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HEALTHCARE INDUSTRY CHALLENGES THROWN INTO SPOTLIGHT
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Healthcare Companies End 2024 in the Hot Seat |
The killing of UnitedHealthcare CEO Brian Thompson thrust his company, and his industry, into the spotlight. It also sparked widespread consumer reckoning over denied claims and the high costs of care in the U.S., where health care is the most expensive in the world. Now lawmakers on both sides of the aisle are stepping up their scrutiny of the industry. But even before Thompson's shocking death on a New York City street, and its ongoing aftermath, the business of Big Health Care was having a rocky year. Costs are up, profits are down, top executives have lost their jobs, and investors are selling off the shares. (https://www.npr.org/2024/12/20/nx-s1-5234682/big-health-care-terrible-year-business-of-health)
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Reasons Why U.S. Healthcare Spending Rose 7.5% to Nearly $5 Trillion - New Government Data |
National healthcare spending increased 7.5% year over year in 2023 to $4.867 trillion, or $14,570 per person, according to data released by CMS, and reported by The Wall Street Journal (WSJ). Total spending on healthcare goods and services accounted for 17.6% of GDP. The 7.5% rise represented a much faster pace of growth than the 4.6% increase in 2022. It came as pandemic federal funding for the healthcare sector expired and private health insurance enrollment increased. More people with insurance led to increased demand for medical procedures, and spending on hospital care grew at the fastest pace since 1990. Spending on drugs also rose, including for medications to treat diabetes and obesity.
Health Affairs and Becker's published CMS's figures that private health insurance spending rose 11.5% to $1.5 T; Medicare spending increased 8.1%, reaching $1 T; and Medicaid spending rose 7.9%, reaching $871.7 B. Privately, Americans spent $505.7B out-of-pocket, an increase of 7.2%. The biggest share of our healthcare dollars was spent with hospitals, which reached $1.5T, a growth rate of 10.4% - the fastest rate since 1990.
A full 92.5% of Americans were covered by insurance last year, and 175.6 million, or just over half the population, got it through their employer, according to the government's new annual data. Over 65 million Americans are on Medicare, and nearly 92 million are on Medicaid.
About 8% of a typical American's spending last year was on healthcare, according to Labor Department data released in September - less than housing, transportation and food, but more than clothing, entertainment and education. On average, Americans spent about $4,000 on health insurance, which makes up the lion's share of healthcare spending. The amount consumers reported spending on health insurance in 2023 was up nearly 20% from five years earlier and has nearly doubled from a decade ago, according to the Labor Department.
So why the higher prices? Hospitals and doctors' offices are paying more for workers, in large part due to labor shortages, rising wages and high turnover. Prices have also been pushed higher by consolidation among hospitals.
Over the past couple of decades, the price index for what the Labor Department classifies as medical care - which includes visits to doctors, hospital stays, prescription drugs and medical equipment - has risen roughly 40% faster than the overall pace of inflation. Healthcare tends to rise more quickly than overall inflation because of high labor costs in the sector, as well as advancements leading to new and more expensive drugs and treatments. Demand for healthcare is also increasing as the population ages.
The average worker pays a premium of $114 a month out of pocket for their share of employer-provided insurance, or $525 a month for family coverage, according to a recent survey by the healthcare nonprofit KFF. Both figures are up roughly 30% from a decade ago. Also up are deductibles, the fixed amount that a person must spend before most services are covered by insurance. The average deductible for a worker insuring just himself through employer-provided coverage is $1,787, up about 47% from a decade earlier, according to KFF. The average deductible for a worker insuring her family, too, now runs $3,000 to $4,000. (Wall Street Journal) (Becker's Hospital Review) (Health Affairs)
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Meanwhile, Americans' Confidence in Healthcare Quality Hits Record Low: Gallup |
A recent Gallup poll revealed that Americans' perception of the quality of healthcare in the U.S. is the lowest it's been since Gallup began checking the trending data in 2001. The findings come from Gallup's latest annual health and healthcare poll, conducted from Nov. 6 to Nov. 20, 2024. Findings include:
- Only 11% of U.S. adults find healthcare quality in the U.S. to be "excellent," with 33% calling it "good," down 10 percentage points since 2020. 38% said U.S. healthcare quality is "only fair," and 16% called it "poor."
- 28% ranked healthcare coverage "excellent" or "good." The healthcare coverage ranking is four points lower than the average seen since 2001 and below the 41% high in 2012.
