The $50B rural health transformation fund is pushing many hospitals to shrink

https://www.healthcaredive.com/news/rural-health-transformation-fund-50-billion-push-hospitals-shrink/823206

To avoid losing funding, many states are pursuing proven cost-saving strategies like downsizing inpatient care rather than untested approaches, some experts say.

Listen to the article7 min

The Rural Health Transformation Program is beginning to reshape how hospitals in rural America deliver care. But with nearly a trillion dollars in Medicaid cuts looming and pressure to show results or risk losing funding, many states are pursuing the safest path available: paying hospitals to downsize.

Congress established the $50 billion, five-year fund under the One Big Beautiful Bill Act to improve healthcare access, quality and outcomes in rural areas — and to win over a handful of Republicans who threatened not to vote for the bill over concerns it would gut Medicaid funding and take out rural hospitals in the process.

The funds are meant to improve rural healthcare access, which has been declining in the U.S. for years. More than 100 rural hospitals have closed in the past decade, and more than one-third are at risk of closing, according to the nonprofit Center for Healthcare Quality and Payment Reform.

The OBBBA will reduce Medicaid spending by an estimated $911 billion over the next decade and increase the number of uninsured people by 10 million, according to the Congressional Budget Office. The RHT program, meanwhile, could offset 37% of the estimated cuts to federal Medicaid spending in rural areas, or about 5% of the total estimated cuts to federal Medicaid spending, according to a KFF analysis of the CBO’s estimates. 

In light of the massive funding cuts, the RHT program may not live up to its promises, experts say.

“If we weren’t facing a trillion-dollar cut in the Medicaid program over the next 10 years, this could be a once-in-a-generation policy,” said Bradley Cunningham, a regulatory and policy analyst at the Association of American Medical Colleges.

In December, all 50 states received their first-year awards, totaling $10 billion and averaging roughly $200 million per state. The program caps direct care spending at 15% of funds, steering the bulk of the remaining money toward infrastructure, technology, workforce and new care models.

However, states only had about seven weeks to prepare their applications. So, their plans largely focus on proven cost-cutting strategies rather than innovation, and now they’re locked into whatever they proposed.

“They had to prioritize speed over thoroughness,” said Aaron Bujnowski, a managing director with the healthcare industry group at consultancy Alvarez & Marsal.

As a result, rural health systems in at least 25 states will need to rightsize to receive funding, NPR reported in April. That can mean cutting services, such as dialysis or labor and delivery, or subsidizing conversions to the Rural Emergency Hospital designation, which requires eliminating inpatient care.

That could affect academic medical centers and other large providers, as they often absorb patients when rural facilities cut services or close. The wave of rural hospital closures over the past decade has already pushed patients to urban academic health systems, increasing volumes and straining capacity.

The point was driven home by an AAMC member who ran the only academic medical center in his state, said Leonard Marquez, senior director of government relations and legislative advocacy at the AAMC.

“He looked at me and said, ‘If my rural hospitals are not healthy, I cannot be healthy,’” Marquez said.

Five buckets, 50 plans

States are taking sharply different approaches to the RHT program. Bujnowski identified five broad categories: Downsizing and REH conversion, as in Kansas and Montana; workforce development, including Maine’s expanded scope of practice for physician assistants; technology and alternative payment models, with 42 of 50 states including some form of value-based care expansion; social determinants of health, including food-as-medicine programs in Arkansas and Pennsylvania; and states that are still refining their plans.

The applications for funding were “so divergent” that it’s difficult to discuss the program in holistic terms, Cunningham said. 

Moreover, the program’s clawback authority, which allows the CMS to reduce a state’s funding in subsequent years if it fails to demonstrate outcomes, is weighing heavily on states’ decision-making.

Read More in Hospitals

Because of this, states have strong incentives to pursue proven models rather than untested approaches, as they must demonstrate measurable progress in the first year or risk losing funding in the second.

That dynamic likely limits innovation and spurs cuts because reducing services will quickly lead to direct and measurable progress. So, states are more inclined to expand capitated primary care payments or subsidize REH conversions — interventions with existing track records — than attempt something novel without a demonstrated history of results.

Still, not everyone sees the service cuts as a loss.

Framing the program as incentivizing hospitals to shrink is misleading, said Robert Parris, a managing director who leads government-focused healthcare advisory work at consulting firm Huron. What’s actually happening, he said, is that communities are getting more of what they need and less of what they don’t.

“It’s more about reallocation as opposed to taking away,” Parris said.

The program is also shifting how leaders think — from what services a facility can provide within its own walls to what care the surrounding population actually has access to, said Paul Johnson, a managing director who works directly with rural hospital clients at Huron.

Many hospitals had these changes on their wish lists for years, but they couldn’t justify the investment because they were focused on surviving the next budget cycle.

“It’s almost like a license for them to pivot into things that they know they’ve had to do,” Johnson said.

Programs over people

But with nearly half of rural hospitals operating in the red, the 15% direct-care cap doesn’t replace what they lost from Medicaid cuts, forcing difficult decisions about which services to keep.

Hospital boards are weighing four options, Bujnowski said: Close services, convert to a Rural Emergency Hospital, develop truly innovative payment models or improve access to technology like digital health tools.

In many instances, the first two offer the clearest path to continued funding under the RHT program.

The need to demonstrate outcomes, as well as the looming threat of funding clawbacks, could also cause hospital leaders to become overly focused on program management at the expense of the communities they serve.

“The most common mistake could be to put programs over people,” Bujnowski said.

The best leaders will ensure their initiatives stay aligned with what patients in their communities actually need. Boards should ask what sustained, community-appropriate care looks like beyond 2030, when the program’s funding runs out.

“That should be your North Star,” Bujnowski said.

But whether the program’s limitations allow for genuine transformation — or simply a managed, federally-funded downsizing — is a question that won’t be answered for years.

