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The Good, Bad and Ugly in Healthcare all in One Week

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The Good, Bad and Ugly in Healthcare all in One Week

Summer is here and its first week is in the books. Like politics, the economy and life in general, it brought the good, bad and ugly attention to healthcare in the U.S.

The good:

  • At the American Society of Clinical Oncology (ASCO) meeting in Chicago, attendees heard about a breakthrough medication that dramatically improved results in pancreatic cancer patients (Revolution Medicine) and a gene editing tool capable of permanently lowering cholesterol (Lilly) with Chinese ascendence in the biotech science race a clear takeaway.
  • The American Hospital Association issued a statement accepting responsibility—in part—for healthcare affordability concerns mounting nationwide, calling for collaboration with insurers, drug companies and others to pursue solutions. In tandem, AHA released “Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality.” which recommends 5 core strategies and 24 actions to address affordability in a broader context of its systemic reform.
  • And the Bureau of Labor’s May jobs report brought a surprise: the labor market rebounded in May adding 179,000 jobs prompting speculation new Fed Chair Kevin Warsh might consider interest rate hikes to slow inflation (a policy that would encounter disfavor in the White House as Campaign 2026 looms).

The bad:

  • The House Appropriations Committee mark-up of its FY27 budget Friday included a 4% cut to FY27 HHS’ funding—less than the 12.5% President Trump proposed in his proposed budget but no less sobering.
  • The S&P 500 (-2.64%) and Nasdaq (-4.18%) each had their worst single-day drops of the year yesterday after the stronger-than-expected jobs report (BLS May) triggered a market selloff. Stocks fell across a broad range of sectors. The Dow Jones Industrial Average fell more than 1%, and the S&P 500 fell more than 2%. The tech-heavy Nasdaq composite sank more than 4%.

And the ugly:

Last Monday, CMS issued its work requirement directive to the 40 Medicaid expansion states detailing two new requirements they must meet to verify enrollment that begins in January: 1-

  • States must use unspecified data that’s not more than a year old to make the eligibility determinations as much as possible.
  • Starting Jan. 1, 2028, states must provide documentation proving medical frailty i.e. proof people have conditions that impair their ability to meet the requirements.

And these new stipulations come on top of administrative filing requirements that start at the end of this month and mandated twice/year eligibility verification oversight starting next year.

Per the CBO, the intensified policing of the Marketplaces (a legacy of the Affordable Care Act) is likely to shrink enrollment by 25% or more—that’s the point. The administration holds a view that states are ineffective in managing health programs like Medicaid, CHIP, the Marketplaces et al. contributing to un-attended fraud, waste and abuse.

Neither of the new stipulations from CMS is clear nor was either anticipated. They were an ugly surprise and none of 40 states is prepared.

My take

The promising breakthroughs in diagnostics and therapeutics like last week’s are the reasons most individuals in the U.S.—legal residents or not—believe our health system seeks to do no harm and provides dependable high-quality care, state of the art care (especially if you have insurance). They acknowledge it’s complex and expensive, but they accept it’s what we have for now.

But the bad and ugly news about healthcare seems to dominate media coverage, especially in social media where fact-checking is often shortcut.

For me, the highlight of the week was AHA’s statement committing itself to the pursuit affordability across the system by marshalling its peers to create meaningful solutions. Sign me up. Collaboration is the starting point. Transparency in its deliberations will be necessary to building trust in this process. Inclusion of all proposed solutions subjected to objective review will be its necessary start.  And timing is key: election season tends to distort messaging and draw critics. The urgency of direction is no less key: ideally, meaningful direction and substantive recommendations should follow soon after but be independent of Campaign 2026 results in state and federal elections.

Paul

PS I am in DC this weekend celebrating HFMA’s 80th Anniversary at National Harbor. Now living away after 15 years in the nation’s capital, visits like this are bittersweet. There’s no doubt healthcare’s impacted by the laws, rules, administrative actions, executive orders, SCOTUS decisions and appropriations that originate here, but I’ve come to appreciate three realities since leaving here years ago:

1-U.S. healthcare is decreasingly controlled by DC-originated actions and activities. The corrosive impact of partisan brinksmanship in our elective politics has eroded faith and confidence in its purpose and intent, especially in federal government.

2 Changes to the system are increasingly the result of states forced to cope with health & social services programs and private capital seeking shareholder gain. How these align (or not) will be keys to U.S. healthcare’s future. Today, there’s more dissonance than consonance in their directions.

3-Only a few are planning for healthcare’s long-term future. The agenda for most in this industry-including the majority attending HFMA this week- is short-term survival and sustainability.  Long-range strategic planning and meaningful assessment of future state scenarios are luxuries for most. Clearly, issues like affordability did not surface overnight.

In Healthcare: 10 Issues where States are Accelerating Policy Changes

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In Healthcare: 10 Issues where States are Accelerating Policy Changes

In the United States, laws that define how our health system operates have evolved over our 250-year history. They’re built on allopathic medical pedagogy borrowed from our European roots and evolve around clinical innovations and technologies that improve outcomes and extend life.

Historically, federal agencies oversaw its evolution: the Departments of Health and Human Services (providers, insurers, drugs) Justice (antitrust), Federal Trade Commission i(interstate commerce, marketing practices) were primary actors with Agriculture (food supply) and Interior (natural resources) playing support roles. And the federal court system adjudicates challenges. But that’s changing: states are playing a bigger role. State attorneys general and Supreme Courts are pulled in more frequently.

Since the Supreme Court’s 2022 ruling in Dobbs v. Jackson Women’s Health Organization that overturned Roe v. Wade, healthcare issues have become more prominent in state lawmaking. That decision essentially delegated abortion rights to states to handle. And, in HR1 (One Big Beautiful Bill Act 2025), Congress cut federal Medicaid funding by almost $900 billion over 10 years essentially forcing states to find different ways to manage it. Today, Medicaid is 30.7% of the average state’s expenditures with half sourced from state general funds. OB3 will add fiscal pressure to every state.

