Why a Conversation May Be the Highest-ROI Investment a Healthcare CEO Can Make

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One of the most impactful leadership tools isn’t a new technology, consulting framework, or operational initiative. It’s being human. 

Hospital and health system leaders spend countless hours reviewing financial dashboards, quality metrics, staffing ratios, and strategic plans. Yet one of the most impactful leadership tools is much more simple: lunch.

Yes, as in food and conversation. Specifically in this case, a simple practice called “Check-ins with Charles.”

At our June 2026 HealthLeaders CEO Exchange in Avon, Colorado, some of healthcare’s top executives gathered for an honest conversation about leadership, culture, financial performance, and the future of the industry.

During the discussion I moderated, Charles Williams, regional president at Baylor Scott & White, covered everything from revenue cycle management and physician engagement to CEO succession planning.

Yet one of the most compelling ideas shared that afternoon (and that had all the other CEOs rapidly engaging) had nothing to do with technology, reimbursement models, or operational restructuring. It was Williams’ leadership initiative “Check-ins with Charles.”

The concept is remarkably simple. On a regular basis, Williams invites a randomly selected group of employees—from nurses and environmental services staff to finance professionals and administrative team members—to an informal Chick-fil-A lunch. There is no PowerPoint presentation. There are no scripted talking points. There is no formal agenda. The purpose is simply to listen.

As Williams explained during the discussion, the impact has gone far beyond an hour spent sharing a meal.

“When that email goes out,” he told the group, “it’s not that guy, it’s Charles.”

That distinction may sound small, but in today’s healthcare environment, it represents something much larger: trust.

Healthcare executives spend enormous amounts of time analyzing financial statements, reviewing quality metrics, discussing workforce shortages, and developing strategic plans. Those activities are essential. But as the CEO Exchange conversation repeatedly demonstrated, strategy only succeeds when people believe in the leaders asking them to execute it.

Trust Before Strategy

Healthcare leaders often focus on execution. We talk about operating margins, revenue cycle performance, patient experience scores, physician productivity, employee retention, and quality outcomes.

Those metrics matter, but execution doesn’t begin with dashboards. It begins with trust.

One of the recurring themes throughout the CEO Exchange was that organizations often fail to communicate proactively because leaders and employees simply don’t know one another well enough. Everyone is busy. Calendars are full. Meetings dominate the day. Yet when leaders become disconnected from the frontline, small problems stay hidden until they become expensive crises.

Williams described how “Check-ins with Charles” has become one way to eliminate that disconnect.

The informal lunches allow employees to speak openly in a setting where titles disappear. Clinical and non-clinical staff have an opportunity to ask questions, offer suggestions, and discuss concerns directly with the CEO.

He complements those lunches with another simple communication strategy: a monthly three-minute video message. Sometimes the videos are intentionally lighthearted—wearing a Valentine’s shirt covered in hearts or joking with employees—to demonstrate vulnerability and approachability.

The objective isn’t entertainment, it’s accessibility, and employees stop seeing “the president” and begin seeing a person.

That shift has produced measurable results.

Williams shared that following these consistent communication efforts, his organization achieved the highest employee engagement survey participation rate in its history.

Participation itself isn’t the end goal, but it is an important indicator. Employees generally do not take time to provide honest feedback unless they believe leadership is genuinely listening and prepared to act on what they hear.

Communication Is Operational Strategy

Several executives around the table reinforced the same lesson with their own experiences.

One CEO of a health system in Connecticut described taking over responsibility for revenue cycle despite coming from a nursing background. Rather than pretending to understand every technical aspect of billing and coding, she gathered everyone into one room and admitted what she didn’t know.

Many of those employees had worked in the same building for years but had never truly collaborated.

Together, they established shared expectations, defined key performance indicators, and began meeting regularly.

The results were dramatic.

Claim denials declined significantly. Departments that previously blamed one another started solving problems together. Frontline registration staff, physicians, coding teams, and revenue cycle leaders finally understood how each person’s work affected the others.

The improvement didn’t begin with a new software platform. It began with communication.

