2010 Great Recession. But notably, it included $138 billion for healthcare including requirements for hospitals and physicians to computerize their medical records, extension of medical insurance to laid off workers and additional funding for states to offset their Medicaid program expenses. The Obama-Biden team came to power with populist momentum behind their promises to lower health costs while keeping the doctors and insurance plans they had. Its rollout was plagued by miscues and the administration’s most popular assurances (‘keep your doctor and hospitals’) were not kept. The Republican Majority in the 111th Congress’ (247-193)) seized on the administration’s miss fueling anti-ACA rhetoric among critics and misinformation.

3-Support for the ACA has grown but its results are mixed. It has survived 7 Supreme Court challenges and more than 70 failed repeal votes in Congress.  It enjoys vigorous support in the Biden administration and among the industry’s major trade groups but remains problematic to outsiders who believe it harmful to their interests. For example, under the framework of the ACA, the administration is pushing for larger provider networks in the 18 states and DC that run their own marketplaces, expanded dental and mental health coverage, extended open enrollment for Marketplace coverage and restoration of restrictions on “junk insurance’ but its results to date are mixed: access to insurance coverage has increased. Improvements in quality have been significant as a result of innovations in care coordination and technology-enabled diagnostic accuracy. But costs have soared: between 2010 and 2021, total health spending increased 64% while the U.S. population increased only 7%.

So, as the ACA takes center stage in Campaign 2024, here are 4 things to watch:

1-Media attention to elements of the ACA other than health insurance coverage. My bet: attention from critics will be its unanticipated costs in addition to its federal abortion protections now in the hands of states. The ACA’s embrace of price and quality transparency is of particular interest to media and speculation that industry consolidation was an unintended negative result of the law will energize calls for its replacement. Thus, the law will get more attention. Misinformation and disinformation by special interests about its original intent as a “government takeover of the health system” will be low hanging fruit for antagonists.

2- Changes to the law necessary intended to correct/mitigate its unintended consequences, modernize it to industry best practice standards and responses to court challenges will lend to the law’s complex compliance challenges for each player in the system. New ways of prompting Medicaid expansion, integration of mental health and social determinants with traditional care, the impact of tools like ChatGPT, quantum computing, generative AI not imagined as the law was built, the consequences of private equity investments on prices and spending, and much more.

3-Public confusion. The ACA is a massive law in a massive industry. Cliff’s Notes are accessible but opinions about it are rarely based on a studied view of its intent and structure. It lends itself to soundbites intended to obscure, generalize or misdirect the public’s attention.  

4-The ACA price tag. In 2010, the CBO estimated its added cost to health spending at $1.1 trillion (2010-2019) but its latest estimate is at least $3 trillion for its added insurance subsidies alone. The fact is no one knows for sure what its costs are nor the value of the changes it has induced into the health system. The ranks of those with insurance coverage has been cut in half. Hospitals, physicians, post-acute providers, drug manufacturers and insurers are implementing value-based care strategies and price transparency (though reluctantly) but annual health cost increases have consistently exceeded 4% annually as the cumulative impact of medical inflation, utilization, consolidation and price increases are felt.

Final thought:

I have studied the ACA, and the enabling laws, executive orders, administrative and regulatory actions, court rulings and state referenda that have followed its passage. Despite promises to ‘repeal and replace’ by some, it is more likely foundational to bipartisan “fix and repair’ regulatory reforms that focus more attention to systemness, technology-enabled self-care, health and wellbeing and more.

It will be interesting to see how the ACA plays in Campaign 2024 and how moderators for the CNN-hosted debates January 10 in Des Moines and January 21 in New Hampshire address it. In the 2-hour Tuscaloosa debate last Wednesday, it was referenced in response to a question directed to Gov. DeSantis about ‘reforming the system’ 101 minutes into the News Nation broadcast. It’s certain to get more attention going forward and it’s certain to play a more prominent role in the future of the system.

The ACA is back on the radar in U.S. healthcare. Stay tuned.