In Campaign 2026, healthcare referenda will appear alongside candidates match-ups on many state ballots. Candidates in the 36 Gubernatorial/Territorial races and every Congressional race face questions about how they’ll “fix” healthcare. The combination of the public’s discontent with Congress and its dissatisfaction with the health system will prompt states to address a widening range of healthcare issues of consequence to their citizens. For some issues, Governors will issue Executive Orders, for others, referenda will appear on voter ballots and in others, legislation will be approved by their legislatures. The list is long…

  • Expansion of price transparency (PT) requirements for hospitals, insurers and (likely) physician services: Increased stipulations to increase awareness and use of pricing tools beyond current regulations.
  • Limitations on private equity ownership: States may require disclosures of private equity investments and many will seek modification of carried interest, clinical autonomy and governance structures.
  • Scope of practice expansion: States are expanding clinical responsibilities for advanced practice nurses, pharmacists and others to enable access to primary and preventive health services.
  • Prior authorization and payment integrity: States will require insurers to adopt business practices that reduce enrollee and provider challenges, financial shortfalls and disputes. In tandem, states will expand payment integrity alignment with evidence-based practices that reduce unnecessary care.
  • Implementation of site neutral payment policies: Despite federal pushback, states will align with employers and insurers to expand site neutral payment policies opposed by hospitals.
  • Re-calculation of community benefits and limitations on tax exemptions: Large, NFP systems will face state and federal regulatory pressure to forego/limit tax exemptions.
  • Price controls on prescription drugs (above and beyond most favored nation stipulations): States will enact legislation creating Drug Price Control Commissions to limit drug price escalation. In some, importation and restrictive formulary strategies will be enacted/expanded.
  • State constraints on PBM and GPO activity: States will advance business practice restrictions on PBMs and GPOs geared to consumer protections, greater transparency and increased competition.
  • Relief of Stark, Physician Self-Referral Limitations: Some states will expand physician ownership arrangements and enable physicians to compete with hospitals and other providers.
  • Integration of social services with local delivery systems: States will facilitate delivery systems in which public health and provider services are fully integrated and population health management improvement is optimized.

The bottom line:

Total state spending on for healthcare services increased 5.7% to $3.2 trillion in 2025 slightly more than the 38-year average of 5.6%. In fiscal 2025 federal funds to states rose 5.5% following three consecutive years of decreases from fiscal 2022 to fiscal 2024. Thus, states were forced to provide more funding for their healthcare programs even as the U.S. economy sputtered and, most recently, as affordability issues mounted for voters.

Healthcare’s future in the U.S. will continue to be framed by federal policies and the political system from which its laws originate, but its transformational changes will increasingly originate in states where affordability, funding and system effectiveness issues are tackled head-on.

Why Hospitals Are Targeting Leadership, Administrative Jobs in Latest Layoffs

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https://www.healthleadersmedia.com/ceo/why-hospitals-are-targeting-leadership-administrative-jobs-latest-layoffs?utm_source=HealthLeaders&utm_campaign=1f055b4303-EMAIL_CAMPAIGN_2026_06_03_01_59&utm_medium=email&utm_term=0_adc94e5966-1f055b4303-532959885&mc_cid=1f055b4303&mc_eid=71a6a1464f

As financial challenges persist and clinical labor remains difficult to replace, many hospitals are turning to restructuring for cost savings.

KEY TAKEAWAYS

Care New England, Washington Regional Medical System, and Intermountain Health all announced layoffs that prominently affected administrative functions.

Hospitals are increasingly embracing “The Great Flattening,” consolidating nonclinical roles to reduce overhead while preserving frontline care capacity.

While leaner organizational structures may improve efficiency and speed decision-making, reducing leadership layers can also create operational strain and place added burden on remaining staff.

Three notable health systems announced layoffs in recent days, and in all three cases, management and leadership roles were largely affected. Even as labor costs continue to climb, clinical talent remains scarce, making administrative jobs often the primary target of workforce reductions.

Healthcare, and hospitals specifically, are not immune to “The Great Flattening” impacting corporate America. Companies across industries have spent recent years trimming down middle management, if not outright eliminating those positions, for the purpose of creating leaner workforce structures and cutting overhead.

In the case of hospitals, many have taken the step to consolidate functions that aren’t directly tied to delivering patient care.

The trend became particularly visible over the past week with Care New England, Washington Regional Medical System, and Intermountain Health all initiating reductions.

Providence, Rhode Island-based Care New England eliminated more than 30 leadership and nonclinical positions as part of a restructuring to address financial pressures and help close an estimated $20 million budget gap for fiscal year 2026. System president and CEO Michael Wagner said in a statement that “current financial conditions have made additional cost-saving measures unavoidable.”

Elsewhere, Washington Regional Medical System announced a restructuring plan that included 86 job cuts through consolidation of management and support functions. “By restructuring our management operations and consolidating roles, Washington Regional will reduce redundancies and optimize efficiency while still providing the high-quality care our community has come to expect,” Lucas Campbell, president and CEO of Washington Regional, said in the announcement.

At Intermountain Health, the 93 positions that were eliminated amid clinic closures and operational changes in Colorado and Montana looked a little different. While clinical roles were affected as part of the restructuring, the organization also pointed to leadership and administrative consolidation to improve efficiency and better align resources.

Though the circumstances surrounding the three systems differed, the overlap across the layoffs was the emphasis on leadership restructuring and administrative streamlining.

The logic behind these restructurings is straightforward: clinical workers are difficult to replace, whereas administrative costs often represent one of the few areas where organizations can still reduce spending relatively quickly.

According to Kaufman Hall’s latest National Hospital Flash Report for March, hospitals are operating more efficiently, but financial performance is still being weighed down by rising expenses. Length of stay, for example, was down 3% year-over-year, indicative of improved throughput. However, that clinical efficiency requires adequate staffing, and that labor is costly, as seen in a 4% rise in labor expense per calendar day year-over-year.

To just maintain their thin margins, hospitals are being forced to cut costs in areas that won’t directly hinder patient flow. That’s why administrative restructuring is often viewed as a less disruptive path toward reducing overhead while sustaining operational efficiency.

The result can also be a faster decision-making structure, allowing organizations to be strategically nimbler during a time when moving slow can leave hospitals behind the curve.

Still, the benefits come at a price. The loss of leadership and management may not be felt in financial performance immediately, but over time, it can create operational strain and place additional burden on remaining leaders and frontline staff.

For hospital executives, the question they must answer is how far their organization can streamline before efficiency gains start to create new organizational pressures.