- 19% said they were satisfied with healthcare costs in the U.S., which is unchanged from 2023 and lower than the 22% average seen since 2001.
- Americans ranked cost (23%) the most urgent health problem in the U.S., followed by healthcare access (14%), obesity (13%), drug and alcohol abuse (6%), abortion (6%). (https://www.beckershospitalreview.com/rankings-and-ratings/americans-confidence-in-healthcare-quality-hits-record-low-gallup.html)
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Killing of UnitedHealthcare Exec Ignites Patient Anger Over Insurance |
From USA Today: The brazen killing of UnitedHealthcare CEO Brian Thompson has unleashed social media scorn at his company and a U.S. health insurance industry that serves as gatekeeper to the nation's $4.5 trillion health care system. Although social media is often filled with hatred and "good riddances" after a high-profile murder, and there have been instances of violence against people involved in health care before, the reaction this time felt different, experts said. (https://www.usatoday.com/story/news/nation/2024/12/06/united-healthcare-ceo-killed-highlights-frustration-workers/76798694007/)
From Reuters: The recent killing of a powerful health insurance executive has ignited an outpouring of anger from Americans struggling to receive and pay for medical care. The attack called fresh attention to deepening frustrations over health coverage. Recent data show that patients are now even more likely to have their claims denied, pay more for premiums and medical visits, and face unexpected costs for care they thought was covered by their health plan. Rising costs are attributed in part to consolidation of doctors' practices, hospitals and insurers. (https://www.reuters.com/business/healthcare-pharmaceuticals/americans-face-challenges-health-insurance-costs-rise-delays-mount-2024-12-09/)
From PBS: The fatal shooting of UnitedHealthcare CEO Brian Thompson has unleashed a wave of public feeling - exasperation, anger, resentment, helplessness - from Americans sharing personal stories of interactions with insurance companies, often seen as faceless corporate giants. In particular, the words written on ammunition found at the shooting scene - "delay," "deny" and "depose," echoing a phrase used to describe how insurers dodge claim payouts - amplified voices that have long been critical of the industry. (https://www.pbs.org/newshour/nation/unitedhealthcare-ceo-shooting-opens-floodgates-of-americans-insurance-frustrations)
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UnitedHealth Group CEO: 'We understand people's frustrations' |
United's CEO took to the pages of The New York Times to publish an op-ed, following the murder of Brian Thompson, CEO of UnitedHealthcare, to write: "We know the health system does not work as well as it should, and we understand people's frustrations with it," Mr. Witty wrote. He called for a broader effort from insurers, employers, governments and others who pay for care to explain how and why coverage decisions are made... Healthcare is both intensely personal and very complicated, and the reasons behind coverage decisions are not well understood. We share some of the responsibility for that," he wrote. UnitedHealth Group's purpose is to "build a healthcare system that works better for everyone," according to Mr. Witty. MEANWHILE, Sachin Jain, MD, CEO of SCAN Group, added that a "broader reckoning" with the insurance industry is taking place... Most people who work in health plans believe they are supporting action for patients, but it's clearer than ever that the American public doesn't necessarily see it that way." Witty further wrote that UnitedHealth Group employees have been "barraged by threats" in the days since the attack. "No employees - be they the people who answer customer calls or nurses who visit patients in their homes - should have to fear for their and their loved ones' safety," he wrote. (https://www.beckershospitalreview.com/hospital-management-administration/unitedhealth-group-ceo-we-understand-peoples-frustrations.html)
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GOVERNMENT & LEGISLATIVE NEWS
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New Healthcare Laws Taking Effect in California This Year |
In 2025, California is implementing several new healthcare laws aimed at enhancing access, equity, and quality of care for its residents. Key legislative changes include:
- Fertility Coverage Expansion: Effective July 2025, health insurers in California are mandated to cover fertility services, including in vitro fertilization. The legislation broadens the definition of infertility to encompass individuals unable to conceive without medical intervention, thereby extending benefits to the LGBTQ+ community and single individuals seeking to build families. (https://www.gtlaw.com/en/insights/2024/10/new-california-law-expands-fertility-coverage-by-large-group-insurance-plans) (https://www.modernhealthcare.com/government/state-healthcare-laws-2025-california-illinois-minnesota-arkansas)
