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In the News
What happened in healthcare recently—and what we think about it.
- RFK Jr. clears committee vote, is on track to become health secretary. Robert F. Kennedy Jr.’s path to lead the Department of Health and Human Services (HHS) took a major step forward on Tuesday, when the Senate Finance Committee advanced his nomination to the full Senate floor on a party-line vote. The controversial nomination moved forward after Sen. Bill Cassidy (R-LA), a physician who had previously voiced doubts, extracted concessions including a commitment to maintain current vaccine recommendations. It’s unclear how Cassidy might hold Kennedy to his promises. Republicans enjoy a 53-47 majority in the Senate, so Kennedy could still lose three Republicans and get confirmed with Vice President Vance casting a tiebreaking vote; potential defectors might include Mitch McConnell of Kentucky, Susan Collins of Maine, and Lisa Murkowski of Alaska. The full Senate has not rejected a Cabinet nominee since 1989, when John Tower, who would have been President George H.W. Bush’s Defense Secretary, lost a 53-47 vote. A full confirmation vote for Kennedy could come as early as next week.
- The Gist: If confirmed, Kennedy would become the nation’s top health official, overseeing a $1.7 trillion annual budget with 13 agencies and running federal health programs including Medicare and Medicaid. HHS touches every aspect of healthcare in the United States, including payment, medication and device approval, and research, so Kennedy’s nontraditional background and views about the medical establishment make him an unorthodox nominee. Kennedy is associated with the “Make America Healthy Again” movement, which draws energy from a diverse spectrum of voters. But despite bipartisan support for some of the movement’s tenets, such as supporting exercise and healthier eating habits, it’s fair to ask whether "Make America Healthy Again” is merely nostalgia for an actually unhealthy past.
- New York hospitals warned against canceling transgender care. New York state attorney general Letitia James warned hospitals on Monday that they may risk violating anti-discrimination laws by denying are to pediatric transgender patients. The move came after NYU Langone Health canceled appointments with two children who had been scheduled to receive implants that dispense puberty-blocking medication. The hospital has not made any public announcements, but family of one of the patients was told that the hospital canceled the appointments after President Trump issued an executive order threatening to withhold federal funding from hospitals that provide gender-affirming care to children. It is estimated that approximately 3% of teenagers ages 13 to 17 are transgender in New York state, about twice the national average.
- The Gist: NYU Langone Health found itself caught in the middle of a battle that appears likely to escalate between liberal-leaning state governments and the Trump administration. Providers in some states find themselves in a no-win situation: risk violating state laws or antagonize the federal government and put millions of research dollars in jeopardy. The stakes are very high; in 2021, NYU Langone Health and its researchers received more than $800 million in research awards from the National Institutes of Health. Some aspects of this issue are particular to New York, a state with a long liberal history but a resurgent and emboldened Republican party. Hospitals must craft a response that balances federal and state law, the local political situation, and doing what’s right for their patients and the community at large.
- Health insurer credit outlook downgraded. Last Friday, Moody’s Ratings downgraded its assessment of the health insurance sector from “stable” to “negative.” The bond credit rating service cited high costs and utilization that are expected to continue challenging Medicare Advantage, Medicaid, and commercial insurance carriers in 2025. Moody’s also cited proposed legislation targeting pharmacy benefit managers (PBMs), which could have an outsized impact on the three largest PBMs and their parent companies: CVS Caremark (CVS Health), Express Scripts (Cigna), and OptumRx (UnitedHealth Group). The news isn’t all bad for the insurance sector, as Moody’s pointed out that enrollment is rising in Medicare Advantage and health insurance exchange plans; but the looming end of enhanced subsidies on the individual market could lead to enrollment declines in 2026, further clouding the outlook.