Hospitals are stuck in a deadly doom loop

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https://www.economist.com/international/2026/04/09/hospitals-are-stuck-in-a-deadly-doom-loop

The diagnosis is simple: “Our health-care system broke in 2020,” says Dr Tom Dolphin, an anaesthetist in London and boss of the British Medical Association. “We like to pretend it didn’t, but it really did.” In the early months of 2020, hospitals paused normal activity to free up beds as they braced for a wave of covid-19 patients. The strategy helped in a moment of crisis. But, several years on, it is becoming clear that those measures did lasting damage to health-care systems. Understanding why is less straightforward.

From admission to discharge, hospital care is now harder to access, takes longer and is of worse quality. The resulting toll includes avoidable deaths. Almost everyone is affected: across 18 rich democracies, satisfaction with health-care quality fell sharply after the pandemic and remains well below the pre-pandemic norm (see chart). Few data sets track hospital performance across countries, so The Economist collected data on health-care systems from all over the world to identify where things are going awry.

Chart: The Economist

The ordeal begins outside the emergency room, or the accident-and-emergency department (A&E).Waiting times have become longer in America, Europe and elsewhere. Hospital entry halls are more crowded and their staff more overstretched than they were before the pandemic, says Dr Alex Janke, an emergency physician at the University of Michigan.

In some parts of Australia almost half of patients arriving by ambulance wait more than 30 minutes outside A&E before space can be found for them. About a quarter of patients experience such delays in Britain, double the level in 2019. In Canada a record number of sick and injured simply give up and leave emergency rooms before they are seen by staff.

Once in A&E, care is slow. More than a quarter of patients in England spend over four hours there, roughly twice the level in 2019. In Massachusetts, a state with good data, more than two in five endure such waits. In Australia, nearly half of patients do so. There has also been a steep rise in “trolley waits”, the time between a doctor’s decision to admit a patient from A&E to the hospital and when a patient gets a bed. Last year nearly one in ten emergency admissions in England, or some 550,000 people, had waited more than 12 hours on a trolley—a 67-fold increase since 2019.

The real trolley problem

The Royal College of Emergency Medicine estimates that trolley waits contributed to almost 5,000 avoidable deaths in Britain’s hospitals last summer (health authorities have disputed such figures in the past).

Millions are stuck on waiting lists. Waits for hip replacements, to take one example, were above pre-pandemic levels in 2024 in nine out of 11 OECD countries, for which data exist. Canada is perhaps the worst hit. The median waiting time for specialist treatment was 29 weeks in 2025, more than a third higher than the 2019 baseline, according to the Fraser Institute, a think-tank in Vancouver. That is the second-worst result since the survey began in 1993; the record of 30 weeks was set in 2024. France’s main hospital union says access to health care in the country is undergoing an “unprecedented deterioration”.

In many countries the challenges of hospitals are viewed as the product of domestic policy choices. Britain’s government, like Giorgia Meloni’s in Italy, was elected in part on a promise to reduce waiting lists; Australian voters have punished politicians for ambulances delayed outside A&E; and in France, where staffing shortages have forced the closure of some clinics, there is talk of déserts médicaux.

But the long-term effects of the pandemic on hospitals are consistent across countries. A paper published in January by Luigi Siciliani of the University of York and his co-authors finds no relationship between a health-care system’s characteristics, be it public or private, and the effect of covid on its function. How much funding a system had, its bed capacity and how many physicians it employed, had little to no relation with big jumps in waiting lists for elective surgeries between 2020 and 2023, which occurred across the board.

Hospitals are jammed up despite being well-resourced. Funding for health care is the highest it has ever been, outside covid. After stabilising in the 2010s, spending in the OECD rose to nearly 10% of GDP following the pandemic. Median spending per person in Europe has risen 13% in constant prices since 2019. There are also more helping hands. Hospitals added nearly 140,000 jobs in America last year, more than the entire rest of the economy. Hiring by England’s National Health Service has increased sharply: its headcount has grown by 25% since 2019 to employ some 1.4m people—or 2% of the population.

All this presents a productivity puzzle. Some hospitals seem to be faring worse with more resources. In Australia, where the hospital workforce grew by almost 20% from 2019-24, elective surgeries are basically flat—the only difference is that the sick are waiting longer to be seen. Though there has been a gradual recovery, “On any measure you want to use in England, productivity is below where it was pre-pandemic,” says Max Warner of the Institute for Fiscal Studies, a think-tank in London.

Hospital productivity is hard to measure, but a good rule of thumb for spotting any decline in productivity is when spending grows faster than output, or revenue. Even in Germany, where the public system is considered to be in good shape, three out of four hospitals lost money in 2024, up from a third in 2019, according to a recent report by Roland Berger, a consultancy. In America operating costs for hospitals increased by 7.5% in 2025, about twice as fast as prices, says Aaron Wesolowski of the American Hospital Association, an industry body. Accordingly operating-profit margins have stagnated since 2019, even as profits in the rest of America’s economy recovered and grew.

Experts differ on the reasons why hospitals, as big, complex systems, have never fully recovered. One explanation lies in the hospital workforce. About half of the growth last year in the operating expenses of American hospitals came from inputs such as labour costs, which grew by 5.6% in nominal terms. Pandemic-era stresses increased churn as doctors and nurses resigned, or retired early. Those who stayed have reduced their “discretionary effort”, voluntary overtime work that helped frail health-care systems surge in peak periods. Burnout remains high, says Dr Margot Burnell of the Canadian Medical Association.

Is there a manager in the house?

Both factors have created an acute need for staff, and spurred a big hiring drive. The knock-on effect is that health-care workers today are less experienced and perhaps less productive. In Britain the share of nurses with less than one year of experience has doubled since 2015, a trend explained also by efforts to improve nurse-to-patient ratios. Moreover, though doctors and nurses have been added quickly, in some countries hiring for other jobs vital to productivity, such as theatre assistants and hospital managers, has not kept pace.

The other half of rapidly rising costs comes from having more, and sicker, patients. Four factors apply across rich countries: longer waits have left patients sicker, sicker patients take longer to treat, longer treatments clog capacity, reduced capacity creates longer waits. It is a doom loop.