Explaining patients’ declining trust in doctors

https://www.linkedin.com/pulse/explaining-patients-declining-trust-doctors-robert-pearl-m-d–u3krc

For more than half a century, physicians ranked among the most trusted professionals in America. Even before modern medicine, when treatments usually failed, patients admired their doctors’ knowledge, dedication and compassion. Today, that trust has eroded, with profound implications for the future of U.S. healthcare.

Gallup polling shows just 44% of Americans rate the quality of care they receive as “good” or “excellent,” the weakest showing since Gallup began asking the question in 2001. Meanwhile, trust in doctors’ honesty and ethics has dropped 14 points since 2021, falling to its lowest point this century.

At first glance, you might assume that this decline resulted from recent developments: COVID-19, political polarization and rising vaccine skepticism. Instead, today’s drop in confidence is the predictable result of decisions set in motion some 20 years ago.

How the arc bent

To understand why patients now rate their doctors so poorly, we need to trace the full arc of modern medicine: how trust was built, how it peaked and why it declined.

The arc began with the arrival of antibiotics in the 1920s and ‘30s. Before then, doctors more often offered patients hope and compassion rather than cures. But with the availability of sulfa drugs and, later, penicillin, a doctor’s visit was more likely to prolong a life than shorten it.

The second half of the 20th century became medicine’s golden era. In this next section of the arc, breakthroughs in surgery, transplantation, chemotherapy and vaccines were paired with broader access through employer-sponsored insurance and the creation of Medicare and Medicaid. Life expectancy climbed year after year, and public confidence in doctors soared.

But every arc bends. By the 1990s, the daily demands of clinical practice had shifted. Acute problems like pneumonia or broken bones — conditions that often could be treated in a single encounter — gave way to chronic illnesses such as diabetes, heart failure and hypertension. These conditions demand lifelong management: frequent monitoring, medication adjustments and repeated follow-ups.

As chronic disease became more common, and as patients and patients struggled to manage these ever-present conditions, the result was an epidemic of heart attacks, strokes, cancers and kidney failures. Costs soared while clinical outcomes stagnated.

Insurers, caught between surging costs and payer resistance, had only one lever to pull: rationing. They rolled out high-deductible plans, imposed prior authorization requirements and denied more claims. Doctors, meanwhile, reassured by high patient satisfaction scores, resisted transformation. Most kept practicing in small, siloed offices under fee-for-service, a payment model that rewards volume over outcomes. Many who sought stability and greater reimbursement sold their practices to hospitals or private equity firms. Few found the relief they hoped for.

Why patients feel differently now, why doctors denied it

As the gap between patient needs and physician capacity widened, access to care steadily eroded. Appointments that once took days to schedule began stretching into weeks or even months, both in primary and specialty care. And when patients finally got through the door, visits felt hurried. With doctors averaging just 17 minutes per encounter, there was little time to listen fully, explain thoroughly or follow up afterward.

The consequences were predictable. Delayed appointments allowed medical problems to worsen. Rushed exams led to misdiagnoses. And for patients left waiting, worrying or returning with complications, the logical conclusion was that their doctors didn’t care.

Even as patients noticed the increasingly compromised quality, most medical professionals clung to the belief that small fixes could repair the system and restore the doctor-patient bond. They lobbied for a few more dollars from Medicare, a little less billing paperwork and fewer insurer-imposed prior authorizations. But with less than half of Americans now confident in the quality of care they receive — and premiums projected to rise nearly 9% next year — physicians can see that major healthcare reform is required. The era of denial is ending.

Patient confidence has now collapsed. A minority of Americans rate their care as excellent, and the data back them up. Life expectancy remains the same in the United States today as it was in 2010. And healthcare now consumes nearly one-fifth of the nation’s GDP, with half of Americans struggling to afford their medical bills. The question clinicians are asking is what can we do? Other industries provide answers.

Lessons from business turnarounds

Clay Christensen observed that companies and their leaders resist transformation until it is too late, and disaster strikes. Intel’s recent struggles illustrate how even once-great companies can go from the world’s best to an “also ran.” The lesson for the medical profession: that recognize the crisis early enough and embrace bold strategies are the ones that survive.

Their approach and ultimate success fall into two categories:

  1. They maximize operational excellence to close the gap between demand and capacity. In the 1970s, for example, Southwest couldn’t match the major carriers on brand reputation, so it had to become cost effective. It chose to maximize collaboration. Pilots, flight attendants and ground crews operated as a tightly integrated team, following consistent steps at every airport. Planes turned around in 10 minutes, not 30. That efficiency allowed Southwest to schedule six flights a day (one more than the competition) without purchasing more planes or adding staff.
  2. They embrace new technologies that can increase quality and lower cost. Take Netflix as an example. What began as a DVD-by-mail service pivoted early to streaming. Even before broadband was widespread, Netflix bet on the future. The model slashed costs, improved accessibility and delivered higher-quality viewing. Subscriptions stayed affordable, households remained loyal, and the company reshaped an entire industry.

Healthcare can learn from this. In this scenario, doctors would join together to achieve economies of scale, collaborate across specialties to avoid duplication of services and minimize resource waste through clinical care coordination. Moreover, they would apply the principle of specialization to create high-volume centers of excellence capable of providing consistently high quality with far greater efficiency and significantly lower costs.

Medicine could emulate this approach. Physicians would embrace generative AI, take financial risk under a capitated model, find ways to better control chronic disease and empower patients to take on more of their own care. This would decrease demand on doctors, free-up time for their most complex patients and reduce burnout. But this scenario won’t happen if the payment methodology remains “pay-for-volume,” or if new technologies are relegated to administrative tasks rather than applied to improve clinical effectiveness and efficiency.