Another executive discussed regularly spending half a day shadowing frontline employees. Dressed in scrubs, he works alongside environmental services, nurses, and other team members—not as a symbolic exercise, but as a learning opportunity.

Those interactions consistently reveal operational problems that never surface in executive conference rooms.

Employees become comfortable sharing frustrations, identifying inefficiencies, and suggesting improvements because the hierarchy has temporarily disappeared.

Another participant emphasized that finance leaders should spend time in clinical environments, while clinicians should gain greater appreciation for financial decision-making. When each group understands the other’s daily challenges, collaboration replaces conflict.

As one executive noted, communication is often the bridge between operational excellence and financial performance.

The Hidden ROI of Listening

Communication is frequently categorized as a ‘soft skill,’ and honestly my boss always told me to stay away from these soft stories, but the executives at the CEO Exchange argued exactly the opposite.

Strong communication produces measurable business outcomes.

Research has indicated that organizations that foster open dialogue often experience:

  • Higher employee engagement and retention
  • Better cross-functional collaboration
  • Earlier identification of operational issues
  • Faster execution of strategic initiatives
  • Greater psychological safety for innovation
  • Stronger patient experiences driven by more engaged caregivers

These observations align with broader workforce research. The firm Gallup has consistently found that highly engaged business units outperform less engaged teams across profitability, productivity, turnover, safety, absenteeism, and customer satisfaction. While healthcare has its own unique challenges, the underlying principle remains the same: Engaged employees produce stronger organizational performance.

The roundtable offered numerous examples.

Finance leaders make better decisions after seeing clinical operations firsthand.

Clinicians become more thoughtful stewards of organizational resources when they understand how financial performance affects future investments.

CEO Turnover Comes at a Cost

The conversation eventually shifted to another challenge facing healthcare organizations: executive turnover.

Participants noted that the average tenure of a hospital CEO today is generally somewhere between three and five years, a figure that aligns with data from the American College of Healthcare Executives (ACHE), which has long reported average hospital CEO tenure at approximately five years nationally.

The executives argued that frequent leadership turnover carries enormous organizational costs.

Every leadership transition requires employees to learn a new leadership style, interpret new priorities, and adapt to another strategic vision.

One executive described the experience as traumatic for organizations.

Instead of concentrating on executing strategy, employees spend valuable time trying to understand the expectations of the incoming CEO.

Another participant observed that boards are often searching for a “silver bullet” during difficult financial periods, replacing leaders before long-term strategies have time to mature.

The result can be an endless cycle of organizational resets.

Several executives pointed to health systems where senior leaders have remained in place for more than a decade as examples of how leadership stability creates a competitive advantage.

Williams discussed Baylor Scott & White’s intentional focus on developing internal leadership pipelines. Potential future presidents and chief operating officers are paired with experienced mentors well before succession becomes necessary, ensuring continuity and preserving organizational culture rather than forcing each new leader to reinvent it.

Culture Isn’t Built in the Boardroom

Perhaps the most memorable story shared during the discussion came from another longtime hospital CEO.

While ordering lunch in the cafeteria, he asked for a very small salad.

The cafeteria employee smiled, placed a single piece of lettuce into the bowl, and asked, “Is that small enough for you?”

Rather than feeling disrespected, he viewed it as one of the proudest moments of his career.

The interaction demonstrated that an employee felt comfortable enough to joke with the CEO.

There was no fear, there was trust.

That, the group agreed, is what culture looks like.

Not mission statements.

Not values posters hanging in hallways.

Not speeches from the executive suite.

Culture is built through everyday interactions that convince employees they are seen, heard, respected, and safe enough to speak honestly.

Leadership That Listens

Healthcare continues to face unprecedented pressure—from workforce shortages and financial uncertainty to AI, rising consumer expectations, and increasing regulatory complexity.

No CEO can personally solve every challenge facing a modern health system.

Every CEO, however, can create an environment where employees feel comfortable identifying problems early, collaborating across departments, and contributing ideas before issues become crises.

That is the real lesson behind “Check-ins with Charles.”