First, in many places the queue has never been longer. Across the OECD, a group of mostly rich countries, elective-surgery activity dipped in 2020 by 19%. This has left hospitals with a long to-do list on top of their ordinary flow of new patients. More than 3m missed hospital stays accumulated in France between 2019 and 2024, according to estimates by the country’s health-care unions. In January nearly 40% of those waiting for treatment in Britain—or 2.8m people—had been languishing for more than 18 weeks. That was up from 570,000 in the same month of 2019. Mr Siciliani says that in order to cut those lists, hospitals need not only to return to their pre-pandemic productivity, but also to “support a big surge in activity”.

That task is made harder by a second big change: patients are sicker now. Long waits for treatment have made patients’ conditions more complex. Some diseases, such as cancers, stayed undiagnosed for longer because people avoided hospitals and clinics during the pandemic. (In America this effect was compounded by a rising avoidance of treatment due to expense.) In addition, populations are older than they were a few years ago. All this has seen chronic conditions, such as heart disease, cancer and liver disease rise as a share of hospital workloads. Death rates, not adjusted for age, are higher than before the pandemic. “Patients are staying longer and cost more to treat,” says Dr Richard Leuchter, an acute-medicine specialist at the University of California, Los Angeles.

Patients who stay longer take up precious bed capacity. Bed occupancy is further inflated by poorly performing general-practitioner services and chock-full care homes for the elderly, both of which funnel a growing number of sick and infirm into hospitals. Research by Dr Leuchter shows that prior to the pandemic about 64% of American hospital beds were occupied at any given time; during the pandemic that figure shot up to and remained at 75%. In some states, the average is as high as 88% (85% is considered “safe”).

American hospitals look positively capacious next to public systems, which run much leaner. In Ireland more than 94% of beds were occupied in 2019; that went up to 96% in 2025. In Britain beds are often 90% occupied and delays in discharging patients have grown. That worsens the initial problem, delays at the A&E door.

Hospitals are trying to break free from the cycle. Many are demanding more money and staff. A few are trying novel approaches to make room for the sickest patients. Some American hospitals, such as Dr Leuchter’s, are trying “avoidance” strategies that refer stable A&E patients to clinics without overnight beds. Many countries are trying types of “community care” in which treatment occurs outside hospitals, sometimes in patients’ homes. In ageing societies, it was inevitable that hospital care would change: there would be relatively fewer nails in thumbs, and relatively more chronically ill. The pandemic simply made people sicker, sooner. 

In OMB’s FY 2027 Proposed Budget, Healthcare is the Big Loser

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In OMB’s FY 2027 Proposed Budget, Healthcare is the Big Loser

In 1970 before there was ESPN Sports Center, there was ABC’s “Wide World of Sports” and its iconic montage opening featuring a disastrous ski jump attempt by Yugoslavia’s Vinko Bogataj and Jim Kay’s voice-over “the thrill of victory and agony of defeat.” It’s an apt framework for consideration of current affairs in the U.S. today and an appropriate juxtaposition for consideration the winners and losers in the White House Office of Management and Budget FY2027 released Friday.

  • Last week’s “Thrill of Victory” includes the recovery of Dude 14, the F-15E Strike Eagle pilot shot down over Iran Friday, the college basketball men’s and women’s’ Final 4 contests, the successful launch of Artemis II by NASA and, for some, the additional funding ($441 billion/+44% vs. FY 2026) for the Department of War in the President’s proposed budget.
  • And last week’s “Agony of Defeat” includes continued anxiety about the economy, especially fuel prices, growing concern the war in Iran begun February 28 might extend at a heavy cost in lives and money, and for health industry supporters, a $15 billion (-12% vs. FY 2026) cut to HHS and the 10-year, $911 billion Medicaid reduction in federal funding for Medicaid enacted in 2025 (HR1 The Big Beautiful Bill).

In its current form, this budget is unlikely to be enacted October 1, 2026: it’s best viewed as a signal from the White House about priorities it deems most important to the MAGA faithful in Congress, 28 state legislatures and 26 Governors’ offices controlled by Republicans. Though its explosive growth in of War Department funding to $1.5 trillion is eye-popping, cuts to healthcare are equally notable. Both are calculated bets as the mid-term election draws near (6 months) and clearly OMB is betting healthcare cuts will be acceptable to its base. Its view is based on three assumptions:

1- Healthcare cost cutting is necessary to fund other priorities important to its base. And there’s plenty of room for cuts in Medicaid, prescription drugs and hospitals because waste, fraud and abuse are rampant in all.

  • Medicaid: Medicaid is a state-controlled insurance program that covers 76 million U.S. women, children and low-income seniors primarily through private managed care plans that contract with states. In HR1, a mandatory work requirement was applied to able-bodied adult enrollees with the expectation enrollment will drop and state spending for Medicaid services will be less. But its enrollees are less inclined to vote than seniors in Medicare and its funding burden can be shifted to states.
  • Prescription Drugs: The White House asserts its “favored nation” pricing program will bring down drug costs but the combination of voluntary participation by drug companies and impenetrable patent protections in U.S. law neutralize hoped-for cost reductions. The administration wants to lower drug spending using its blunt instruments it already has: accelerated approvals, price transparency, pharmacy benefits manager restrictions et al. while encouraging states to go further through price controls, restrictive formularies and, in some, importation. In tandem, the administration sees CMMI modifications of alternative payment models (i.e. LEAD) as a means of introducing medication management and patient adherence in new chronic care pilots. Recognizing prescription drug prices are a concern to its base and all voters, the administration will use its arsenal of regulatory and political tools to amp-up support for increased state and federal pricing constraints without imposing price controls—a red line for conservatives.
  • Hospitals: Hospital consolidation is associated with higher prices and increased spending with offsetting community benefits debatable. Hospitals represent 43% of total U.S. health spending (31% inpatient and outpatient services, 12% employed physician services). In 4 of 5 U.S. markets, 2 hospital systems control hospital services. And hospital cost increases have kept pace with others in healthcare (+8.9% in 2024 vs. +8.1% for physician services and 7.9% for prescription drugs) but other household costs, wage increases and inflation. Lobbyists for hospitals have historically favored hospital-friendly legislation like the Affordable Care Act preferred by Democrats. The Trump administration sees site neutral payments, 340B reductions, expanded price transparency, limits on NFP system tax exemptions et al. and Medicaid cuts necessary curtailment of wasteful spending by hospitals. They believe voters agree.