Of course, there is a third possibility: doctors cling to denial. In this scenario, they keep running faster and faster on the treadmill, cutting more corners each year and hoping small fixes will make a difference.

If this is the path medicine follows, annual costs will outpace inflation, quality will continue to decline, and the gap between healthcare prices and what patients can afford will widen. To fill in the void, entrepreneurs will seize the opportunity and develop generative AI tools that replace (rather than complement) physicians. When that day comes, doctors will regret not acting while they still could.

Who’s suing patients over medical debt? It’s not just hospitals anymore

Hey there —

This week we’re highlighting a trio of stories that shed new light on issues An Arm and a Leg has been tracking closely:

  • A sharp investigation from our partners KFF Health News on who’s actually filing medical debt lawsuits.
  • How one state is cracking down on aggressive medical credit card marketing.
  • Some new, encouraging data suggesting more seniors can afford their medications.

Let’s go!

In at least one state, doctors are now suing patients more than hospitals are

One of the most perplexing realities we’ve come across while reporting on the U.S. health care system (and there are MANY) is this: Hospitals routinely sue their patients over medical debt, yet recoup very little money in the process. So why do they bother?

In fall 2023, we published a twopart investigation with Scripps News and The Baltimore Banner digging into that question.

Since then, we’ve been tracking efforts by advocateslawmakers, and federal agencies to rein in the most aggressive medical debt collection practices — like destroying a patient’s credit, garnishing their wages, or foreclosing on homes.

And now, in at least one state — Connecticut — KFF Health News and the CT Mirror found that public pressure persuaded many hospitals to stop suing patients over medical debt altogether. Cool!

The catch? Other health care providers didn’t follow suit. Actually, their lawsuits have increased.

And recent legislation targeting aggressive medical debt collection practices doesn’t cover non-hospital health care providers. Neither do medical debt protection laws in most other states.

As one Connecticut state senator put it, lawmakers will need to to “go bigger if that’s where the heart of the matter is.”

On a brighter note, Connecticut has passed another law looking out for people facing medical debt…

New rules around CareCredit and other “medical” credit cards

Last week, Governor Ned Lamont signed a bill limiting the aggressive and confusing marketing of medical credit cards inside doctors’ offices and veterinary offices.

Connecticut joins California, Illinois, and New York in passing laws to protect patients from these financial traps.

Health care providers are increasingly pushing medical credit cards as an alternative to in-house payment plans. CareCredit, the biggest player in the field, says these cards are accepted at more than 285,000 locations, including many hospitals.

The appeal for providers is pretty straightforward: Outsourcing billing to a third party reduces administrative burden.

According to Patricia Kelmar, senior director of health campaigns with PIRG, patients frequently don’t understand what they’re agreeing to — whether they’re handed a form at the front desk or an iPad in the exam room.

“It’s just not the place to be looking at terms and conditions,” she says.

As we covered in a previous First Aid Kit, those terms and conditions usually include something scary: deferred interest. In most states, medical debt tied to medical credit cards also isn’t protected by the same consumer laws that cover regular medical debt — New York being the notable exception.

Connecticut’s new law adds meaningful friction that could make it harder for patients to sign up for something they don’t understand:

  • Health care providers can no longer submit or help fill out applications on a patient’s behalf.
  • Provider logos are banned from credit card marketing materials, making it clearer the card isn’t affiliated with the doctor or hospital.
  • Providers can’t charge these cards for services covered by Medicaid.

Kelmar, who’s collecting stories from patients, says it’s a step forward — and a pretty unlikely one, given that Synchrony Financial, which operates CareCredit, is based in Stamford, CT.

Apizza, anyone?

A law from 2022 is making a real difference for seniors

A new study in JAMA finds that legislation capping out-of-pocket prescription costs for seniors has helped many stay on top of their medications.

And, as Undark explains, those good results may be only the beginning. The law was only beginning to phase in during 2024; the full out-of-pocket cap took effect in 2025, and the study’s authors expect even stronger results to follow.

Trump Plans – I Mean – Junk Plans Are Back

The Trump administration has announced that it will significantly expand access to so-called catastrophic health insurance plans, which are policies with comparatively low monthly premiums but deductibles so high they often leave families effectively uninsured until a medical crisis strikes. CMS described the move as giving Americans “flexibility” and improving access to “affordable healthcare coverage.” But what I call them are “junk plans”.

Back in October, I warned that these plans (often called short-term, limited-duration insurance plans, or STLDIs) were poised for a comeback as enhanced Affordable Care Act subsidies expired and millions of Americans faced sharp premium increases. Well, now these plans are, in fact, a reality.

The Affordable Care Act outlawed most of these junk-style plans because the law requires insurers to cover health care services people need, including prescription drugs, hospitalization, mental health care and maternity care. The ACA also forced insurers to spend most premium dollars on medical care instead of executive compensation, advertising and shareholder returns.

But the ACA never fully solved the deeper affordability crisis in American health care. Premiums have steadily become much too high. Deductibles and other out-of-pocket requirements have put care out of reach for millions as insurers have continued to shift more costs onto patients while simultaneously becoming larger, more powerful and more profitable. The shortcomings of the ACA and the decisions by the President and congressional Republicans have created the perfect opening for catastrophic plans to return.

ACA Rule Foreshadows New Plan Model in 2028

Affordability’s all the buzz, but Trump’s sweeping payment rule emphasizes consumer choice over cost control.

When families are staring at monthly premiums they can no longer afford, a cheaper option — even one loaded with massive deductibles and coverage gaps — starts looking attractive. That is exactly what insurers are counting on.

In my old job at Cigna, I helped market plans like these. In my book Deadly Spin, I called them what they often really are: “the illusion of coverage.” These policies were designed to look like insurance while minimizing the likelihood insurers would actually have to pay significant claims. Companies like UnitedHealth Group and other insurance and health care conglomerates make enormous profits on catastrophic-style plans because the deductibles are so high and the restrictions so extensive that relatively few claims ever get paid.