It isn’t really about Chick-fil-A or even about lunch. It is about replacing hierarchy with humanity.

The conversations in Avon made one thing abundantly clear: Organizations that invest time in authentic communication build trust. Trust strengthens culture. Strong cultures execute strategy more effectively. And better execution ultimately produces stronger financial performance.

For healthcare leaders searching for a competitive advantage in an increasingly complex industry, one of the highest-return investments may not be found in the next technology platform or consulting engagement.

It may simply be sitting down at a table, sharing a meal, and asking one question:

“What do you think we could do better?”

Average Medicare vs Medicaid Reimbursement to Hospitals as a Percentage of Cost

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Medicare reimburses hospitals at an average of 82% to 87% of the actual cost of providing patient care. According to long-term data from the American Hospital Association (AHA) and the Congressional Budget Office (CBO), this means hospitals face a shortfall, receiving roughly 82 to 87 cents for every dollar they spend caring for Medicare beneficiaries.

Financial Impact and Hospital Margins

Because Medicare reimbursement rates are fixed by the federal government, they often fail to keep pace with the rising costs of labor, drugs, and supplies:

  • Negative Profit Margins: The Medicare Payment Advisory Commission (MedPAC) reported that hospitals experienced an average -12% margin on fee-for-service Medicare services, with projections remaining deeply negative at -10%. [1]
  • Widespread Losses: Approximately 67% of all U.S. hospitals operate at a net financial loss specifically on their Medicare patient population. [1]
  • Aggregate Underpayments: This payment-to-cost deficit translates to roughly $99.2 billion in annual underpayments that hospitals must absorb or offset through other revenue streams.

How Hospitals Balance the Deficit

To remain financially viable while absorbing underpayments from Medicare and Medicaid, hospitals rely on cost-shifting to the private sector:

  • Commercial Insurance Rates: Private, employer-sponsored health plans pay hospitals significantly more to subsidize public program shortfalls. On average, commercial insurers reimburse hospitals at 196% to 199% of Medicare rates.
  • Payer Mix Vulnerability: Hospitals located in regions with high concentrations of elderly or low-income residents are at higher financial risk. At 96% of U.S. hospitals, government programs (Medicare and Medicaid) account for more than half of all inpatient days.

If you are tracking hospital financials or healthcare policy, would you like to see how Medicaid reimbursement rates compare, or look closer at the differences between inpatient and outpatient Medicare payment structures?

Medicaid reimburses hospitals at an average of 88% to 90% of the actual cost of care, but this figure heavily relies on supplemental government funding. Without these extra state and federal payments, standard Medicaid base rates only cover roughly 58% to 65% of hospital costs.

Because Medicaid is jointly funded by federal and state governments, the exact payment-to-cost ratio varies wildly by state, fluctuating between 49% and 169% of Medicare benchmarks.

The Core Components of Medicaid Payments

Medicaid hospital payment structures are highly complex and divided into two primary tiers:

  • Base Rates (Severe Shortfalls): Standard Fee-For-Service (FFS) base rates and Managed Care Organization (MCO) plans pay well below actual expenditures. According to industry data published by the American Hospital Association (AHA), standard MCO plans cover just 65 cents on the dollar, while FFS base payments plummet to 58 cents on the dollar.
  • Supplemental Payments (The Lifeline): To minimize this gap, states issue extra payments to hospitals. These account for over 52% of total Medicaid hospital spending nationwide and are broken down into:
    • Disproportionate Share Hospital (DSH) Payments: Extra funds legally required for safety-net hospitals serving high volumes of low-income or uninsured patients.
    • Non-DSH Supplemental Payments: Upper Payment Limit (UPL) adjustments and state-directed payments meant to artificially boost base rates closer to commercial or Medicare levels.