PS The resignations under pressure of Penn President Elizabeth Magill and Board Chair Scott Bok over inappropriate characterization of Hamas’ genocidal actions toward Jews are not surprising. Her response to Congressional questioning was unfortunate. The eventuality turned in 4 days, sparked by student outrage and adverse media attention that tarnished the reputations of otherwise venerable institutions like Penn, MIT and Harvard.

The lessons for every organization, including the big names in healthcare, are not to be dismissed: Beyond the issues of genocide, our industry is home to a widening number of incendiary issues like Hamas.

They’re increasingly exposed to public smell tests that often lead to more: Workforce strikes. CEO compensation. Fraud and abuse. Tax exemptions and community benefits. Prior authorization and coverage denial. Corporate profit. Patient collection and benevolent use policies. Board independence and competence and many more are ripe for detractors and activist seeking attention. 

Public opinion matters. Reputations matter. Boards of Directors are directly accountable for both.  

ChatGPT will reduce clinician burnout, if doctors embrace it

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Clinician burnout is a major problem. However, as I pointed out in a previous newsletter post, it is not a distinctly American problem.

A recent report from the Commonwealth Fund compared the satisfaction of primary care physicians in 10 high-income nations. Surprisingly, U.S. doctors ranked in the middle, reporting higher satisfaction rates than their counterparts in the U.K., Germany, Canada, Australia and New Zealand.

A Surprising Insight About Burnout

In self-reported surveys, American doctors link their dissatisfaction to problems unique to the U.S. healthcare system: excessive bureaucratic tasks, clunky computer systems and for-profit health insurance. These problems need to be solved, but to reduce clinician burnout we also need to address another factor that negatively impacts doctors around the globe.

Though national healthcare systems may vary greatly in their structure and financing, clinicians in wealthy nations all struggle to meet the ever-growing demand for medical services. And that’s due to the mounting prevalence and complications of chronic disease.

At the heart of the burnout crisis lies a fundamental imbalance between the volume and complexity of patient health problems (demand) and the amount of time that clinicians have to care for them (supply). This article offers a way to reverse both the surge in chronic illnesses and the ongoing clinician burnout crisis.

Supply vs. Demand: Reframing Burnout

When demand for healthcare exceeds doctors’ capacity to provide it, one might assume the easiest solution is to increase the supply of clinicians. But that outcome remains unlikely so long as the cost increases of U.S. medicine continue to outpace Americans’ ability to afford care.

Whenever healthcare costs exceed available funds, policymakers and healthcare commentators look to rationing. The Oregon Medicaid experiment of the 1990s offers a profound reminder of why this approach fails. Starting in 1989, a government taskforce brought patients and providers together to rank medical services by necessity. The plan was to provide only as many as funding would allow. When the plan rolled out, public backlash forced the state to retreat. They expanded the total services covered, driving costs back up without any improvement in health or any relief for clinicians.

Consumer Culture Can Drive Medical Culture

Ultimately, to reduce burnout, we will have to find a way to decrease clinical demand without raising costs or rationing care.

The best—and perhaps only viable—solution is to embrace technologies that empower patients with the ability to better manage their own medical problems.

American consumers today expect and demanded greater control over their lives and daily decisions. Time and again, technology has made this possible.

Take stock trading, for example. Once the sole domain of professional brokers and financial advisors, today’s online trading platforms give individual investors direct access to the market and a wealth of information to make prudent financial decisions. Likewise, technology transformed the travel industry. Sites like Airbnb and Expedia empowered consumers to book accommodations, flights and travel experiences directly, bypassing traditional travel agents.

Technology will soon democratize medical expertise, as well, giving patients unprecedented access to healthcare tools and knowledge. Within the next five to 10 years, as ChatGPT and other generative AI applications become significantly more powerful and reliable, patients will gain the ability to self-diagnose, understand their diseases and make informed clinical decisions.

Today, clinicians are justifiably skeptical of outsized AI promises. But as technology proves itself worthy, clinicians who embrace and promote patient empowerment will not only improve medical outcomes, but also increase their own professional satisfaction.

