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In the News
What happened in healthcare recently—and what we think about it.
- Trump administration releases ACA integrity rule, impeding enrollment in ACA plans. On Monday, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule to tackle fraud in the Affordable Care Act (ACA) Health Insurance Marketplace and carry out administration priorities. The proposed rule would end the special enrollment period for individuals with incomes below 150% of the federal poverty line. Additionally, people who are automatically re-enrolled in subsidized coverage would be charged a $5 monthly premium until they re-confirm or update their eligibility. The rule would also shorten the annual open enrollment period by one month, would remove gender-affirming care from the list of essential health benefits, and would bar “Dreamers” from seeking marketplace coverage—a Biden administration rule that is facing legal challenges. The public will have 30 days to comment on the proposed rule once it is published in the Federal Register.
- The Gist: Given political backlash and congressional midterm losses of the failed repeal-and-replace efforts in 2018, President Trump is being very careful about how he approaches changes to the ACA this time. This rule would significantly weaken the ACA, with 750,000 to 2 million people estimated to lose coverage if it takes effect. The ACA exchanges achieved record-high enrollment in 2024 following former President Biden’s efforts to strengthen the law. The rule would put greater responsibility on enrollees rather than further regulate brokers who were largely blamed for previous fraud. This rule also touches cultural flashpoints, a strategy the Trump administration has used in other areas and is now employing more directly in healthcare. The move could increase the uninsured rate and hurt providers’ revenue, an additional challenge as potential changes to Medicaid still loom.
- Walgreens to be acquired by Sycamore Partners in $10 billion deal. Last Thursday, Walgreens Boots Alliance announced that it had entered into a definitive agreement to be acquired by Sycamore Partners, a private equity firm that focuses on retail investments, in a take-private deal. Shareholders will receive $11.45 per share, totaling about $10 billion. With debt and potential payouts, the total value of the deal could be up to $23.7 billion. Tim Wentworth, Walgreens’ CEO, stated that “while we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus and change that is better managed as a private company.” The transaction follows years of financial challenges for the company and months of rumors of a deal between these two parties.
- The Gist: This news is another example of large company entering retail health and struggling, illustrating the immense financial risks of providing care. This fall from grace is notable: Walgreens has been publicly traded since 1927 and has lost more than 90% of its value compared with its 2015 peak. In 2021 and 2022, Walgreens committed to care delivery, seeing this path as the answer to the profitability issues that plagued its pharmacy and retail businesses. But, saddled with debt and differing visions of the company’s future, Walgreens was never able to fully leverage its care delivery assets and achieve strategic transformation. The future of Walgreens, particularly VillageMD—an asset the company has wanted to sell—remains uncertain. Walgreens has a lot of work to do on the path to profitability and it will be interesting to see how Sycamore Partners handles an asset with such a storied history.
- Kennedy meets with food company executives. On Monday, Secretary of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. held a closed-door meeting with food industry leaders. He told them that he would like artificial color additives removed from their products by the end of his tenure as HHS secretary, and reportedly promised that if the industry is not proactive about getting “the worst ingredients” out of the American food supply, he would act. Kennedy has long championed removing artificial coloring from food, which has become a key priority for the Trump administration due to the power of the “Make America Healthy Again” movement.
- The Gist: There is momentum in states across the nation, from New York to Oklahoma, supporting Secretary Kennedy as he tries to address food quality and safety. Addressing the food supply is an issue with rare bipartisan support and one of Secretary Kennedy’s signature issues as he refocuses HHS’ efforts towards chronic disease. The changes he wishes would bring the United States in line with other industrial nations, which have more forcefully regulated the use of food additives. This meeting shines a light into Secretary Kennedy’s strategy on this issue, seeking to work with industry rather than dictate change, at least for now.
Plus—what we’ve been reading.
- His final lesson: Professor brings his experience as a patient into the classroom. Published last month in The New York Times, this piece tells the story of Stanford University medical professor Bryant Lin, M.D., teaching a class about an unusual subject: his own terminal illness. Dr. Lin, whose usual area of expertise is keeping medicine focused on humans in a technologically focused environment, was diagnosed with stage 4 lung cancer last year. Medication is holding off the cancer’s advancement, but he estimates it will only do so for another 2 years. However, instead of retreating into private life as the end draws near, Dr. Lin chose to teach a course about his illness this fall. He taught students about a variety of topics from the patient’s perspective, including confronting uncertainty, caregiving and the psychological impact of illness. He considers it part of his calling as a physician and an educator. “It’s quite an honor for me, honestly,” he says. “This class is part of… what I’m doing to give back to my community as I go through this.”
- The Gist: Dr. Lin’s class is reminiscent of “The Last Lecture” delivered by Carnegie Mellon University professor Randy Pausch as he was dying of pancreatic cancer. Both Pausch and Lin use humor and humility to confront one of life’s most profoundly serious subjects. Medicine has always been considered part art, part science; but rarely is it discussed as a humanity. Hospitals and doctors typically don’t like to talk about death, but Lin confronts it directly and asks his students to do the same. Doctors and nurses are key actors in what are often the most transformative days—the final ones—of life. This article is an important reminder that despite providers’ best efforts, every patient ultimately will die—and it’s up to provider organizations and clinicians to manage that process with grace and deep respect for the patient’s wishes and values. Sometimes, the highest level of care is knowing when and how to stop providing it, surely a humbling challenge even under the best of circumstances.
Graphics of the Week
A key insight illustrated in infographic form.
Healthcare Companies Report 2024 Financials
In this week’s graphic, we highlight 2024 financial data from some of the healthcare industry’s most prominent companies and largest provider organizations. Hospitals continue to face a daunting landscape given the sheer size and revenue growth of other actors in the industry. From a revenues perspective, hospitals remain on the smaller side compared with other companies involved in healthcare. In addition, over the past five years, health systems have not grown their revenues as quickly. Amazon and CVS, prominent players in the pharmacy and retail space, have grown their revenue by an average 13% annually compared with 5% for some large health systems. Select insurers and distributors have also enjoyed higher revenue growth than health systems. Additionally, the median hospital continues to face increased expenses and declining profitability, partially due to a tough economic environment. While external pressures are starting to affect others in the industry, notably large payers, given their size and varying revenue streams, many players in other sectors of the industry will have more resources to lean on during challenging times.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
Emergency department (ED) overcrowding has been a problem for decades, but there is evidence that it is getting worse. Both patient boarding—the practice of holding admitted patients in the ED due to a lack of available inpatient beds—and leave with being seen (LWBS) rates are increasing, with negative impacts on patient outcomes, workforce sustainability and hospital financial performance.
In a new article, Roy Boland describes how health systems can analyze their ED data to implement operational improvements that address staffing, patient flow and capacity constraints. He offers four approaches that systems can employ to reduce ED overcrowding.
On Our Podcast
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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