Operational Impacts on Hospitals

The gap between Medicaid base reimbursement and actual cost strains hospital systems in several distinct ways:

  • Widespread Financial Loss: Even after accounting for all safety-net supplemental payments, roughly 62% of U.S. hospitals operate at a net loss on their Medicaid patient populations.
  • Aggregate Underfunding: The total nationwide Medicaid underpayment deficit adds up to approximately $24.8 billion annually that hospitals must absorb.
  • The Commercial Subsidy: Because public programs underpay, hospitals shift costs onto employer-sponsored health plans. As a result, private insurers are charged nearly double (up to 200%) what Medicare and Medicaid pay for the exact same medical services.

The Fragile Economics of Safety-Net Care

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https://www.healthleadersmedia.com/cfo/hennepin-healthcares-rescue-package-reveals-fragile-economics-safety-net-care?utm_source=HealthLeaders&utm_campaign=513090240d-EMAIL_CAMPAIGN_2026_06_18_02_52&utm_medium=email&utm_term=0_adc94e5966-513090240d-532959885&mc_cid=513090240d&mc_eid=71a6a1464f

Minnesota lawmakers approved a $205 million funding package to stabilize Hennepin Healthcare, but it underscores that the safety-net risk is escalating. Here’s what Hennepin told us.

KEY TAKEAWAYS

Hennepin’s financial struggles highlight how hospitals with heavy Medicaid and uninsured populations remain vulnerable when reimbursement growth lags expense inflation.

CFOs should model scenarios involving Medicaid funding reductions, rising uncompensated care, and sustained labor-cost pressures to assess liquidity and capital needs.

While government funding can provide short-term relief, finance leaders should focus on long-term sustainability through revenue diversification, service-line optimization, and proactive advocacy efforts. 

Hennepin Healthcare’s financial crisis has become one of the most closely watched healthcare stories in the country. Now bolstered with state funding, its story illustrates the mounting pressure on safety-net hospitals.

The CFO Take Away

Think of this headline as an underscore to the growing vulnerability of health systems whose payer mix is concentrated in government programs. Hennepin Healthcare’s situation demonstrates that even large, clinically essential institutions can find themselves in liquidity crises when reimbursement growth consistently trails expense inflation.

CFOs should view this as a warning to stress-test their organizations against scenarios involving Medicaid funding reductions, higher uncompensated-care volumes, and continued labor-cost pressure. The strategy lesson here is that traditional margin-improvement initiatives alone may not be enough. CFOs should be strengthening advocacy efforts, diversifying revenue streams where possible, reassessing service-line profitability, and building long-range capital plans that assume greater reimbursement volatility.

The market is tightening, and the broader takeaway is that safety-net economics are becoming a board-level risk issue. Organizations that wait until cash reserves deteriorate before pursuing structural solutions will find themselves relying on emergency legislative interventions rather than executing deliberate financial strategy.

The System

Hennepin Healthcare leaders have warned lawmakers that the organization faces severe financial challenges driven by a combination of factors: rising labor and operating costs, inadequate reimbursement from government programs, and a heavily Medicaid-dependent population.

The system has already tried to shrink costs by reducing beds and eliminating services, while seeking additional state support to stabilize operations. But policymakers ultimately negotiated a funding package worth approximately $205 million to help preserve the organization’s role as Minnesota’s largest trauma center and a critical provider for vulnerable and low-income populations.

In an email to me, the system stated:

“Hennepin Healthcare is deeply grateful to the lawmakers who acted with urgency and collaboration, and to our employees, patients, and advocates whose voices brought needed attention to this crisis. The stabilization funding does not resolve the long-term impacts of HR1 or the structural deficits that uniquely challenge safety-net hospital systems. But it does accomplish two essential things: it delivers historic support that sustains us, and it gives us the time and stability to work with the state on durable, long-term solutions.

Our immediate priorities are to stabilize our team and invest in patient care while carefully stewarding the funds allocated to us. We have essential needs that have been deferred because of financial challenges, including staffing, equipment, and other investments that support patient care.

Looking ahead, our strategy is focused on both operational improvement and long-term sustainability. We will continue working with state leaders, the Governor-appointed task force, and our future professional governing board to identify lasting solutions that strengthen Minnesota’s healthcare safety net and ensure Hennepin Healthcare can continue serving patients for generations to come.”