Here’s how it can happen:

Empowering Patients With Generative AI

In the United States, health systems (i.e., large hospitals and medical groups) that heavily prioritize preventive medicine and chronic-disease management are home to healthier patients and more satisfied clinicians.

In these settings, patients are 30% to 50% less likely to die from heart attack, stroke and colon cancer than patients in the rest of the nation. That’s because their healthcare organizations provide effective chronic-disease prevention programs and assist patients in managing their diabetes, hypertension, obesity and asthma. As a result, patients experience fewer complications like heart attacks, strokes, and cancer.

Most primary care physicians, however, don’t have the time to accomplish this by themselves. According to one study, physicians would need to work 26.7 hours per day to provide all the recommended preventive, chronic and acute care to a typical panel of 2,500 adult patients.

GenAI technologies like ChatGPT can help lessen the load. Soon, they’ll be able to offer patients more than just general advice about their chronic illnesses. They will give personalized health guidance. By connecting to electronic health records (EHR)—even when those systems are spread across different doctors’ offices—GenAI will be able to analyze a patient’s specific health data to provide tailored prevention recommendations. It will be able to remind patients when they need a health screening, and help schedule it, and even sort out transportation. That’s not something Google or any other online platform can currently do.

Moreover, with new tools (like doctor-designed plugins expected in future ChatGPT updates) and data from fitness trackers and home health monitors, GenAI will be capable of not just displaying patient health data, but also interpreting it in the context of each person’s health history and treatment plans. These tools will be able to provide daily updates to patients with chronic conditions, telling them how they’re doing based on their doctor’s plan.

When the patient’s health data show they’re on the right track, there won’t be a need for an office visit, saving time for everyone. But if something seems off—say, blood pressure readings remain excessively high after the start of anti-hypertensive drugs—clinicians will be able to quickly adjust medications, often without the patient needing to come in. And when in-person visits are necessary, GenAI will summarize patient health information so the doctor can quickly understand and act, rather than starting from scratch.

ChatGPT is already helping people make better lifestyle choices, suggesting diets tailored to individual health needs, complete with shopping lists and recipes. It also offers personalized exercise routines and advice on mental well-being.

Another way generative AI can help is by diagnosing and treating common, non-life-threatening medical problems (e.g., musculoskeletal, allergic or viral issues). ChatGPT and Med-PaLM 2 have already demonstrated the capability in diagnosing a range of clinical issues as effectively and safely as most clinicians. Looking ahead, GenAI’s will offer even greater diagnostic accuracy. When symptoms are worrisome, GenAI will alert patients, speeding up definitive treatment. Its ability to thoroughly analyze symptoms and ask detailed questions without the time pressure doctors feel today will eradicate many of our nation’s 400,000 annual deaths from misdiagnosis.

The outcomes—fewer chronic diseases, fewer heart attacks and strokes and more medical problems solved without an office visit—will decrease demand, giving doctors more time with the patients they see. As a result, clinicians will leave the office feeling more fulfilled and less exhausted at the end of the day.

The goal of enhanced technology use isn’t to eliminate doctors. It’s to give them the time they desperately need in their daily practice, without further increasing already unaffordable medical costs. And rather than eroding the physician-patient bond, the AI-empowered patient will strengthen it, since clinicians will have the time to dive deeper into complex issues when people come to the office.

A More Empowered Patient Is Key To Reducing Burnout

AI startups are working hard to create tools that assist physicians with all sorts of tasks: EHR data entry, organizing office duties and submitting prior authorization requests to insurance companies.

These function will help clinicians in the short run. But any tool that fails to solve the imbalance between supply (of clinician time) and demand (for medical services), will be nothing more than a temporary fix.

Our nation is caught in a vicious cycle of rising healthcare demand, leading to more patient visits per day per doctor, producing higher rates of burnout, poorer clinical outcomes and ever-higher demand. By empowering patients with GenAI, we can start a virtuous cycle in which technology reduces the strain on doctors, allowing them to spend more time with patients who need it most. This will lead to better health outcomes, less burnout for clinicians and further decreases in overall healthcare demand.