Backdrop: Per the National Health Care Fraud Association, 10% of health spending ($560 billion) was spent fraudulently in 2024: the majority in the areas above.

2- The public is dissatisfied by the status quo and supports overhaul of the U.S. healthcare system to increase its affordability and improve its accessibility.

  • Consolidation: Through its Federal Trade Commission and Department of Justice, the White House has served notice it believes healthcare affordability and unreasonable costs are the result of hyper consolidation among hospitals, insurers, and key suppliers in the healthcare supply chain. It has appointed special commissions, task forces, and filed lawsuits to flex its muscle believing the industry has pursued vertical and horizontal consolidation for the purpose of reducing competition and creating monopolies. It shares this view with the majority of voters.
  • Corporatization: In tandem with consolidation, the White House asserts that Big Pharma, Big Insurer, and Big Hospital have taken advantage of the healthcare economy at the expense of local operators and mom and pop services. It presumes they’re run as corporate strongarms that access capital and leverage aggressive M&A muscle to drive out competitors and bolster their margins and executive bonuses. The administration treads lightly on corporate healthcare, seeking financial and political support while voicing populist concerns about Corporate Healthcare. Photo ops with CEOs is valued by the White House; corporatization is recognized as a necessary plus with a few exceptions.  By contrast, most voters see more harm than good. Thus, the administration courts corporate healthcare purposely and carefully.

Backdrop: Intellectually, the majority of voters understand healthcare is a business that requires capital to operate and margins to be sustainable. But many think most healthcare organizations put too much emphasis on short-term profit and inadequate attention on their mission and long-term performance.

3-The U.S. healthcare industry will be an engine for economic growth domestically and globally if regulated less and consumers play a more direct role.

  • The administration is resetting its trade policies in response to suspension of at-will tariff policies that dominated its first year. At home, it seeks improved market access for U.S. producers of healthcare goods and services. It will associate this effort with US GDP growth and expanded privatization in healthcare. And it will assert that expansion of global demand for U.S. healthcare products and services is the result of the administration’s monetary policy geared to innovation and growth. And it will play a more direct role in oversight of foreign-owned/controlled health products and services and impose limits of their use of U.S. data.
  • The administration also seeks to protect intellectual property owned by U.S. inventors and companies by increasing its policing at home and abroad. In this regard, the administration will play a more direct role in the application of AI-enabled solution providers and expedite technology-enabled interoperability.

Backdrop: U.S. healthcare is the world’s most expensive system, so protections against IP theft are important, but the administration’s legacy in healthcare will be technology-enabled platforms that enable scale, democratize science and shift the system’s decision-making (and financial risk) consumer self-care.

Final thought:

The U.S. healthcare system does not enjoy the confidence of the White House: its proposed FY27 budget illustrates its predisposition to say no to healthcare and yes to other pursuits. It bases its position on three assumptions geared to support from its conservative base.

This budget proposal clearly illustrates why state legislators and Governors will play a bigger role in its future at home and abroad. And it means consumer (voter) awareness and understanding on key issues will be key to the system’s future, lest it is remembered for the agony of its defeat than the thrill of its victory.

In OMB’s FY 2027 Proposed Budget, Healthcare is the Big Loser

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In OMB’s FY 2027 Proposed Budget, Healthcare is the Big Loser

In 1970 before there was ESPN Sports Center, there was ABC’s “Wide World of Sports” and its iconic montage opening featuring a disastrous ski jump attempt by Yugoslavia’s Vinko Bogataj and Jim Kay’s voice-over “the thrill of victory and agony of defeat.” It’s an apt framework for consideration of current affairs in the U.S. today and an appropriate juxtaposition for consideration the winners and losers in the White House Office of Management and Budget FY2027 released Friday.

  • Last week’s “Thrill of Victory” includes the recovery of Dude 14, the F-15E Strike Eagle pilot shot down over Iran Friday, the college basketball men’s and women’s’ Final 4 contests, the successful launch of Artemis II by NASA and, for some, the additional funding ($441 billion/+44% vs. FY 2026) for the Department of War in the President’s proposed budget.
  • And last week’s “Agony of Defeat” includes continued anxiety about the economy, especially fuel prices, growing concern the war in Iran begun February 28 might extend at a heavy cost in lives and money, and for health industry supporters, a $15 billion (-12% vs. FY 2026) cut to HHS and the 10-year, $911 billion Medicaid reduction in federal funding for Medicaid enacted in 2025 (HR1 The Big Beautiful Bill).

In its current form, this budget is unlikely to be enacted October 1, 2026: it’s best viewed as a signal from the White House about priorities it deems most important to the MAGA faithful in Congress, 28 state legislatures and 26 Governors’ offices controlled by Republicans. Though its explosive growth in of War Department funding to $1.5 trillion is eye-popping, cuts to healthcare are equally notable. Both are calculated bets as the mid-term election draws near (6 months) and clearly OMB is betting healthcare cuts will be acceptable to its base. Its view is based on three assumptions:

1- Healthcare cost cutting is necessary to fund other priorities important to its base. And there’s plenty of room for cuts in Medicaid, prescription drugs and hospitals because waste, fraud and abuse are rampant in all.