- The Gist: While Moody’s downgrades the industry at large, most of the big players in the field retain their neutral outlooks. But while the outlook has worsened for insurers, it’s improving for hospitals; late last year Moody’s fellow rating agencies Fitch and S&P Global joined it in assessing that the not-for-profit hospital field was going through an uneven but promising recovery. Darkening the skies for the insurance industry are the threat of legislation and possible action from the Trump administration, which together might make life miserable for PBMs. But while autumn was bad for payers and winter is shaping up to be worse, might a brighter spring be around the corner?
Plus—what we’ve been reading.
- The opioid epidemic paradox. Published earlier this week in The Washington Post, this piece details the state of the opioid epidemic. The article reveals that deaths due to drug overdoses are expected to fall in 2024 despite fentanyl still wreaking havoc. The author presents the story of Hamilton County—a southern Ohio county that has been hit particularly hard by the epidemic—to show this convoluted trend. Experts point out that improved Narcan access and local programs are saving lives. However, a more cynical interpretation says the population of drug users has already been diminished by fentanyl’s lethality, leading to fewer deaths in 2024. This article illustrates that, unfortunately, “the opioid crisis is far from over” for many communities.
- The Gist: Reducing fentanyl deaths is a high priority for the new administration—especially for Vice President Vance, who has a deeply personal connection to the issue and established a not-for-profit in Ohio to improve the lives of people living with opioid addiction before he entered politics. Reducing the number of overdose deaths is an achievement worth celebrating and speaks to the likely effectiveness of the government’s recent decision to make naloxone available over-the counter. However, this piece illustrates that current efforts remain more focused on getting better at treating addiction rather than preventing it, with negative implications for providers and care delivery. Providers should remain ready partners and supportive of the many community outreach efforts that help people with opioid use disorder. These programs best understand the local factors that drive the opioid crisis in their areas, and they have established credibility in hard-to-reach communities.
Graphic of the Week
A key insight illustrated in infographic form.
The state of hospital operations in 2024
This graphic dives into the most interesting findings in 2024’s year-end National Hospital Flash Report. From a revenue perspective, hospitals’ investments in outpatient care are reaping dividends, and 2024 as an operating year was largely better than 2023. In 2024,outpatient revenues grew 9% year-over-year and 31% compared with 2021. However, bad debt and charity care grew 14% year-over-year and 20% since 2021. While a myriad of factors could have led to such a significant increase, Medicaid redeterminations and persistent prior authorization denials were likely at play. Hospitals’ median expenses also illustrated the simultaneous hope and hurdles that many are facing. Hospitals’ median expenses were 6% higher year-over-year and 17% higher than in 2021, a reflection of stubborn inflation across the economy. However, when looking at these expenses on a volumes-adjusted basis, these expense increases did not outpace inflation. As we enter new and uncertain times, providers should remain focused on investments that prioritize strategic growth and continued profitability.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
Although health system performance has begun to stabilize, the new level of industry-wide health system operating cash flow performance has raised questions regarding long-term sustainability. The range of performance is wide, with the bottom two-thirds of providers experiencing stagnating or declining performance.
In a recent article, Nora Kelly, Jason Sussman and Megan Kendall discuss how organizations that actively maintain a best-practice capital allocation and management process can accommodate the demands of the current, dynamic healthcare environment, regardless of their current performance and financial position. Application of an established, structured and disciplined data-driven approach to the capital planning process is not only a necessity in this era of uncertainty: it’s a pathway to organizational resilience and growth.
On Our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in ten minutes or less every other weekday morning.
Last Monday, we heard the second part of host J. Carlisle Larsen’s conversation with Modern Healthcare politics and policy reporter Michael McAuliff about a list of potential large-scale federal healthcare spending cuts being weighed by Congressional Republicans.
This Monday, JC speaks with Craig Garthwaite, Professor of Strategy and Director of Healthcare at Northwestern University’s Kellogg School of Management, about a recent $10 million endowment to establish a center to train the next generation of healthcare leaders.
To stay up to date, be sure to tune in every Monday, Wednesday, and Friday morning. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We’ll see you next Friday with a new edition. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