- Implicit Bias Training in Healthcare: To address disparities in maternal and infant health outcomes, particularly among Black women, a new law requires medical facilities to implement evidence-based implicit bias training for healthcare professionals. Facilities must report compliance to the state Attorney General's office, with current providers completing training by June 1, 2025, and new providers within six months of their start date. (https://www.nbclosangeles.com/news/local/7-new-california-laws-may-impact-your-health-care-planning/3527113/)
- California is incrementally raising the minimum wage for healthcare workers, aiming for a $25 per hour minimum over the next decade. The initial increase sets the minimum at $18 per hour for rural healthcare workers and $23 per hour for those at larger hospitals. This initiative seeks to address staffing shortages and improve compensation for approximately 350,000 healthcare workers statewide. (https://apnews.com/article/california-health-care-minimum-wage-6f9b449763d0e7c5e093c2de672ce616)
- Regulation of Private Equity in Healthcare: Assembly Bill 3129, passed in 2024, introduces stringent regulations on healthcare acquisitions by private equity firms and hedge funds. The law requires state Attorney General approval for acquisitions involving healthcare companies with over $25 million in revenue and prohibits financial investors from influencing medical decisions. This measure aims to ensure that patient care remains the primary focus in healthcare operations. (https://www.wsj.com/articles/california-senate-passes-bill-to-clamp-down-on-private-equity-healthcare-deals-118a2134)
- Medical Injury Compensation Reform Act (MICRA) Adjustments: Assembly Bill 35, signed into law in May 2022, modifies the Medical Injury Compensation Reform Act by increasing caps on non-economic damages in medical malpractice cases. Over ten years, the cap for non-death cases will rise to $750,000, and for cases involving death, to $1 million. Subsequently, these caps will adjust annually by 2% for inflation. The law also revises limits on contingency fees for plaintiffs' attorneys, aiming to balance fair compensation for patients with maintaining access to affordable healthcare. (https://en.wikipedia.org/wiki/Medical_Injury_Compensation_Reform_Act)
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New California Law Prohibits Using AI as Basis to Deny Health Insurance Claims |
Last year, about a quarter of all health insurance claims were denied in California - a reality mirrored nationwide that has stoked public anger toward health care companies, and led to accusations that such decisions lack human empathy. But this month, a new state law is taking on the latest twist in the debate, ensuring that a human's perspective cannot literally be removed from such decisions by prohibiting coverage denials be made on the sole basis of artificial intelligence algorithms. Signed by Gov. Newsom last September, Senate Bill 1120 - known as the "Physicians Make Decisions Act" - comes as frustration with the health insurance system has intensified.
While SB 1120 does not entirely prohibit the use of AI technology, it mandates that human judgment remains central to coverage decisions. Under the new law, AI tools cannot be used to deny, delay or alter health care services deemed medically necessary by doctors. The California Department of Managed Health Care will oversee enforcement, auditing denial rates and ensuring transparency. The law also imposes strict deadlines for authorizations: standard cases require decisions within five business days, urgent cases within 72 hours, and retrospective reviews within 30 days. Under SB 1120, state regulators have the discretion to fine insurance companies and determine the amounts owed for violations, such as missed deadlines or improper use of AI. (https://www.mercurynews.com/2025/01/05/new-california-law-ban-artificial-intelligence-deny-insurance-claims/)
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Six Ways Trump's Immigration Plans Could Worsen Healthcare Labor Shortages |
Trump's policies could exacerbate healthcare labor shortages in the U.S., which already exist due to a growing demand for services, an aging population, and insufficient domestic workforce supply, by:
Restricting Work Visas for Foreign Healthcare Professionals - Many healthcare workers, including nurses, physicians, and allied health professionals, enter the U.S. on H-1B, TN, or J-1 work visas. Trump's stricter policies on visa caps and eligibility criteria could reduce the inflow of qualified foreign healthcare professionals. With nearly 16% of healthcare workers in the U.S. being immigrants, these restrictions could lead to a significant staffing gap, particularly in underserved rural and urban areas.
Limiting Green Cards and Permanent Residency - Trump's preference for a "merit-based" immigration system could disadvantage lower-paid but critical healthcare roles, such as home health aides, certified nursing assistants, and support staff, roles predominantly filled by immigrants. Green card backlogs and heightened restrictions could deter skilled professionals from seeking long-term careers in U.S. healthcare.