Supporters of these plans frame them as “consumer choice.” But choice is a misleading word when many Americans are being financially cornered into skimpier coverage because comprehensive insurance has become unaffordable. People do not think they will get cancer before it happens. No one expects a devasting car crash or for their kid to come down with a confusing illness. The danger with junk plans is that people undoubtedly only discover how weak their coverage is after their lives have already been turned upside down.

And so, both parties in Washington deserve criticism. Republicans are now openly expanding access to catastrophic-style plans. But Democrats also bear responsibility for defending a post-ACA system that still leaves millions of Americans underinsured and financially exposed. Expanding coverage was enormously important. But coverage alone is not enough if using that coverage can still bankrupt you. We need a comprehensive update to the consumer protections in the ACA – expanding junk insurance is not that – and Republicans know better.

The real danger now is that America slowly normalizes a health care system where people are expected to carry insurance cards that offer little meaningful protection until disaster strikes. Once that becomes acceptable, legitimate insurance and junk insurance become indistinguishable.

Is the Payer-Provider Battle of the Bots Driving Healthcare Costs Higher?

With commercial medical costs projected to increase 9.0% in 2027, patients are feeling the financial squeeze from administrative friction generated by the payer-provider AI arms race.


KEY TAKEAWAYS

PwC projects a 9.0% commercial medical cost trend for group plans in 2027, driven by structural inflators like AI-enabled documentation tools, rising specialty pharmacy costs, and IDR payments. 

As payers aggressively deploy AI-driven pre-payment reviews to combat rising costs, providers are automating their defenses, creating an expensive administrative arms race that fails to lower systemic costs for the consumer.

To navigate this financial squeeze without alienating their communities, health systems must shift away from back-end collections and prioritize transparent, empathetic pre-service financial clearance.

Last year, PwC projected a 8.5% medical cost spike in the commercial group market. Unfortunately, the professional services company’s forecast for the next year does not suggest there will be any relief for rising healthcare costs.  

According to PwC’s latest Medical Cost Trend: Behind the Numbers report, the 2026 group cost trend has been retroactively adjusted upward to 9.0%. Looking ahead to 2027, health plan actuaries expect that 9.0% growth rate to sustain in the group market, alongside an 8.5% increase in the individual market.

With historical deflators, like biosimilars and site-of-care shifts now fully embedded into the baseline, the cost environment heading into 2027 represents a structural shift rather than a temporary spike, according to the report. 

Five Cost Inflators in 2027

Health plan actuaries point to five distinct inflators driving medical costs higher across the commercial sector.

1. AI-Enabled Revenue Optimization 

While revenue cycle leaders may say that payers started the battle of the bots, provider use of AI-powered scribes and ambient documentation tools are leading to higher E/M levels and higher-severity DRG assignments. Consequently, health plans are seeing higher billed allowed amounts and increasing per-member-per-month trends without a corresponding change in actual care utilization or contracted rates.


2. Provider Reimbursement Pressures 

Hospitals continue to face elevated labor expenses and rising input costs for drugs and supplies. To offset these structural costs, health systems are leveraging market consolidation to negotiate higher commercial reimbursement rates.

3. Surging Pharmacy Costs 

Pharmacy trend continues to outpace overall medical trend. Spending on cancer medicines alone reached $143 billion in 2025. Additionally, high-cost GLP-1 therapies are expanding well beyond obesity treatment, securing FDA approvals for cardiovascular disease and chronic kidney disease.

4. Behavioral Health Utilization 

Between 2018 and 2024, behavioral health visit rates increased by 62.6%. Unlike other medical categories that are driven by unit cost, the behavioral health trend is actively fueled by sustained increases in patient utilization.

5. IDR Arbitration 

The No Surprises Act’s Independent Dispute Resolution (IDR) process has become a significant revenue driver for providers. Providers won roughly 88% of payment determinations in the first half of 2025. A 2025 report found that IDR had generated $5 billion in costs, including $2.24 billion in direct payments to providers. 

Looking at the Bigger Picture

While AI has been sold as a tool to improve efficiency, the technology has so far driven an expensive administrative arms race rather than acting as a systemic cost deflator. On the health systems side, providers are using AI-powered scribes and documentation tools to capture greater complexity and patient acuity. Meanwhile, health plans are deploying their own technology to auto-triage complex claims, detect billing anomalies, and flag provider outliers before funds are ever released.

Administrative friction between providers and payers ultimately causes patients to delay or interrupt necessary clinical care. It is critical that payers and providers work together to prevent this, according to Ryan Thompson, Chief Revenue Cycle Officer at Providence. 

“It’s incumbent on both payers and providers to identify what we can do differently to mitigate that friction that causes patients to interrupt or delay care,” Thompson says.

This puts revenue cycle leaders in a tricky position, where they are expected to drive collections from cash-strapped patients without alienating local communities by focusing solely on revenue optimization. 

To counteract the 2027 cost trajectory without damaging patient trust, health systems must prioritize transparent, pre-service financial clearance. Ryan Klein, Senior Director of Patient Access and Financial Experience at UW Health, emphasized that leaning into empathy and flexibility ultimately protects both the patient and the bottom line.

“An experience-first approach, I don’t think it undermines revenue goals,” Klein stated. “I think it just simply sets up the patient to contribute to their out-of-pocket liability in the way that best works for them.”

With Millions Expected to Lose Coverage, States Look for New Ways to Prevent Medical Debt

https://mailchi.mp/c6493f5d8b4b/with-millions-expected-to-lose-coverage-states-look-for-new-ways-to-prevent-medical-debt?e=ad91541e82

There are a lot of eye-popping statistics that capture the burden high health care costs put on so many Americans. Nearly three in 10 adults say they have problems paying medical bills. More than 40% say they skip medications because of the cost.