  • Medicaid: Medicaid is a state-controlled insurance program that covers 76 million U.S. women, children and low-income seniors primarily through private managed care plans that contract with states. In HR1, a mandatory work requirement was applied to able-bodied adult enrollees with the expectation enrollment will drop and state spending for Medicaid services will be less. But its enrollees are less inclined to vote than seniors in Medicare and its funding burden can be shifted to states.
  • Prescription Drugs: The White House asserts its “favored nation” pricing program will bring down drug costs but the combination of voluntary participation by drug companies and impenetrable patent protections in U.S. law neutralize hoped-for cost reductions. The administration wants to lower drug spending using its blunt instruments it already has: accelerated approvals, price transparency, pharmacy benefits manager restrictions et al. while encouraging states to go further through price controls, restrictive formularies and, in some, importation. In tandem, the administration sees CMMI modifications of alternative payment models (i.e. LEAD) as a means of introducing medication management and patient adherence in new chronic care pilots. Recognizing prescription drug prices are a concern to its base and all voters, the administration will use its arsenal of regulatory and political tools to amp-up support for increased state and federal pricing constraints without imposing price controls—a red line for conservatives.
  • Hospitals: Hospital consolidation is associated with higher prices and increased spending with offsetting community benefits debatable. Hospitals represent 43% of total U.S. health spending (31% inpatient and outpatient services, 12% employed physician services). In 4 of 5 U.S. markets, 2 hospital systems control hospital services. And hospital cost increases have kept pace with others in healthcare (+8.9% in 2024 vs. +8.1% for physician services and 7.9% for prescription drugs) but other household costs, wage increases and inflation. Lobbyists for hospitals have historically favored hospital-friendly legislation like the Affordable Care Act preferred by Democrats. The Trump administration sees site neutral payments, 340B reductions, expanded price transparency, limits on NFP system tax exemptions et al. and Medicaid cuts necessary curtailment of wasteful spending by hospitals. They believe voters agree.

Backdrop: Per the National Health Care Fraud Association, 10% of health spending ($560 billion) was spent fraudulently in 2024: the majority in the areas above.

2- The public is dissatisfied by the status quo and supports overhaul of the U.S. healthcare system to increase its affordability and improve its accessibility.

  • Consolidation: Through its Federal Trade Commission and Department of Justice, the White House has served notice it believes healthcare affordability and unreasonable costs are the result of hyper consolidation among hospitals, insurers, and key suppliers in the healthcare supply chain. It has appointed special commissions, task forces, and filed lawsuits to flex its muscle believing the industry has pursued vertical and horizontal consolidation for the purpose of reducing competition and creating monopolies. It shares this view with the majority of voters.
  • Corporatization: In tandem with consolidation, the White House asserts that Big Pharma, Big Insurer, and Big Hospital have taken advantage of the healthcare economy at the expense of local operators and mom and pop services. It presumes they’re run as corporate strongarms that access capital and leverage aggressive M&A muscle to drive out competitors and bolster their margins and executive bonuses. The administration treads lightly on corporate healthcare, seeking financial and political support while voicing populist concerns about Corporate Healthcare. Photo ops with CEOs is valued by the White House; corporatization is recognized as a necessary plus with a few exceptions.  By contrast, most voters see more harm than good. Thus, the administration courts corporate healthcare purposely and carefully.

Backdrop: Intellectually, the majority of voters understand healthcare is a business that requires capital to operate and margins to be sustainable. But many think most healthcare organizations put too much emphasis on short-term profit and inadequate attention on their mission and long-term performance.

3-The U.S. healthcare industry will be an engine for economic growth domestically and globally if regulated less and consumers play a more direct role.

  • The administration is resetting its trade policies in response to suspension of at-will tariff policies that dominated its first year. At home, it seeks improved market access for U.S. producers of healthcare goods and services. It will associate this effort with US GDP growth and expanded privatization in healthcare. And it will assert that expansion of global demand for U.S. healthcare products and services is the result of the administration’s monetary policy geared to innovation and growth. And it will play a more direct role in oversight of foreign-owned/controlled health products and services and impose limits of their use of U.S. data.
  • The administration also seeks to protect intellectual property owned by U.S. inventors and companies by increasing its policing at home and abroad. In this regard, the administration will play a more direct role in the application of AI-enabled solution providers and expedite technology-enabled interoperability.

Backdrop: U.S. healthcare is the world’s most expensive system, so protections against IP theft are important, but the administration’s legacy in healthcare will be technology-enabled platforms that enable scale, democratize science and shift the system’s decision-making (and financial risk) consumer self-care.

Final thought:

The U.S. healthcare system does not enjoy the confidence of the White House: its proposed FY27 budget illustrates its predisposition to say no to healthcare and yes to other pursuits. It bases its position on three assumptions geared to support from its conservative base.

This budget proposal clearly illustrates why state legislators and Governors will play a bigger role in its future at home and abroad. And it means consumer (voter) awareness and understanding on key issues will be key to the system’s future, lest it is remembered for the agony of its defeat than the thrill of its victory.

Why drugs cost so much, 101: Medicine monopolies

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Why drugs cost so much, 101: Medicine monopolies
https://omny.fm/shows/an-arm-and-a-leg/why-drugs-cost-so-much-101-medicine-monopolies/embed?media=audio&size=wide&style=cover

We’re always asking: Why do drugs cost so freaking much? 

And it’s a complicated question. There are a bunch of reasons — to be sure. But in our reporting over the years, like our stories on insulin and tuberculosis drugs, experts cited one big reason over and over again: 

The pharmaceutical industry wages sophisticated legal battles to keep monopoly control over their best selling, most lucrative drugs — blocking generic competition, and increasing their prices along the way. 

How did it come to be this way? 

In this first episode of a new series – what we’re calling An Arm and a Leg 101 – we’re doing a crash course in the history of the drug patent system.

And the rags-to-riches story of one amazing guy is going to help us do it. 

Al Engelberg got schooled in the Art of the Hustle at a young age, collecting dimes at an illegal bingo game on the Atlantic City boardwalk. 

Later, he’d put those street smarts to use as he sat at the negotiation table in Washington D.C., hashing out the details of a law that would usher in the generic drug industry as we know it. Then made millions from the rules he helped write.

And as he admits, his legacy is mixed. 

On the one hand: The rules Al Engelberg helped write — a grand bargain between generic drugmakers and patent-holding brand pharma companies — unleashed the power of generic drugs to save Americans money. 

Nine out of ten prescriptions written today get filled with a generic.

On the other hand: In the process of making his fortune, Al Engelberg discovered loopholes, gaps, and perverse incentives in that grand bargain. 

Gaps that allowed brand and generic drugmakers to profit by keeping generics for many hit drugs off the market.  

So we now spend more than ever on medicine — and more than 20 percent of Americans report skipping their medication because they can’t afford it. 

Al Engelberg, now 86, has spent the last 30 years — and millions of his own dollars — trying to close those gaps. 

“I live in a world — a pharma world — where half the people think I’m dead, and the other half wish I was,” he tells us. 

You can read more of Al’s story — plus his prescription for fixing the crisis of high drug prices — in his book, Breaking the Medicine Monopolies: Reflections of a Generic Drug Pioneer.