Targeting Family-Based Immigration - Family reunification policies have historically allowed immigrant healthcare workers to bring family members to the U.S., creating a stable environment conducive to retention. Restrictions on family-based immigration could discourage potential workers from pursuing opportunities in the U.S., pushing them toward countries with more supportive policies, like Canada or Australia.
Deportation and Enforcement Priorities - Policies focusing on aggressive deportations and enforcement could impact undocumented immigrants who play critical roles in healthcare, particularly in home health and elder care. Fear of deportation may also prevent immigrant workers from seeking necessary licensing or reporting labor abuses, worsening labor shortages and affecting care quality.
Impact on Training Pathways - Many international medical graduates enter U.S. residency programs through J-1 or H-1B visas. Policies restricting these pathways could further limit the pipeline of future physicians, especially as the U.S. faces a projected shortage of up to 124,000 physicians by 2034.
Ripple Effect on Patient Access and Care Quality - Healthcare labor shortages can lead to longer wait times, delayed treatments, and increased workload for existing staff, raising burnout risks. Underserved areas, already reliant on immigrant healthcare workers, may face the brunt of the impact, deepening health inequities.
(https://www.modernhealthcare.com/policy/nursing-shortage-doctor-shortage-visa-immigration-policies)
(https://www.kff.org/racial-equity-and-health-policy/issue-brief/expected-immigration-policies-under-a-second-trump-administration-and-their-health-and-economic-implications/)
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House Bipartisan Task Force on AI Releases Healthcare Report |
The report details the transformative potential of AI in healthcare, alongside associated challenges and recommendations for future policy development.
- Drug and Medical Device Development: AI is expediting drug discovery and design, potentially reducing the average 12-year timeline and substantial costs associated with bringing new drugs to market. Machine learning (ML) and generative AI (GenAI) are enhancing clinical trial designs, increasing success probabilities, and streamlining patient identification. However, concerns persist regarding data quality, transparency in AI decision-making, and regulatory uncertainties.
- Clinical Applications: AI is improving diagnostic accuracy, supporting clinical decision-making, and alleviating administrative burdens. For instance, AI-assisted imaging analysis aids in early disease detection, and GenAI enhances medical imaging clarity. Additionally, AI-driven clinical decision support systems analyze patient data to recommend treatments, potentially reducing disparities if implemented carefully. Nonetheless, challenges include ensuring data interoperability, maintaining documentation quality, and addressing potential biases in AI models.
- Health Insurance Decisions: The integration of AI in health insurance raises questions about coverage, reimbursement, and transparency. Current Centers for Medicare and Medicaid Services (CMS) policies may not fully accommodate AI technologies, leading to uncertainties in payment mechanisms. Moreover, the use of AI in automating prior authorizations has resulted in concerns about unnecessary denials and access to necessary treatments, especially when AI-driven decisions are appealed and frequently overturned.
RECOMMENDATIONS:
- Develop voluntary standards for data collection and sharing to enhance interoperability and data quality. Create guidelines to evaluate AI tools, ensuring they are safe, transparent, and effective, while supporting healthcare entities in meeting legal requirements under the Health Insurance Portability and Accountability Act.
- Clarify Regulatory Frameworks: Encourage sector-specific regulations to address the unique challenges posed by AI in healthcare. Support the development of standards for liability related to AI issues, ensuring that legal responsibilities are clearly defined among AI developers, healthcare providers, and other stakeholders.
- Support Research and Innovation: Maintain robust support for healthcare research related to AI, fostering innovation while ensuring that new technologies are developed inclusively to prevent exacerbating existing health disparities. Encourage practices that promote risk management of AI technologies across various deployment conditions to improve privacy, enhance security, and prevent disparate health outcomes.
- Enhance Education and Training: Invest in training programs for researchers and healthcare professionals to improve understanding and implementation of AI technologies. This includes developing digital literacy to ensure that AI tools are used effectively and ethically within clinical settings.