The stat that always stops me in my tracks is the fact that Americans have nearly $200 billion in unpaid medical bills in collections, according to one recent estimate. The average consumer facing collections in 2020 had more medical debt than all other sources of debt — credit cards, phone, utilities — combined.

“If a debt collector is calling you up or is knocking on your door, more than half of the time, it’s for medical debt,” said Neale Mahoney, a Stanford University economist and one of the nation’s leading scholars on medical debt.

Mahoney has spent two decades studying the scale of the country’s medical debt problem, as well as the effectiveness of policies intended to relieve people’s medical debt. From 2022-2023, he worked in the Biden administration on regulations to remove unpaid medical bills from people’s credit reports.

Mahoney and other experts fear even more people will end up in medical debt if millions of people lose health insurance as projected following federal cuts to Medicaid and the Affordable Care Act.

We talked with Mahoney about the fate of those regulations under the Trump administration, and what we’ve learned about the best way to protect people from getting medical debt in the first place.

Here are a few of the takeaways: 

  • The Trump administration is rolling back Biden’s regulation of medical debt. Credit agencies sued to prevent the federal government from banning overdue medical bills from credit reports, and the White House declined to defend it. New guidance under Trump also challenged state protections for medical debt
     
  • Nonprofits — and some local governments — have paid off medical debt for millions of Americans, in hopes of easing stress and improving people’s health. Mahoney’s research points to bigger improvements in health outcomes for patients who got debt relief sooner rather than later. One recent study showed patients who got their bills cleared within a few weeks of getting care were more likely to get diagnosed and treated for heart disease and diabetes than those who didn’t get help. However, an analysis of people who had their debts wiped after carrying them for years found no improvements to self-reported physical or mental health.
     
  • Mahoney believes helping patients avoid medical debt through health insurance or hospital financial assistance, which wipes out some or all of a patient’s bill, is the most effective approach. Many people, however, struggle to take advantage of either due to obstacles like restrictions from insurers and extensive applications to get help from hospitals. Patients caught up in what Mahoney has dubbed “the annoyance economy” often  end up in money-losing fights. “For too many of us, navigating the U.S. health care system can feel like a second job,” Mahoney said, “at the precise moment when we don’t have the time and energy to take on a second job.”
     
  • One promising option to prevent people from falling into medical debt, Mahoney said, is for hospitals to auto-enroll eligible patients for financial assistance — a process known as “presumptive eligibility.” California, Illinois, Oregon and North Carolina have adopted auto-enrollment requirements for hospitals, and more states are considering it. “I would be eager to see hospitals working on this and sharing best practices,” Mahoney said, “so that we can provide relief to people who need it while still recovering payments from people who can afford it.”

I hope you’ll listen to the full conversation or read the transcript. You’ll hear why Mahoney remains optimistic that the country will find its way out of its medical debt crisis.

One of those reasons is the growing number of states looking to require hospitals to auto-enroll patients in financial assistance programs. I’ve been reporting on this idea of presumptive eligibility for years, and for the last few months, I’ve been working on a special series diving deep into the pros and cons of forcing hospitals to provide more charity care. Those stories will drop this fall.

Health Insurers: The Other Half of the Consolidation Story

Hospital monopolies get the headlines – but new research shows health insurance markets are highly concentrated in every state, giving insurers more pricing power than most policymakers realize.

Hospital consolidation dominates the discussion on health care costs – with good reason. There is overwhelming evidence that it raises prices. But every hospital must ultimately negotiate rates with insurers, yet the consolidation story in the health insurer market has only gotten a tiny fraction of the attention. This is a mistake. While the insurer market is not as highly consolidated as the hospital market, it is still highly concentrated by any reasonable antitrust standard, and a major (and under-estimated) driver of cost growth.

The Department of Justice (DOJ) and Federal Trade Commission (FTC) use the Herfindahl Hirschman Index (HHI) to measure market concentration, where >1,800 is highly concentrated, 5,000-7,500 is where a few firms hold substantial market power, and >7,500 is a near monopoly, where a single firm holds absolute (or near absolute) price-setting autonomy. The hospital market is heavily concentrated and has an average HHI score of 5,273, with 97% of markets being at least heavily concentrated and 64% being near or complete monopolies.

By comparison, our recent work similarly shows a high degree of consolidation among insurers. (Figure 1) We found that the state-level average HHI score in the commercial insurance market was 4,458, with 50 of 50 states (100%) at least heavily concentrated, comparable to hospital markets. This means that in almost every state, health insurers hold pronounced power in price-setting, a key component of the health care cost crisis roiling the country. The most competitive states (although still very highly concentrated) were Oregon (2,870), New York (3,203), and Georgia (3,222), whereas Kentucky (6,752) and Alabama (6,988) are near monopolies.

We find that insurers are even more consolidated than previously reported by the American Medical Association (AMA). Yet the market power of insurers, in combination with hospitals, is a vastly under-appreciated and under-studied driver of costs.

There are several reasons why it is important.

1. Vertical integration

Vertical integration is rapidly accelerating the ability of insurers to consolidate power and redefining what an insurer even is (UnitedHealth/Optum, CVS/Aetna, Cigna/Express Scripts, Elevance/Carelon, BCBSA/Ascendiun). This means that traditional plan-level data (such as that used by researchers and the DOJ/FTC) underestimates the true market power of insurers, and the shadowy network of MSOs, banks, and vendors makes it very difficult to quantify, absent new reporting or regulatory requirements

2. Geography

Where you live is important since it determines where you receive care and buy insurance. In some states, the average competition tells the story, e.g. Louisiana, Kentucky, Alabama, since certain insurers dominate the metro areas and everything in between. In others, the reassuring state averages (CA, NY) mask the variance, and hide the pockets of very uncompetitive markets, particularly in rural areas. Understanding this issue at a market level is important for creating transparency and accountability, to ensure that everyone has options and access to affordable health insurance.