Physicians and medical societies have the opportunity to take the lead. They’ll have to educate the public on how to use this technology effectively, assist in connecting it to existing data sources and ensure that the recommendations it makes are reliable and safe. The time to start this process is now.

Executive Intelligence and Its Relationship to Management Competence

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These days I have been reading From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life by Arthur C. Brooks. Brooks is the former President of the American Enterprise Institute and is currently a professor at both the Harvard Kennedy School and the Harvard Business School. 

From Strength to Strength is a book about intelligence and aging and the relationship of those aspects to personal happiness. The book is part sociology, part psychology, and part self-help. But if you read carefully, the book also offers important lessons in contemporary management.

The central theme of From Strength to Strength is how our intelligence changes over time and how individuals must change to make the best use of this changing intelligence. To make this point, Brooks cites Raymond Cattell, a British-American psychologist, who in 1971 suggested that there are two types of intelligence: “fluid intelligence” and “crystallized intelligence.”

Cattell and Brooks define fluid intelligence as the ability to “reason, think flexibly, and solve novel problems.” This is the kind of smarts and intelligence that is associated with young Nobel Prize winners and the tech titans of Silicon Valley. Crystallized intelligence is different. Brooks defines crystallized intelligence as the ability to use a stock of knowledge accumulated and learned in the past. Fluid intelligence is a characteristic of the young while crystallized intelligence is more closely associated with our aging process.

At its best, fluid intelligence is “raw smarts” or what I might term “mental athleticism.” Crystallized intelligence at its best is what we recognize as “wisdom.”

Extrapolating from Brooks’ observations and analysis, one can conclude that complex organizations, both not-for-profit and for-profit, require both kinds of executive intelligence. Fluid intelligence generates new ideas, top-shelf innovation, and executive solutions to the most difficult business problems. But crystallized intelligence provides organizations with “the wisdom and experience of people who have seen a lot.”

To further paraphrase Brooks, crystallized intelligence can teach the organization how not to make flagrant, self-defeating, and avoidable errors.

Reading Brooks and thinking about Cattell’s research led me to two observations. First, in our general corporate environment, including hospitals, we very much de-emphasize the value of crystallized intelligence. Just at the moment when many “older” executives are at the highest point of institutional wisdom, our modern corporate structure tends to react in two ways:

  • In general, we no longer give these so-called older executives jobs of responsibility and/or importance. These jobs are reserved for younger executives whose critical qualification is powerful levels of fluid intelligence.
  • Also, many corporate organizations demand what I would characterize as “early retirement.” This is especially true in many prominent American companies when long-tenured executives are required to retire in their late fifties or early sixties. If you place these retirements in the context of crystallized intelligence, then such retirements inevitably lead to a significant loss of human capital to our overall national economy. This includes the loss of long-term accumulated smarts, and most importantly, a loss of organizational wisdom.

Turning this discussion more specifically to hospital management leads to my second observation. Since Covid, the number of hospital CEO resignations has significantly increased when compared to previous years. Additionally, not only has CEO turnover increased but a number of important, influential, and highly capable CEOs—who previously might have been expected to work into their mid-sixties or, perhaps, even into their early seventies—have also decided to leave hospital leadership.

If we come back then to the central observations of Brooks and Cattell, we can see that hospital leadership and management, which is already challenged by so many external and difficult factors, is now losing critically required crystallized intelligence and wisdom.

Having said all this, it is still patently obvious that your organization requires the fluid intelligence of the next generation and the generation after that. That kind of intelligence is necessary and essential to solve today’s and tomorrow’s hardest healthcare problems. And, of course, to innovate and then to innovate some more.

But at the same time, your hospital or health system must also preserve a prominent place for older executives who possess the crystallized intelligence that assures your hospital will prioritize caring, thoughtfulness, and an essential level of managerial balance—all things that come along with executive wisdom.

From Strength to Strength signals a new way of looking at your executive team. This includes understanding that executives of differing tenures bring very different types of intelligence to the organization. And, it requires finding the proper balance between fluid and crystallized intelligence to give your hospital the very best opportunity to re-find its way to a much-needed new vision of hospital success.