The report serves as a foundation for future legislation and rulemaking, aiming to harness AI's benefits in healthcare while mitigating potential risks. (Modern Healthcare) (bhfs.com) (obernolte)
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Warren, Hawley Introduce Bill Requiring Insurers to Offload Pharmacy Businesses |
Democratic and Republican lawmakers are calling on insurers and pharmacy benefit managers to divest any pharmacies they own in bills introduced to Congress Dec. 11. While PBM reform has been a widely supported but largely fruitless endeavor so far, mandating insurers sell their pharmacies is one of the most sweeping changes suggested to date. The mirrored bills were introduced by Senators Elizabeth Warren, D-Massachusetts, and Josh Hawley, R-Missouri and House representatives Jake Auchincloss, D-Massachusetts, and Diana Harshbarger, R-Tennessee. Auchincloss said the Patients Before Monopolies (PBM) Act implements a critical "firewall" between drug manufacturers and health plans, brokers and sponsors in a LinkedIn post. Under the bill, insurers would need to sell their pharmacy businesses within three years. If an insurer is found in violation with the act, the Federal Trade Commission, Department of Health and Human Services, the Department of Justice and state attorneys can instruct the health plans to return all revenue earned following the violation. The FTC would then return the revenue to "harmed communities." (https://www.fiercehealthcare.com/payers/warren-hawley-introduce-bill-requiring-insurers-offload-pbm-businesses)
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FDA Advances Proposal to Set a Nicotine Limit on Tobacco Products |
The FDA has submitted a proposed rule that could significantly lower the amount of nicotine in tobacco products and potentially prompt more people to quit smoking. The FDA has been signaling its intentions to limit nicotine levels at least since 2018. In 2022, FDA commissioner, Dr. Robert Califf, took it a step further and announced that the agency was developing a rule that would require tobacco companies to significantly reduce the amount of nicotine in traditional cigarettes. The FDA took the next regulatory step on December 10, by submitting the proposal to the Office of Management and Budget, but it would not mean overnight change. But if the government did set a limit on nicotine levels, experts say, it could significantly improve public health. (https://www.cnn.com/2024/12/11/health/fda-tobacco-nicotine-limit/index.html)
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Biden Administration Bars Medical Debt from Credit Scores |
The federal Consumer Financial Protection Bureau has issued new regulations barring medical debts from American credit reports. The rules ban credit agencies from including medical debts on consumers' credit reports and prohibit lenders from considering medical information in assessing borrowers. These rules, which the federal watchdog agency proposed in June, could be reversed after President-elect Donald Trump takes office Jan. 20. But by finalizing the regulations now, the CFPB effectively dared the incoming Trump administration and its Republican allies in Congress to undue rules that are broadly popular and could help millions of people who are burdened by medical debt. (https://kffhealthnews.org/news/article/biden-administration-cfpb-medical-debt-credit-scores-final-rule/)
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How RFK Jr. Plans to Make America Healthy Again |
With a $1.8 trillion budget (in 2024) and oversight of CMS, CDC, FDA, and NIH:
- RFK Jr. has stated that President-elect Trump seeks "measurable impacts" to combat the chronic disease epidemic within two years.
- He'll focus on prevention: He has called for reforms targeting food additives, pesticides and environmental health risks, alongside overhauls of agencies like the CDC and FDA.
- Called for an end to direct-to-consumer advertising for prescription drugs.
- He's expressed interest in redirecting Medicare spending toward promoting healthy behaviors rather than covering certain pharmaceuticals. "For half the price of Ozempic, we could purchase regeneratively raised, organic food for every American, three meals a day and a gym membership, for every obese American."
- He's also considering changes to the Medicare physician fee schedule, shifting the health system's incentives toward primary care and prevention.
- He's said, "we're going to make sure that scientific studies are done [on vaccine safety} and that people can make informed choices about their vaccinations and their children's vaccinations."
- Believes abortion should be legal up to a point he describes as when the fetus becomes viable outside the womb, after which he supports restrictions. He's also pointed to the importance of addressing economic factors in discussions about abortion and reproductive health. "We should be looking at why there are so many abortions in the first place."