It’s clear the system views the package only as a bridge. It’s obviously not a solution. But beyond that, it’s also clear that this is not a Minnesota-confined story.

Hennepin Healthcare showcases the financial fragility of safety-net hospitals nationwide. In 2023, well before any of today’s Medicaid chaos, safety-net hospitals provided roughly $11 billion in uncompensated care.

Roughly three-quarters of Hennepin Healthcare’s patients are uninsured or covered by public insurance programs, creating a structural gap between the cost of care and reimbursement levels.

Hennepin Healthcare was projecting up to $50 million in operating losses for 2026 and a staggering $1.7 billion in deficits over the next decade. The organization’s repeated losses and dependence on government intervention underscore the challenges many urban safety-net systems face as Medicaid funding uncertainty, amongst other pressures, converge.

Roosevelt on Leadership Integrity

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Theodore Roosevelt believed that doing the right thing required courage, responsibility, and moral character—even when it was difficult or unpopular. He argued that people should act with integrity rather than seek the easiest path.

Roosevelt consistently taught that strong character was built through honest work, personal responsibility, and the willingness to stand up for what was just. He believed that individuals—and nations—became stronger when they chose duty over convenience.

CFOs And The Structural Margin Squeeze—Health Spending Set to Top 20% of GDP by 2034

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https://www.healthleadersmedia.com/cfo/cfos-and-structural-margin-squeeze%E2%80%94health-spending-set-top-20-gdp-2034?utm_source=HealthLeaders&utm_campaign=3c3e52d247-EMAIL_CAMPAIGN_2026_07_09_03_41&utm_medium=email&utm_term=0_adc94e5966-3c3e52d247-532959885&mc_cid=3c3e52d247&mc_eid=71a6a1464f

New National Health Expenditure projections show sustained cost growth outpacing GDP, driven by Medicare expansion, rising drug spend, and persistent utilization pressures.

KEY TAKEAWAYS

Medicare is projected to grow faster than other payers, increasing exposure to lower reimbursement rates and tightening system-wide margins.

Utilization is driving costs. Post-pandemic service use remains elevated, undermining the assumptions that demand would normalize.

Rapid pharmaceutical growth and shifting federal pricing policy make pharmacy costs unpredictable and scenario-dependent.

The latest National Health Expenditure projections from Health Affairs and CMS confirm what CFOs already suspect: cost growth is structural. Total U.S. health spending is expected to grow at roughly 5.4% annually through 2034, consistently outpacing GDP growth of about 4.1%, pushing healthcare’s share of the economy from roughly 18% today to more than 20% by 2034. 

The first major implication is funding-source imbalance. Medicare is projected to grow the fastest at roughly 7.7% annually, driven by demographics and utilization intensity. Medicaid and commercial insurance trail at about 5% each, but still above general inflation. This divergence matters. Payer mix will steadily tilt toward government payers with structurally lower reimbursement growth. Even small shifts in payer composition will exacerbate pressure on operating margins unless productivity gains or rate improvements offset them.

Secondly, utilization is what’s really driving the next wave of cost growth. Recent data show elevated service use across hospital, physician, and pharmaceutical categories, with little evidence that post-pandemic demand has normalized. That suggests budgeting cycles can no longer assume regression to pre-2020 utilization trends. For CFOs, this complicates volume forecasting: demand is becoming less predictable and more sensitive to coverage expansion and policy-driven enrollment changes.

Third, prescription drug spending is now the fastest-growing category, with retail pharmaceuticals set to outpace hospital and physician services through the projection window. The combination of specialty drug uptake and policy-driven price reforms creates a dual volatility problem: higher baseline spend alongside uncertain future savings from federal negotiations and benefit redesigns. CFOs in both provider and payer organizations should treat pharmacy cost projections as scenario-driven, not point estimates.

Fourth, federal policy is increasingly the dominant driver of revenue exposure. The federal government’s share of total health spending is expected to rise from roughly 31% to 33% by 2034, reinforcing dependence on Medicare and federal Medicaid financing. At the same time, policy volatility—particularly around subsidies, eligibility rules, and drug pricing—introduces new forecasting risk that cannot be diversified away. CFOs should expect more frequent mid-cycle reimbursement adjustments and greater lag between policy adoption and financial realization.