3. Competition

Competition among insurers and hospitals matters, as power asymmetry and/or collusion create dysfunctional markets where costs are “optimized” for the purposes of power and profits, not to make health care more affordable for consumers. It is also important to look at competition among insurers. Market dominance confers advantages that have little to do with delivering better care, such as leverage over providers, captive employer relationships, and pricing power insulated from competition.

While insurer markets aren’t as concentrated as hospital markets, they’re concentrated enough to matter, and the structure of that concentration makes it a distinct and important part of the cost problem. In our next piece, we will show which carriers hold dominant positions and where, and why the answer surprised us.

This research was made possible by the support of Arnold Ventures.

Data from Clarivate Managed Market Surveyor dataset. Includes FI/SI/HMO/PPO/POS/ACA plans.

HHI scores weighted according to zip-level and policy volume. Concentration levels: Red – Extreme; Orange – Severe; and Yellow – Very High.

Why You’re Seeing a PA or NP—But Not a Doctor

Try making a doctor’s appointment at your primary care provider’s office or an urgent care clinic, and often, it won’t be with an MD or DO. As more people need more care—and as more types of preventative care are available—offices are increasingly relying on nurse practitioners (NPs) and physician assistants (PAs) to see patients and save costs. 

That’s not necessarily a bad thing; though they don’t have as extensive training as an MD or DO, both nurse practitioners and physician assistants can deal with many of the complaints someone would have at their primary care office.

“An experienced PA or NP can do most of what a primary care physician does,” says Perri Morgan, a professor in family medicine and community health at Duke University School of Medicine who focuses on PAs and NPs in the health care work force. “And many practices find them to be a welcome addition to the bottom line” because they cost less to employ than physicians.  

Nurse practitioners and physician assistants are paid less than doctors are, but in some states they can generate nearly as much income for practices because they can bill at the same rate as doctors, says Dr. David Chan, a professor at the University of California, Berkeley who studies health economics. Doctors make, on average, $239,200 a year, according to the Bureau of Labor Statistics—nearly double what physician assistants and nurse practitioners make. 

In 2023, the most recent year for which data are available, there were 340,319 primary care physicians in the U.S., according to the National Center for Health Workforce Analysis. By contrast, there were an estimated 374,970 nurse practitioners and 29,433 physician assistants working in primary care in 2024. 

Estimates suggest that in a decade, there will be many more NPs and PAs than MDs and DOs across medicine. While the number of physicians in the U.S. is projected to grow by just 3% between 2024 and 2034, according to the Bureau of Labor Statistics, the number of physician assistants is expected to grow by 20%, and the number of nurse anesthetists, nurse midwives, and nurse practitioners is expected to grow by 35% over that time.  

In some states, nurse practitioners and physician assistants must be supervised by a physician to practice. But groups that represent the interests of NPs and PAs are advocating for more independence. They have persuaded many states to pass legislation that allows them to operate without a supervising physician. The American Medical Association, however, has worked to defeat such bills, calling the practice “scope creep” and arguing that it makes patients less safe. 

Here’s what patients should know about PAs, NPs, and what you might get from one type of provider vs. another.

What is a nurse practitioner (NP)?

The technical name for a nurse practitioner is an advanced practice registered nurse, or APRN. There are four main types of APRNs: nurse practitioners, certified registered nurse anesthetists, certified nurse-midwives, and clinical nurse specialists. 

Nurse practitioners can diagnose and treat illnesses, prescribe medications, manage chronic conditions, order and interpret diagnostic tests, and provide preventative care, says Valerie J. Fuller, president of the American Association of Nurse Practitioners (AANP). Fuller says NPs are unique because they are trained in nursing and so are extremely patient-centered. “I think patients who choose a nurse practitioner are really looking for a clinician who can diagnose, treat, manage their health needs, but who also takes the time to listen,” she says.

To become a nurse practitioner, you need an undergraduate nursing degree and a registered nurse license. Then you must go back to school to pursue a graduate degree: either a master of science in nursing or a doctor of nursing practice. After your graduate degree, you must pass a national certifying exam; only then can you receive an APRN license. (Not all states issue a specific APRN license; some issue similar authorization but call it a certification or registry.)

Nurse practitioners have what’s called full practice authority in 27 states, meaning they can practice without being supervised by a physician. That’s up from just 14 states in 2010. And although some states have passed legislation that requires visits with nurse practitioners to be compensated at the same rate as physicians, that’s not the case in all states. Medicare reimburses nurse practitioners at 85% of what they reimburse for physicians, Fuller says. 

Fuller argues that allowing NPs to practice without a physician’s supervision encourages them to open up practices, helping close gaps in care. When Arizona allowed full practice authority, she says, the nurse-practitioner workforce grew by more than 50%. Millions of Americans don’t have access to basic primary care services, she says, and nurse practitioners can step up to help if they’re allowed. 

What is a physician assistant (PA)?

Physician assistants came about in the wake of the Vietnam War, when thousands of medics were returning from overseas and looking for a place to fit in the medical field, says Morgan, of Duke. Today, to recognize their independence, the American Academy of Physician Associates (AAPA) is advocating for PAs to be referred to as “physician associates” rather than “physician assistants.” 

PAs help fill gaps in medical care, just like NPs do. “They are trained as core generalists,” says Chantell Taylor, head of advocacy at AAPA. “They’re attractive to employers looking to lower wait times and increase patient access, particularly in rural and underserved areas.”

To start a PA program, students must have a bachelor’s degree, complete prerequisite coursework, and enter PA school with more than 3,000 hours of patient-contact experience, Taylor says. PA programs usually last three academic years that include more than 2,000 hours of clinical experience. 