- Additionally, he Introduced a plan while running for president, called "More Choices, More Life," that called for a subsidized daycare initiative aimed at making childcare more accessible. He said universal childcare has the capacity to add $1 trillion to the U.S. GDP. "And since economics is a major driver of abortion, this policy will do more to lower abortion rates than any coercive measure ever could." (https://www.beckershospitalreview.com/hospital-management-administration/make-america-healthy-again-6-healthcare-positions-of-rfk-jr.html)
MEANWHILE, over 75 Nobel Prize Winners Urge U.S. Senators to Reject RFK Jr.'s Nomination as HHS Secretary: The Nobel Laureates argue in their letter that Kennedy's views on public health and science make him unqualified to lead an agency with vast influence over American healthcare. The laureates emphasized the importance of a leader who can work with the scientific community and not against it. (https://www.nytimes.com/2024/12/09/health/kennedy-hhs-nobel-laureates.html) (https://www.beckershospitalreview.com/hospital-management-administration/75-nobel-prize-winners-urge-senators-to-reject-rfk-jr-s-hhs-nomination.html)
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Bird Flu Update: CDC Says It's Searching for Pandemic Red Flags |
The CDC revealed it is monitoring for a number of red flags that suggest bird flu could become the world's next pandemic. The first severe human bird flu case in the U.S. was reported in Louisiana in December. Genetic analysis found the virus had mutated, making it more easily transmissible to humans, the CDC said. The agency called the mutations "concerning' and "a reminder that A(H5N1) viruses can develop changes during the clinical course of a human infection." The CDC told Newsweek that while bird flu's current risk to the general public remains low, the agency is carefully monitoring for several red flags that could indicate that the virus could be on the verge of becoming a pandemic. Those red flags include any outbreaks of bird flu that are spread from person-to-person, as well as evidence that the virus has mutated, making it easier for it to spread between humans. Human-to-human bird flu infections are rare but have occurred in other parts of the world. However, none of the U.S. cases show evidence of human-to-human transmission. They all occurred in isolation, after exposure to infected animals. While the Louisiana patient is the first severe case in the U.S.[and has now died], there have been more than 60 mild human cases reported in the U.S. in 2024. Around 65 bird flu cases have been recorded in 10 states: California, Colorado, Iowa, Louisiana, Michigan, Missouri, Oregon, Texas, Washington and Wisconsin. California, which reported 37 cases, declared a state of emergency in response to the outbreak.
The U.S. has two H5N1 vaccines ready if the virus starts spreading more easily but the vaccines cannot be used until they're approved by the FDA. The CDC and its partners in the U.S. government are planning for a vaccine program in case of a potential pandemic or wider outbreak. (https://www.newsweek.com/bird-flu-update-cdc-red-flags-2007711)
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HEALTHCARE BY THE NUMBERS
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Over a Third of the Nation's Beneficiaries in the 10 Largest Medicaid Managed Care Plans Are in 3 Plans in California |
#1 L.A. Care Health Plan has 2.5 million beneficiaries, #4 Centene's Health Net has 1.6 million, and #5 Inland Empire Health Plan has 1.5 million, which means that 5.6 million (36.36%) of the 15.4 million beneficiaries who belong to the ten largest Medicaid managed care plans are located in California. (https://www.beckerspayer.com/payer/10-largest-medicaid-managed-care-plans.html)
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7 Cancers Linked to Alcohol Use: Surgeon General |
Annually, alcohol consumption contributes to about 100,000 cancer cases and 20,000 cancer deaths, according to a Jan. 3 report from U.S. Surgeon General Vivek Murthy, MD. The causal link between alcohol and cancer was first established in the late 1980s, and a growing body of evidence has since supported this claim. Dr. Murthy's advisory says there are at least seven alcohol-related cancers, including cancer of the breast (16.4% of all breast cancer cases in women), colorectum, esophagus, liver, mouth (oral cavity), throat (pharynx) and voice box (larynx). While tobacco and obesity are the top two leading causes of cancer, alcohol use is the third. (https://www.hhs.gov/surgeongeneral/priorities/alcohol-cancer/index.html) (https://www.nbcnews.com/health/cancer/cancer-warning-alcohol-overdue-doctors-surgeon-general-rcna186163)
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Ransomware Attacks Cost Healthcare $21.9B in Downtime |