And you can hear our earlier reporting on drug patents here:

John Green vs. Johnson & Johnson (part 1)

John Green vs. Johnson & Johnson (part 2)

The surprising history behind insulin’s absurd price (and some hopeful signs in the wild)

An Arm and a Leg 101 is made possible in part by support from Arnold Ventures.

How Insurers Are Using the Courts to Rewrite the No Surprises Act

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https://healthcareuncovered.substack.com/p/how-insurers-are-using-the-courts?utm_source=post-email-title&publication_id=255152&post_id=190610279&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

A wave of coordinated lawsuits is transforming the No Surprises Act’s arbitration system into a battlefield where insurers seek to intimidate physicians, rewrite the law and consolidate control.

As I have written, Congress passed the No Surprises Act (NSA) to safeguard patients from unforeseen medical expenses and establish a neutral, independent dispute resolution (IDR) process for payment conflicts between insurers and out-of-network providers. That design was meant to replace brinkmanship with an independent referee. What Congress designed as a neutral arbitration system is now being challenged by Big Insurance through coordinated litigation designed to narrow, intimidate, and ultimately reshape the law.

Major insurance conglomerates — including UnitedHealthcare entities, Elevance/Anthem affiliates and Blue Cross Blue Shield plans — have launched a coordinated series of federal lawsuits against providers, hospitals, and revenue-cycle vendors who have used IDR at scale. Employing nearly identical language, legal arguments, and allegations, these lawsuits are not isolated ordinary litigation. It is lawfare.

Narratively, these suits recast lawful engagement in the NSA’s IDR process as “abuse,” but functionally they are designed to intimidate physicians from seeking NSA protection. A Pennsylvania suit from UnitedHealthcare against NorthStar Anesthesia presents the most urgent and perilous threat to independent physicians. If Unitedhealthcare prevails, insurers will be able to obtain judgments of fraud against physicians who incorrectly file NSA disputes. The effects of this will be catastrophic for independent physician practices, who cannot afford to litigate against billion dollar behemoths that have armies of lawyers on staff and retainer.

If successful in these efforts, the insurers will further weaken physician practices and make them ripe for acquisitions, continuing the dangerous path of vertically integrated insurance corporations – and the further decimation of independent physician practices.

The “Flooding” Myth

The lawsuits all start in a similar fashion. Each one claims that the defendant “abused” federal legislation “designed to protect patients from unexpected medical bills” and asserts that “the IDR process has not functioned as intended.” This wording appears verbatim in cases filed months apart, across different jurisdictions, against completely different defendants. Insurers adopt the same basic allegation: providers or billing companies “flooded,” “overwhelmed,” or unleashed an “avalanche” of IDR disputes that insurers assert were ineligible.

Those characterizations are based on bad data. Before the NSA went into effect, the Departments of Health and Human Services, Labor, and Treasury projected that the independent dispute resolution (IDR) process would see roughly 17,000 disputes annually. In reality, the system received nearly hundreds of thousands of disputes in its first year. That mismatch didn’t happen by accident. The departments based their projections on New York’s experience with a state arbitration system, scaling the state’s dispute numbers nationally. But New York’s law relied on an independent benchmark called FAIR Health that sharply reduced disputes. This is a structural feature the federal law does not have.

A more realistic comparison was available at the time: Texas. Unlike New York, Texas operated an arbitration system without an external benchmark making it a better comparison for the federal No Surprises Act. In its first year, the Texas system received nearly 49,000 arbitration requests for a population of just under six million people. That experience should have been a clear signal that arbitration volume would be far higher than federal projections suggested. Insurers have used this modeling error to their rhetorical advantage in their litigation.

Healthcare Workforce Modernization Needed

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Healthcare Workforce Modernization Needed

Last week, the war in Iran intensified and Kristi Noem’s tenure as DHS Secretary came to an unceremonious close. Perhaps lost in the noise was the February jobs report issued Friday by the U.S. Bureau of Labor Statistics. It showed a surprising decline in job growth prompting speculation the economy might have taken a downward turn. Some headlines….

  • Payrolls unexpectedly fell by 92,000 in February; unemployment rate rises to 4.4% (CNBC)
  • Employers Cut Jobs in Sign of a Shakier Economy (New York Times)
  • Paychecks keep rising for American workers, providing boost to household budgets (Fox Business):
  • The U.S. economy lost 92,000 jobs in February, stoking labor market worries (NBC News)
  • The US economy lost 92,000 jobs in February and the unemployment rate rose to 4.4% (CNN)

Anticipation that the jobs report portends bad news for the economy followed the news cycle all day and through the weekend. And a few, like Axios, went further: “The surprise to many was where the biggest since job growth especially in healthcare and social assistance had buoyed the labor market for 3 years.” Others attributed the decline to hangovers from recent nursing strikes (USC Keck, Kaiser Permanente, MarinHealth) and layoffs by many health systems.

To industry insiders, the BLS jobs report’s capture of declines in healthcare hiring was no surprise. Operating cost reduction has been a strategic imperative in every hospital, long-term care, ancillary and medical group since the pandemic (2020). In tandem, investments in workforce productivity enhancements via technology-enabled workforce redesign and performance-based compensation have elevated human resource management to C-suite status in most organizations. It’s understandable:

Healthcare is capital intense: it needs appropriations from government and in-flows from employers and individual taxpayers to pay its bills. Most of that pays for its labor costs. Today, most Board agenda include updates on labor relations, human resource management issues and workforce adequacy—it’s standard fare. And all weigh options to outsource and devour progress reports from HR management on AI-enabled investments anticipated to reduce labor costs.

Healthcare is highly regulated, especially in workforce activities, and labor-management relationships impact organizational performance and reputation. Every sector in healthcare is regulated by combinations of federal, state and local rules, laws and agency directives that define roles, responsibilities, decision-rights and constraints of its workforce. It’s complicated by the politics of healthcare which avoids policy changes that threaten protections sought by each labor cohort in healthcare. Protecting funding and restricting infringement on scope of responsibility by unwanted outsiders is the primary rationale for professional society’ advocacy efforts. In hospital and long-term care settings, the healthcare workforce is a cast-system that keeps doctors at the top of the pyramid, licensed mid-levels in the middle and everyone else below. In other healthcare settings, executive-level designations dominate hierarchies, and in some Boards play roles in workforce structure and compensation schemes. Workforce modernization in most healthcare settings is acknowledged as a critical need but most default to layoffs and fail to enact a comprehensive strategy.

