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In the News
What happened in healthcare recently—and what we think about it.
- Restructuring—including mass layoffs—announced at HHS. The Department of Health and Human Services (HHS) on Thursday announced a major reorganization that includes cutting nearly a quarter of its workforce. The move will save about $1.8 billion annually by reducing staff from 82,000 to 62,000, according to HHS. Half of the jettisoned employees took buyouts and early retirement. The remaining 10,000 will lose their jobs. HHS will cut the number of department operating divisions nearly in half, to 15, and will consolidate several core functions into a new Administration for a Healthy Ameri The number of regional offices will drop from 10 to five. HHS said the overhaul will allow it to prioritize its new goal of eliminating chronic illness by “focusing on safe, wholesome food, clean water, and the elimination of environmental toxins.” The Centers for Medicare & Medicaid Services will lose approximately 300 staffers, about 4% of its workforce, but officials said the cuts will not impact those health programs. The Centers for Disease Control and Prevention (CDC) will lose 2,400 employees, about 18% of its workforce, and refocus on fighting epidemics, officials said.
- The Gist: The reorganization, which has been rumored for weeks but the details of which had been a closely guarded secret, reduces HHS to a size not seen since 2002. The biggest cuts target the Food and Drug Administration (FDA); 3,500 employees at FDA, which HHS Secretary Robert F. Kennedy Jr. has long criticized, will lose their jobs. Those 3,500 employees comprise about 19% of FDA’s workforce, although HHS said the reduction will not affect drug, medical device or food reviewers. The new Administration for a Healthy America will combine several existing agencies, including the Health Resources and Services Administration (which administers the Federally Qualified Health Center program) and the Substance Abuse and Mental Health Services Administration. Public health advocates criticized the cuts as a “brain drain,” while activists who support President Trump’s agenda called the reorganization a long overdue reform. Kennedy acknowledged that cuts would plunge HHS into a “painful period.”
- Trump’s health policy team falls into place. The Senate on Tuesday confirmed President Trump’s picks to lead two major health agencies. Jayanta “Jay” Bhattacharya, M.D., Ph.D., will direct the National Institutes of Health (NIH); and Marty Makary, M.D., will lead FDA. Bhattacharya, a Stanford University physician and health economist, was a prominent early critic of how the nation handled the Covid-19 pandemic. Makary, a Johns Hopkins University surgeon and Fox News commentator, was supportive of some pandemic restrictions but opposed vaccine mandates. The confirmations come as Susan Monarez, Ph.D., acting director of CDC, was nominated to lead the agency permanently. Monarez, an infectious diseases researcher, previously was deputy director for the Advanced Research Projects Agency for Health, an agency within HHS.
- The Gist: Bhattacharya takes charge of the world’s largest public funder of biomedical research after a 53-47 party-line vote. But three Democratic senators—Richard Durbin of Illinois and Maggie Hassan and Jeanne Shaheen, both of New Hampshire—joined all 53 Republicans in approving Makary, a rare bipartisan victory for the president. Meanwhile, Monarez is considered a more moderate pick than Dave Weldon, M.D., the administration’s first nominee to lead CDC. While confirmation for most of Trump’s nominees was never seriously in doubt, Makary’s bipartisan support and Monarez’s background in infectious disease demonstrate the broad appeal of aspects of the Make America Healthy Again movement. Monarez, if confirmed, would become the first non-physician to lead the agency in more than 50 years.
- CEO resigns as 23andMe files for bankruptcy. 23andMe, the popular DNA testing company, filed for bankruptcy on Sunday. The company, once valued at $6 billion, claimed about $277.4 million in total assets and $214.7 million in debts at the end of 2024. The company reported $191.8 million in revenue last year, a 28% decline year over year, as public demand for DNA testing has subsided. In a related move, CEO and co-founder Anne Wojcicki resigned but will remain a director on the board. Joseph Selsavage, 23andMe’s chief financial and accounting officer, was named interim CEO. Wojcicki had proposed taking the company private last year and is still said to be working to lead an acquisition. Last fall, 23andMe announced it would lay off approximately 40% of its workforce. The company continues to operate as usual.