Fifth, the insured population is expected to slightly decline as a share of total population over the next decade. This is a subtle but important signal for providers, because even small coverage shifts can disproportionately affect elective volume, bad debt exposure, and charity care assumptions. CFOs should incorporate coverage elasticity into long-range planning models, especially in markets with high exchange enrollment sensitivity.

Finally, healthcare is steadily absorbing a larger share of the U.S. GDP. Look out for structural revenue tailwinds for the sector and intensifying political and payer pressure to contain costs. CFOs should expect sustained scrutiny on operating efficiency, administrative overhead, and price justification across all service lines.

Ultimately, the shift here is from static 10-year budgeting to dynamic scenario planning. Health systems that quickly model policy sensitivity, payer mix drift, and utilization volatility in real time will be better positioned than those relying on historical cost curves that just no longer hold up.

UnitedHealth Has a Bank. Now Washington Wants More Insurers to Act Like One.

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The administrations new ACA rules encourage health insurers to offer loans for medical bills instead of addressing the soaring out-of-pocket costs driving Americans into debt.

Most Americans are familiar with UnitedHealth, the largest private health insurer in America – if not because the corporate giant provides their medical coverage, then because of the massive publicity when the CEO of its key subsidiary was assassinated on a Manhattan street in December 2024.

The shooting of Brian Thompson also sparked a nationwide debate over Big Insurance practices, after many came forward with horror stories about their denied claims for urgent medical care or other bad health insurance experiences. Yet there is one thing most Americans do not know about UnitedHealth: It also has a bank.

But a number of physicians did know about Optum Financial by the spring of 2025, and they were not happy. Some doctors said their practices had been forced to borrow money from Optum to deal with a crippling cyberattack on the medical payments system, and Optum then pressured them to quickly repay the money. One New Jersey specialist in pediatric neurology and neurosurgery told The New York Times: “Optum, in my opinion, is acting like a loan shark trying to rapidly collect.”

Now, financially pressed U.S. families might learn what it’s like to owe money to Optum, under a new plan from the Trump administration.

With out-of-pocket medical costs for Americans skyrocketing, new guidelines for the Affordable Care Act marketplace suggest that insurers begin offering loans to patients with sky-high deductibles and unexpected large medical bills, a loan that presumably would be repaid with interest.

The Trump administration’s plan would worsen an existing crisis. In the world’s only developed nation where families experience medical bankruptcy, and with about one-third of families already in debt because of their medical bills, the government’s proposed solution is even more debt.

“We note that multiyear and 1-year catastrophic plans may be able to offer relief from the high deductible and maximum annual limitation on cost sharing through other mechanisms,” reads the final rule. “For example, issuers of catastrophic plans could consider financing the deductible by providing enrollees a loan.”

Experts say the ACA rules for 2027 and 2028 from the Centers for Medicare & Medicaid Services reveal the administration’s focus on expanding consumer choice and reducing federal outlays while ignoring the core issue: higher out-of-pocket costs.

“They’re putting a lot of stock into the idea that people really want these extremely, extremely high deductibles and out-of-pocket costs,” said Katie Keith, director of the Center for Health Policy and the Law at the Georgetown University Law Center. “And so they’re coming up with all these attempts at workarounds, including things like making your insurance company your bank.”

The New York Times noted that UnitedHealth, with its Optum financial unit, is the one large insurer that’s already equipped to offer loan packages to patients who can’t afford their bills. In addition to its controversial program of loans to physician practices, Optum’s bank currently offers government-approved Health Savings Accounts, or HSAs, which allow patients to set aside pre-tax earnings for future medical bills. A UnitedHealth spokesperson wouldn’t comment to the Times on the new ACA rules.