Comparitech.com reported an analysis of 654 ransomware incidents targeting healthcare organizations, including hospitals, clinics, pharmacies and care homes, from 2018 to 2024, in a December 18th report. Key findings showed downtime costs ran an average of $1.9 million a day, with recovery times ranging from minimal disruption to several months. Ransoms demanded by hackers ranged from $4,000 to $10 million; across 55 known incidents, the average ransom demand was $1.18 million, totaling nearly $64.7 million. Major threat actors in recent years have been LockBit, ALPHV/BlackCat, Karakurt and BianLian. (https://www.beckershospitalreview.com/cybersecurity/ransomware-costs-healthcare-21-9b-in-downtime.html)
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$4 Billion: What Kaiser Permanente Spent on Its Epic EHRs, Systemwide |
That was more than Mayo Clinic ($1.5 B), Mass General ($1.2 B) and Northwell ($1.2 B) spent COMBINED. Also on the list of "largest Epic EHR Projects of All Time": Sutter Health ($1 B), Providence ($800M), and Alameda Health System ($200 M). (https://www.beckershospitalreview.com/ehrs/most-expensive-epic-ehrs-ranked.html)
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PROVIDER & PAYER NEWS + TRENDS
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Blue Shield of California Restructures |
The Board of Directors of Blue Shield of California, the nonprofit health plan serving the state's residents since 1939, have unveiled a new corporate structure designed to improve health care for Californians and make it more affordable for its nearly six million members. The board also announced Lois Quam as CEO to lead Blue Shield of California, the first woman to serve as CEO in the health plan's 86-year history. She joined the company as president in 2024. A new, nonprofit corporate entity named Ascendiun launched on January 1, as the new parent to the family of organizations that includes Blue Shield of California and its subsidiary, Blue Shield of California Promise Health Plan; Altais, a clinical services firm; and Stellarus, a company designed to scale healthcare solutions. Paul Markovich, Blue Shield of California's CEO for the past 12 years, has been appointed president of Ascendiun and will serve on an interim basis as president of Stellarus. Stellarus will initially focus on enhancing the capabilities of Blue Shield's existing programs with the goal of sharing these innovations with other like-minded health plans in the future. (https://news.blueshieldca.com/2025/01/08/lois-quam-named-ceo-of-blue-shield-of-california-first-woman-ceo-in-organizations-86-year-history)
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Providence Spins Off Venture Capital Arm into Independent Entity - Allumia Ventures |
Providence recently spun off its venture capital arm, Providence Ventures, into an independent entity now known as Allumia Ventures. Established in 2014, Providence Ventures managed $300 million across two funds, investing in early- to mid-stage healthcare companies specializing in health IT, digital health, medical devices, and diagnostics. As part of the transition, Providence has committed $150 million over the next decade to Allumia Ventures' third fund, maintaining its involvement as a limited partner. Providence Ventures has invested in 28 companies, achieving 10 successful exits. Notable investments include primary care company One Medical, acquired by Amazon, and chronic care management company Omada Health. This strategic move allows Allumia Ventures to broaden its investment scope by inviting additional limited partners, including other healthcare organizations, to participate in its third fund. (https://www.modernhealthcare.com/digital-health/providence/venture-capital-allumia-ventures) (https://www.beckershospitalreview.com/innovation/12-things-to-know-about-providences-venture-capital-arm.html)
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Habitat Health Opens First PACE Center in Sacramento |
Habitat Health, in partnership with Kaiser Permanente, has opened the center at 855 Howe Avenue and offers a comprehensive range of services for older adults, including Primary and Specialty Medical Care, Social Activities, Prescription Services, Transportation, and Home Care. Services are typically provided at no cost to participants who qualify for Medicare and Medi-Cal coverage. Habitat Health estimates that approximately 6,500 older adults in the Sacramento area are eligible for the program and is currently accepting applications. The organization collaborates with local community partners and is supported by Kaiser Permanente, Town Hall Ventures, and New Enterprise Associates. (https://www.prnewswire.com/news-releases/habitat-health-with-kaiser-permanente-opens-its-first-innovative-pace-health-care-program-for-older-adults-in-sacramento-302340778.html)
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GLP-1 Dilemma Persists into 2025 |
Insurers and self-funded employers are making significant changes to their GLP-1 drug coverage policies in 2025, reflecting the financial and operational challenges posed by the high-cost medications. Over 42% of U.S. adults (57.4 million) under 65 with private insurance could be eligible for GLP-1 drugs, based on current FDA indications, according to a Sept. analysis from KFF. According to a Mercer survey of 2,000+ employers in 2024, 44% with 500+ employees offer GLP-1 coverage for obesity. Among employers with 20,000+ employees, 64% offer coverage.