Looking ahead, technology will alter the status quo for workforce modernization efforts in healthcare:

1-Less dependence on physician recommendations. Might patients access customized clinical decision support tools more widely in the future and make more choices themselves (especially if incentives support self-care)? Might other sources of clinical counsel be more accurate, more accessible and less costly in the future, prompting acceptance (trust and confidence) by patients? Physicians and other caregivers will play key roles, but in concert with tools and processes that enable consumer engagement.

2-More access to verifiable cost, price and value information. The underlying costs and prices for healthcare services are unknown to their caregivers at the points of care so the majority of transactions require pre-authorization by a third-party adjudicator with payments that follow. Physicians bear no responsibility for advising patients about costs and prices: theirs is exclusively the domain of clinical counsel. Thus, labor costs in healthcare presume third party payments, middlemen, incapable self-care and work rules that reinforce old ways and torpedo better ways of work. Might the role and scope of insurer activity be integrated with delivery so that “costs and quality” are directly accountable to providers? Might primary and preventive health hubs (physical + behavioral + nutrition + prophylactic dentistry + self-care enablement + insurance) become the centerpieces of community health replacing traditional insurers and hospitals? Where will the workforce choose to work?

Per the Healthcare Workforce Coalition (www.healthcareworkforce.org), healthcare workforce shortages are a near and present danger to the U.S. health system: shortages of physicians, nurses and allied health professionals are significant, especially in rural areas. The 18-million who constitute the healthcare workforce today are being told to work harder with less. It’s no secret.

In the Affordable Care Act (2010), Title 5 (Section 5101), healthcare workforce modernization was authorized: “The purpose of this title is to improve access to and the delivery of health care services for all individuals…” Subtitle B authorized creation of a 15-member National Health Care Workforce Commission to recommend modernization policies. It would have coordinated workforce initiatives across federal agencies (HRSA, CMS, MedPAC, MACPAC, GAO, et al) along with states and private sector operators to address long-term issues and short-term execution challenges. The Commission never met because its funding was not authorized by Congress.

If the overall economy is dependent on healthcare to produce an appropriate share of job growth while reducing overall costs, modernizing its workforce is key. It must include unpaid caregivers, licensed and unlicensed providers and technology-enabled solution providers—not just traditional licensed professional groups and their academic partners. That’s not going to happen in the current political environment where each sector’s primary focus is protecting reimbursement and guarding against scope of practice threats.

The health system needs transformation. Workforce modernization is where to start.

Paul

P.S. My journey as a heart patient continues to teach me just how far we have to go as a “system.” Understanding what I have been billed for, by whom, when and why is like reading Russian. As best I can see, $267,490.30 has been charged by the hospital and 13 different doctors who’ve treated me in some way.  How much I end up spending after rehab et al remains a mystery but it’s not remotely close to the hospital’s “price estimator” tool. Little wonder consumers are frustrated about healthcare costs pushing its affordability to the top of their Campaign 2026 concerns.

HHS takes another swing at drug discount overhaul

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https://www.axios.com/2026/02/23/hhs-340b-drug-discount-overhaul?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

The Trump administration is doubling down on efforts to revamp the federal discount drug program — a major flashpoint between Big Pharma and hospitals.

Why it matters: 

The so-called 340B program has been mired in litigation, most recently over administration efforts to let drugmakers carry out price reductions through rebates instead of cutting prices at the front end.

  • After a court halted the attempt on procedural grounds, federal health officials this month laid the groundwork to reintroduce changes that providers say could cost them hundreds of millions of dollars.

Driving the news: 

The Health Resources and Services Administration last week issued a notice soliciting feedback on whether and how to make hospitals and clinics in the program pay full price up front for the medications.

  • Drugmakers would then rebate the price difference later, after verifying that a facility qualifies for a discount.
  • The agency is asking hospitals for financial data to back up industry claims that such a change would threaten facilities’ cash flows and create administrative hassles as they contend with federal Medicaid cuts.

Context: 

A federal court in Maine ruled late last year that the Department of Health and Human Services, which HRSA is part of, didn’t solicit enough stakeholder feedback before proposing its initial rebate model.

  • HHS “cannot fly the plane before they build it,” Judge Lance Walker wrote in response to a lawsuit from the American Hospital Association and other hospital groups.
  • HHS scrapped the pilot in January and dropped its appeal of the decision.
  • The new notice it sent this month “suggests a sense of urgency in advancing a new rebate model proposal,” lawyers at Quarles & Brady wrote in a blog post.
  • Still, HHS would need to formally propose and gather comment on any future model, and has committed to giving providers at least 90 days’ notice before starting the new system.

Where it stands: 

The drug industry trade group PhRMA sees the rebate model as a way to add needed transparency to federal drug discounts, spokesperson Alex Schriver said in a statement to Axios.

  • “We’re heartened by the administration’s efforts to ensure that the program operates as it’s intended,” CEO Steve Ubl told reporters last week.
  • Pharmaceutical companies have been trying to move in the direction of rebates themselves over the past couple of years, arguing that many providers are gaming the system and getting 340B program discounts as well as Medicaid rebates for drugs.
  • Courts have blocked individual companies like Bristol Myers Squibb and Johnson & Johnson from switching to rebates from up-front discounts.

The other side: 

Hospitals are planning to respond to the information request, but they’re holding out hope that HHS will drop the rebate idea altogether.

  • HHS should “recognize that imposing hundreds of millions of dollars in costs on hospitals serving rural and underserved communities is not a sound policy,” Aimee Kuhlman, AHA vice president of advocacy and grassroots, said in a statement.
  • AHA and other hospital groups last week sent a letter to the administration asking to extend the comment period and potentially laying the groundwork for another legal challenge if that isn’t granted.
  • Community health centers, meanwhile, are urging Congress to pass a bill that exempts them from rebate experiments.

The bottom line: 

The administration isn’t giving up on the rebate idea. That will only add to the controversy over a program that covers more than $81 billion in annual drug purchases.