It’s understandable why the Big Insurance icon wouldn’t be eager to weigh in on a concept that will only fuel consumer anger over the increasing unaffordability of health care. U.S. Rep. Shontel Brown, an Ohio Democrat, weighed in on the Trump administration scheme on the social media platform X by noting this would “supercharge medical debt.” She added: “This could ruin people’s finances, while creating a financial incentive for insurers to deny coverage.”

Indeed, a 2025 report from the health-policy organization KFF found that UnitedHealth had – along with two Blue Cross Blue Shield affiliates – one of the nation’s three highest rates of claims denials for its ACA Marketplace policies. Its reported denial rate of 33% was nearly double the overall national rate of 19%. Now UnitedHealth – which posted more than $12 billion in profits in 2025, the highest of the nation’s insurers – could make even more money from denying claims or raising deductibles and offering loans.

The crisis of high out-of-pocket medical costs in America has been spiraling rapidly since the Trump administration and the Republican-controlled Congress rejected extending enhanced federal subsidies that had made coverage under the ACA, or Obamacare, reasonably affordable.

For millions of Americans, the end of those subsidies – with some consumers getting 2026 monthly premium bills that have more than doubled – has meant shifting to the lowest level of Bronze ACA plans, which come with high annual deductibles. This will mean thousands of dollars in bills for an unexpected major illness.

The soaring premiums have also seen many families joining the growing ranks of the uninsured. One early analysis from KFF predicted that as many as 5.5 million Americans – or about 25% of the peak enrollment – will have dropped their ACA insurance by the end of 2026, The new negative aura around health insurance – higher premiums, higher-out-of-pocket costs for those choosing inferior plans, or those without any coverage at all – is behind a recent report that about one-third of all Americans are cutting routine expenditures or even skipping meals to deal with their rising doctor bills and drug costs.

Instead of continuing the subsidies that had brought a steep rise in ACA enrollment earlier in the decade, the Republican-led government insists it is addressing the growing affordability crisis with new options that dangle lower premiums with the much greater risk of painful out-of-pocket costs in an emergency.

The government’s new ACA rules for 2027 increase the number of people who’d be eligible to buy so-called catastrophic plans that might defray costs for an extreme medical emergency but put consumers on the hook for the costs of most doctor visits or prescriptions. This is on top of new rules that will allow insurers to raise deductibles for the third-tier Bronze plans to $15,600 for individual coverage or $31,200 per family.

The Trump administration hoped to boost catastrophic plans to spike their enrollment as high as 3 million Americans, but Louise Norris, the longtime expert who writes for Healthinsurance.org, noted that a variety of factors have prevented any surge in customers for these high-deductible plans. In some states, she noted, premiums are actually lower for the Bronze plans, and this year, only about 67,000 people have signed up for the catastrophic plans.

Norris said the Trump administration’s idea for insurance-company loans is “that you can pay back that deductible over time, [but] I’m not sure that would really offset those other factors in terms of making those plans appealing.” She added that, “if you don’t qualify for subsidies, and you’re looking for the cheapest plan you can get in a lot of areas, that’s actually going to be a Bronze plan.”

So the government seems determined to make catastrophic insurance popular when American consumers don’t really want it.

Instead, the various schemes in the new ACA rules for 2027 and beyond – pitched with a notion of offering consumers more choices instead of the cost relief that Americans need – are projected to cost a whopping $1.3 billion annually, while it’s projected that two million more people will likely drop their ACA coverage because of the expense.

While the Trump administration and its GOP allies on Capitol Hill own this current crisis, Democrats need to acknowledge their own complicity in the situation.

Democrats in the past have bent to insurers’ demands to make sure all the health plans offered in the ACA marketplace have cost-sharing requirements of some amount and also to allow the out-of-pocket maximum to be unaffordably high for most Americans – especially for people with chronic conditions and those with low incomes.

This year’s midterm election is an opportunity for candidates to promise that health care affordability will be a priority. The centerpiece of such an agenda should be lowering the outrageous out–of-pocket maximums. The Lower Out of Pockets NOW coalition, which I founded, supports a bill sponsored by Massachusetts Democratic U.S. Rep. Jake Auchincloss to extend the Biden-era Medicare prescription drug yearly out-of-pocket maximum of $2,000 (rising to $2,100 this year) to people enrolled in ACA marketplace plans.