- The Gist: The company said in a statement that no changes would be made to how the company stores, manages or protects customer data. But with a stockpile of more than 15 million users’ DNA information, 23andMe’s data security situation is precarious. The company had already suffered a data breach in 2023, although no genetic information was exposed. California Attorney General Rob Bonta on Friday advised 23andMe consumers to ask the company to delete their dataand destroy their genetic material. The bankruptcy and possible sale illustrate the vulnerable state of Americans’ health data. Fitness trackers, wellness apps, genetic tests and other direct-to-consumer tools that capture personal health information are not subject to federal health data privacy laws, which could open the door to fraud.
Plus—what we’ve been reading.
- Omnivore’s dilemma no more. Published on Monday in The Atlantic, this piece takes a closer look at one aspect of the Make America Healthy Again movement: high meat-based protein consumption. This trend represents a shift from the 2010s, when eating fewer animal products was encouraged both for health and ethical reasons. But now, cultural and nutritional shifts are boosting meat’s popularity. With meat-based protein (especially beef) increasingly tied to values traditionally associated with masculinity, many eaters are reconsidering what it means to eat well, leaving plant-based eating less popular.
- The Gist: There are health, ethical and environmental reasons Americans deemphasized red meat and beef tallow in their diets years ago. But there are also reasons we are now shifting back. One cause may be skepticism of “overselling” the virtues of plant-based eating. The prevailing medical and scientific consensus remains unchanged that reducing consumption of red and processed meats is beneficial for health; but this scientific consensus has always faced strong cultural headwinds. Americans already have a higher prevalence of cardiovascular disease and eat more meat than other Western, industrialized nations. The slight decrease in meat consumption in the 2010s has already ticked back up, although this could be due to a variety of factors. For providers, the cultural shift suggests that substantial progress in reducing cardiovascular disease in recent years may stall.
Graphic of the Week
A key insight illustrated in infographic form.
Implications of potential federal policy changes for hospitals
In this week’s graphic, we highlight new analysis from our colleagues at Sg2 that illustrates a framework to help providers evaluate the implications of a changing policy landscape. Potential changes to Medicaid, research funding, immigration, tariffs, site-neutral payment policies, telehealth, hospital-at-home and Affordable Care Act subsidies are being considered in Washington, all with varying degrees of impact for academic medical centers (AMCs), integrated delivery networks (IDNs), community hospitals and rural hospitals. Some of these proposals are more serious than others, with some coming to fruition. Medicaid cuts may pose the greatest threat for all provider organizations, especially depending on an organization’s payer mix. Site-neutral payment policy changes could also immensely impact providers’ finances, especially for AMCs and IDNs. In this time of great uncertainty, identifying the proposals, monitoring the political signals, gauging how a change would impact the organization and planning a response will make it easier to respond if the policy environment shifts. Providers have experienced uncertainty before, from economic downturns to the pandemic, and know how to weather the seemingly impossible.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
The flurry of rapidly evolving potential changes to state and federal healthcare policies are posing a real challenge for not-for-profit hospital and health system leaders. The current state of uncertainty is resurfacing memories of the onset of Covid-19 and the 2008 financial crisis, both instances where healthcare organizations had to react to massive financial changes in a short period of time.
In a new article, members of Kaufman Hall’s Financial Planning & Data Analytics practice group recommend moving away from a “wait and see” approach. Instead, hospital and health system leaders should engage in active financial scenario planning that will help them evaluate the implications of key policy positions as they’re being debated by legislators and regulators. By stress-testing their long-range financial and capital plan, leaders can better understand what immediate actions they should take to help their organizations prepare for and mitigate the impact of potential policy outcomes.
On Our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business and more, in 10 minutes or less every other weekday morning.
Last Monday, the podcast was off for a brief break.
This Monday, host J. Carlisle Larsen speaks with Christian Dameff, M.D., emergency physician and Co-Director of the University of California-San Diego’s Center for Healthcare Cybersecurity, about common misconceptions about cyberattacks on healthcare organizations and why we’re still in the dark about the motivations behind these attacks.
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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