That clinical experience includes rotations in family medicine, emergency medicine, surgery, pediatrics, and other specialties, and prepares graduates to evaluate, diagnose, and treat patients across a broad range of medical specialties and practice settings. PAs graduate with a master’s degree—usually a Master of Science in physician assistant studies or a Master of Clinical Health Services—and then must pass the physician assistant certifying exam to receive national certification and obtain a state license.

Some PAs practice in primary care, but others specialize in surgery, oncology, and other areas, assisting doctors and making them more productive, says Morgan. A PA could prep patients for surgery and close a patient up after surgery, for instance, allowing the surgeon to see more patients, she says. “PAs in specialties add at least as much value as ones in primary care,” she says. 

The AAPA is advocating for states to lift the requirement that PAs be supervised by a physician; so far, nine states have done so. Five states have passed legislation to change the title of PA from physician assistant to physician associate. 

Are NPs and PAs as effective as MDs and DOs?

Patients may be hesitant to see a NP or PA because they have less education and medical training than a doctor. There have been recent reports of poorly trained NPs missing key indicators of illness, most notably in a Bloomberg series about the rising numbers of nurse practitioners.

Both AAPA and AANP say that PAs and NPs are essential to provide care in rural and underserved areas with physician shortages, and that having more non-physicians providing care helps increase access for all Americans. The American Medical Association, on the other hand, says that while it supports the role of non-physicians, “they are not a substitute for physicians,” and that numerous studies show that patients want care led by physicians.

The training differences are stark. Physicians complete four years of medical school plus a three-to-seven year residency program, which can include 12,000 to 16,000 hours of clinical training. Nurse practitioners do not have a residency requirement and have about 500-720 hours of clinical training, and PAs are required to have about 2,000 hours of supervised clinical practice. 

“The country is facing a health care workforce shortage, including shortages of both physicians and nurses,” the American Medical Association said in a statement provided to TIME. “One way to alleviate this shortage is by supporting physician-led care teams that leverage the skills of non-physician practitioners while ensuring that all members of the care team work together, under the direction of a physician, toward optimal care for patients.”

What does the research show about the effectiveness of each type of provider? It depends on the study, says Chan of UC Berkeley, who has examined the difference between NPs and physicians in an emergency-room setting. In one study, Chan looked at what happened in emergency rooms when the Veterans Health Administration began allowing nurse practitioners to practice without physician supervision in 2016. His work suggested that NPs ordered more external tests than did physicians, had more patients returning to the ER with infections than did physicians, and were more likely than physicians to prescribe antibiotics. But “the evidence is still kind of limited,” Chan says. Some doctors will have better patient outcomes than some nurse practitioners, but the reverse is true, too.

Other research suggests that both NPs and PAs can be as effective as doctors at taking care of chronic conditions in medically complex patients—and that they can help save money. One study of patients with diabetes seen at the VA found no clinically significant differences in diabetes outcomes of patients seen by a NP, PA, or physician. 

Another study of VA patients with diabetes found that the health care costs were about 7% lower for NP and PA patients than patients who saw a physician, because patients who saw a doctor were more likely to use the emergency room and inpatient services. Morgan of Duke, the lead author of that study, speculates that this is because it might be easier for patients to reach their PA or NP than their physician, allowing  their provider to help them address concerns or adjust medications quickly without having to go to the emergency room. 

What’s most important, experts say, is that NPs and PAs work together with physicians to help fill care gaps and treat patients. Exactly how that team works together is still up for debate. Taylor, of the AAPA, calls the physician-led model “outdated” and argues that it “doesn’t fully leverage all provider types.” The AMA, on the other hand, argues that physician-led, team-based care is higher quality and more cost effective. And both have a number of studies to point to that prove their point. 

“Increasingly, health care is about teams,” Chan says. “So the next question is: How do we best organize teams with NPs and doctors and others?”

What Presbyterian’s Medicare Advantage Exit Really Means

Presbyterian Healthcare Services’ decision to exit most Medicare Advantage plans and eliminate 150 positions underscores a growing reality for provider-sponsored health plans.


KEY TAKEAWAYS

Rising utilization, reimbursement pressure and regulatory scrutiny are forcing organizations to reassess participation in Medicare Advantage.

Presbyterian’s move reflects a decision to prioritize care delivery and long-term financial stability over maintaining an unprofitable business line.

Financial flexibility and access to capital increasingly depend on demonstrating disciplined balance-sheet management.

Albuquerque-based Presbyterian Healthcare Services has announced it will discontinue most of its Medicare Advantage (MA) offerings beginning in 2027, affecting roughly 30,000 members, while laying off approximately 150 health plan and administrative employees. The system will continue operating its Dual Plus Special Needs Plan serving Medicare-Medicaid beneficiaries. According to Presbyterian, remaining in the broader MA market would limit its ability to invest in care delivery, workforce development and access initiatives across New Mexico. The move is another indication that provider-sponsored health plans are facing mounting pressure as MA margins tighten nationwide.

Many health systems entered Medicare Advantage to create integrated delivery models, diversify revenue streams and capture greater value from population health initiatives. However, elevated medical utilization, changing reimbursement dynamics and increased regulatory oversight have altered the financial equation. Presbyterian’s decision suggests leadership determined that the returns no longer justified the capital and operational resources required to compete effectively in the market.


The regional implications are significant. Presbyterian is one of New Mexico’s largest healthcare organizations, operating hospitals, clinics, physician practices and a health plan across the state. While the layoffs are concentrated in health plan and administrative roles, the exit removes a major local MA option and will require thousands of seniors to seek alternative coverage. At the same time, Presbyterian argues the move will allow it to redirect resources toward direct patient care and workforce investments, potentially strengthening healthcare delivery capacity over the long term.