Some states already offer innovative cost-control plans. For example, Massachusetts now requires issuers of individual coverage and fully insured group coverage to limit increases in the enrollees’ out-of-pocket costs to the Consumer Price Index inflation rate for the Boston area. For 2027, the cap will be 3.6%. The covered expenses include plan deductibles, copayments and coinsurance bills.

When the idea of loans from insurers like UnitedHealth was reported in The New York Times, an attorney commented on social media that “it’s hard to top this level of dystopia.” This is a wake-up call to focus on the real pathways to affordable health care.

Nonprofit-private equity joint ventures worth scrutiny, PESP report says

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https://www.fiercehealthcare.com/finance/nonprofit-private-equity-joint-ventures-worth-scrutiny-pesp-report-finds

At least 568 healthcare facilities operate through nonprofit-private equity joint ventures, according to a new report calling for scrutiny into those arrangements.

The figure is likely an undercount, considering only public data were used. The report (PDF) was published by the Private Equity Stakeholder Project (PESP), a nonprofit that advocates for more disclosure about private equity deals.

More than a fifth of private equity (PE)-owned hospitals operate under joint venture arrangements with nonprofit health systems. Apollo Global Management-owned Lifepoint Health, for instance, runs nearly two-thirds of its hospitals through joint ventures.

Such joint ventures extend beyond hospitals, spanning subsectors such as inpatient rehab, hospice, home health, behavioral health, ambulatory surgery centers and urgent care, per the report. And regulations have not kept up with these evolving complex ownership structures. 

“While joint ventures may be advantageous configurations for the businesses involved, PE-backed joint ventures may still represent the risks associated with PE buyouts in healthcare,” the report said.

The report identified several patterns related to such arrangements. First, joint ventures with a provider offer an opportunity for a PE-backed company to expand into new markets. Joint ventures may also help companies get around regulatory restrictions, like in some states that forbid non-doctors from owning medical practices. It may help avoid the challenges associated with converting a health system from a nonprofit to a for-profit. Joint ventures also grant access to private capital and may drive revenue from the sale of real estate, a practice critics have said fueled high-profile health system bankruptcies in recent years. 

One negative pattern, the report cautioned, is patient and caregiver risks due to poor facility conditions, declining care quality, reduced services and higher prices. PESP gave as an example Lifepoint’s involvement in Duke, where associated facilities have seen poor quality of care and have cut services. Lifepoint was the subject of a recent bipartisan Senate investigation, supported by other PESP research, which found underinvestment has affected patient care.

Another example worthy of caution, per the report, is Ascension, which, in addition to having a joint venture with Lifepoint, also works with PE firm TowerBrook Capital to acquire healthcare companies. This case study shows how executives and PE businesses make outsized profits from entering healthcare markets, despite clinician concerns about future negative impacts to patient care. 

While much of the public and an increasing share of policymakers have been wary of PE’s involvement in healthcare due to these cases and others, proponents contend that funds can help fill in gaps where public funding for healthcare falls short, such as by supporting services in underserved areas or providing resources and managerial expertise that would otherwise be out of reach. 

PESP’s report said the examples it documented “expose significant gaps in federal and state oversight of private equity in healthcare.” 

To address this, PESP recommends that the IRS update its joint venture guidance; that the HHS Office of the Inspector General update its guidance on anti-kickback statutes; and that CMS clarify whether exceptions to Stark Law—which protects medical decisions from financial conflicts of interest—apply in PE-backed joint ventures. PESP also called on the Federal Trade Commission and the Department of Justice to better scrutinize joint ventures that don’t trigger individual premerger review, but still amass market influence. 

Additionally, the report was accompanied by a public searchable database of 568 nonprofit-PE joint ventures as identified by PESP. The database is embedded on PESP’s site.

“Patients, payers and employees need protection from the risks associated with PE ownership of healthcare systems and joint ventures expose significant gaps in oversight and regulation,” the report concluded.