Details from a recent Becker's article include: Effective Jan. 1, 2025: Kaiser Permanente will drop base coverage for GLP-1s for commercial and ACA members in California when those drugs are prescribed solely for the purpose of weight loss for patients with BMI less than 40. Independence Blue Cross will stop covering weight loss drugs unless prescribed for conditions such as type 2 diabetes or cardiovascular disease. Members using these drugs solely for weight loss will need to pay out-of-pocket after the policy change. BCBS Michigan said it will no longer cover GLP-1 drugs to treat obesity. The change will affect nearly 10,000 members in fully insured, large group commercial plans. Allina Health will no longer cover GLP-1s prescribed for weight loss under its employee health plans. The BCBS Federal Employee Program standard and basic plans will reduce coverage for GLP-1 drugs such as Wegovy, with some medications moved to excluded or non-covered formulary tiers due to rising costs. (https://www.beckershospitalreview.com/glp-1s/the-glp-1-dilemma-persists-into-2025.html)
MEANWHILE, Use of diabetes and anti-obesity drugs surges nationwide: The number of prescriptions for GLP-1 drugs jumped roughly 10% in 2024, according to insurance claims data provided to Axios by health analytics company PurpleLab. The data shows double-digit growth in 23 states. The most prescriptions went to adults ages 55 to 65 (29%), followed by seniors 65 and older (26%). The vast majority of prescriptions went to commercially insured patients while only 9% were written for Medicaid patients. 17% went to patients on Medicare. The data is based on roughly 7.5 billion claims from private insurers, as well as Medicare - which only covers GLP-1s to treat diabetes - and Medicaid. (https://www.axios.com/2025/01/03/glp-anti-obesity-drug-use-ozempic-wegovy)
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United HealthCare's Prior Authorization Gold-Card Program Releases CPT Codes |
The program, introduced October 1st, automatically enrolls providers who meet their eligibility requirements: being in-network for at least one commercial, individual exchange, Medicare Advantage or community (Medicaid) plan; meeting a minimum annual volume of at least 10 prior authorizations each year for two consecutive years across gold-card-eligible codes; and having a prior authorization approval rate of 92% or more across all gold-card eligible codes for each of the review years. Once Gold-Card status is reached, "advance notification for services" is still required; United will conduct annual evaluations every October 1st; and Gold-Card status is attained, it can be lost because of patient safety issues, failure to cooperate with quality and patient safety activities, failure to make timely responses to RFIs, or they no longer meet program requirements. (https://www.uhcprovider.com/content/dam/provider/docs/public/prior-auth/gold/UHC-Gold-Card-CPT-List.pdf)
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Dignity Hospital Opens $215M+ Tower in Los Angeles |
Dignity Health - California Hospital Medical Center (CHMC) in Los Angeles opened its new patient tower on Jan. 7, according to a news release. Representing an investment of more than $215 million, the tower aims to expand emergency and trauma capacity. For instance, the new emergency department will house additional specialized care areas - including dedicated pediatric ER rooms - and a newly designed waiting room. Moreover, the new tower will house maternity care enhancements, including 28 private postpartum rooms as well as 24 private rooms in the NICU. (https://www.beckershospitalreview.com/capital/dignity-hospital-to-open-215m-tower-in-los-angeles.html)
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California-based Health Systems Grew Larger Through M&A in 2024 |
- Ontario-based Prime Healthcare entered into an asset purchase agreement with Ascension to acquire nine of its hospitals in Illinois.
- Orange-based UCI Health acquired four hospitals for $975 million from Tenet Healthcare's Pacific Coast Network, including Fountain Valley Regional.
- Roseville-based Adventist Health spent about $550 million to acquire two hospitals in California.
- Oakland-based Kaiser Permanente's Risant Health acquired Geisinger and Cone Health.
- San Francisco-based UCSF Health acquired Saint Francis Memorial and St. Mary's Medical Center in San Francisco from Dignity.
(https://www.beckershospitalreview.com/hospital-transactions-and-valuation/14-large-health-systems-growing-bigger.html)
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Cedars-Sinai to Open School to Train Allied Health Workers |
Cedars' newly established Chuck Lorre Allied Health School will initially train students for careers in pharmacy technology, respiratory therapy, clinical lab science and radiation therapy. The hospital also plans to introduce pathways to other health careers, including physician assistant, nuclear medicine, and surgical technology. The health school programs range between six months and two years, blending in-person and online instruction. Tuition support is available to eligible individuals, and students will be paid while undergoing onsite clinical training. Cedars' is also establishing recruitment initiatives with local high schools and colleges and ensuring recruitment and retention efforts reflect the diversity of patient populations served by the hospital. (https://www.beckershospitalreview.com/workforce/cedars-sinais-plan-to-grow-the-allied-health-workforce.html)
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