There’s a larger lesson centered on strategic focus. Organizations often face pressure to maintain market presence across multiple business lines, even when margins deteriorate. Presbyterian’s action demonstrates the importance of regularly evaluating whether each service line advances the system’s long-term mission and financial objectives. Exiting a business can be difficult, but preserving capital for higher-value investments may ultimately create greater organizational resilience.

The decision also highlights why credit ratings deserve ongoing executive attention. Strong ratings are not simply a borrowing metric; they influence an organization’s ability to finance facilities, technology modernization, workforce initiatives and strategic growth. Rating agencies increasingly scrutinize operating performance, liquidity, leverage, governance and management’s willingness to make difficult strategic decisions when market conditions change. Fitch continues to maintain coverage on Presbyterian Healthcare Services, underscoring the importance of external evaluation of health system financial strength.

Healthcare organizations that delay corrective action risk eroding margins, weakening liquidity and increasing borrowing costs. Conversely, systems that demonstrate disciplined portfolio management often preserve stronger credit profiles and maintain greater access to capital during periods of industry disruption.

Presbyterian’s Medicare Advantage could signal a move towards strategic capital allocation, a growing priority in today’s environment. As reimbursement uncertainty and utilization pressures continue across healthcare, CFOs should view the announcement as a reminder that financial sustainability sometimes requires difficult choices today to preserve organizational strength tomorrow.

3 Headlines And What They Really Means for Healthcare CFOs

These headlines point to a common theme for CFOs.


KEY TAKEAWAYS

Policy momentum continues to shift toward prevention, affordability, and population health, which is increasing the value of physician alignment and care management capabilities.

The biggest risk in price transparency isn’t fines—it’s how increased visibility into payer contracts and pricing structures could affect margins, negotiations, and market position.

One healthcare organization’s restructuring highlights a broader industry shift toward rewarding sustainable cash flow, liquidity, and financial flexibility over leveraged growth models.

Headline: Free primary care for all: Democratic think tank pushes the party on new health policy

Democratic strategists are promoting free primary care for all Americans as a more politically viable alternative to Medicare for All, aiming to address healthcare affordability and access ahead of the 2026 elections.

Why it matters: I do not think this proposal will become federal policy in the near future. However, it reflects a shift in healthcare reform politics. Instead of focusing on comprehensive insurance redesign, policymakers are increasingly exploring targeted affordability initiatives that can be more easily communicated to voters and potentially implemented incrementally. I have little doubt that primary care access, preventive services, and healthcare affordability are likely to remain prominent policy themes heading into the midterm election cycle.

The CFO Takeaway: This headline underscores the idea that primary care is becoming a strategic asset. If policymakers continue moving toward subsidized or universally accessible primary care models, health systems with strong employed physician networks, value-based care capabilities, and population health infrastructure could be positioned to benefit.

On the other hand, organizations that remain heavily dependent on downstream specialty and procedural volumes may feel the heat as policymakers and payers redirect resources toward prevention and early intervention. I say look at this as another signal that future reimbursement models may reward access, chronic disease management, and longitudinal patient engagement rather than episodic acute care. The question is not whether free primary care becomes law, but whether an organization’s capital allocation, physician alignment strategy, and care delivery model are prepared for a healthcare economy that places greater financial value on keeping patients healthy rather than treating them after they become sick.

Headline: Trump administration warns more than 500 hospitals to provide more price information or face fines

The Trump administration has intensified enforcement of hospital price transparency rules, warning more than 500 hospitals over alleged noncompliance. Hospitals that fail to disclose required pricing data could face penalties of up to $2 million annually, with officials signaling that additional enforcement actions are likely as the administration intensifies oversight of transparency requirements originally established during President Trump’s first term.

The CFO Takeaway: While hospitals have been required to publish machine-readable files and consumer-friendly pricing information for years, compliance has been uneven across the industry. Many CFOs have spoken to me about the difficulty in publishing usable pricing information; standardizing the masses of varying data is often just too complex and time consuming. This move is the administration’s latest shift from rulemaking toward active enforcement in this category. CFOs should focus on strengthening pricing governance, contract management, and payer negotiation strategies. The bigger risk is whether increased transparency exposes pricing weaknesses that could undermine future reimbursement, market position, and margins.

Industry POV: This headline is not fundamentally about fines, it’s about margin visibility and negotiating leverage. Price transparency is becoming a strategic financial issue. As payer rates and pricing differences become more visible, hospitals will face greater scrutiny from employers, insurers, competitors, and regulators.

Headline: GoHealth files for Chapter 11 to strengthen its position ahead of AEP 2026

GoHealth has filed a prepackaged Chapter 11 bankruptcy to reduce debt and strengthen its finances. The restructuring has strong backing from lenders and major stakeholders, allowing the company to continue normal operations, pay vendors, and maintain customer and payer relationships while emerging with a healthier balance sheet and lender-led ownership structure. The company expects to continue normal operations throughout the process, pay vendors in full, preserve relationships with health plans and consumers, and emerge from bankruptcy before the critical Medicare enrollment season begins.

Why it matters: While the announcement is framed as a restructuring, it is really the culmination of Medicare Advantage pressures. GoHealth has faced declining revenues, significant debt obligations, higher interest costs, and a challenging MA market with health plans increasingly focused on profitability, member retention, and tighter distribution economics.

The CFO Takeaway: This headline is ultimately unsurprising in today’s market. GoHealth’s restructuring shows how quickly leverage that seemed manageable during periods of growth can become a strategic constraint when industry economics shift.

GoHealth’s restructuring may ultimately be successful, but it highlights that healthcare organizations are increasingly being judged not just on revenue growth, but on their ability to generate sustainable cash flow and withstand prolonged reimbursement pressure. CFOs, is that shift influencing capital allocation decisions today?