As the federal government shutdown enters its third week, U.S. healthcare is in the crosshairs.
The federal government U.S. spent 27% of its total spending on healthcare last year and projects to spend at least 5.5% more every year through 2035. In that period, it will grow from 18% of the U.S. GDP to 21%. It’s labor intense, capital intense, fragmented, highly regulated and high profile. Its growth is the result of increased demand, clinical and technologic innovations and higher unit prices for hospital care, specialty drugs and insurance premium increases. Thus, when the U.S. economy is doing well, healthcare does even better. And when the U.S. economy slumps, it does well producing job growth and earnings above peer industries.
The industry’s prominence is the result of two structural advantages:
- Each sector and subsector operates in designated swim lanes. Horizontal consolidation has been the primary growth lever via M&A to lower operating costs and generate higher revenue thru price increases and contracting leverage. Vertical integration has proven more challenging.
- Each operates in a predictable B2B (business to business) industry economic framework wherein transactions in supply chains, payers-provider contracting, public funding and private investing are premised on incremental regulatory changes and increased demand (from aging and disease prevalence).
As the industry has evolved, its influence has followed. Every sector and subsector in the U.S. healthcare industry is now represented by a trade association that exists to advance the interests of its dues-paying members. The four most significant are the American Medical Association (AMA), the American Hospital Association (AHA), the America’s Health Insurance Plans (AHIP) and the Pharmaceutical Research and Manufacturers of America (PhRMA) whose members control 75% of its $5.6 trillion spending.
Here’s quick snapshot based on their 2023 IRS Form 990 filings (regrettably the latest available):
| AMA | AHA | AHIP | PhRMA | |
| Net assets | $1.02 Bil | $289.8 Mil | $24.7 Mil | $210.9 Mil |
| Revenue 2023 | $468 Mil* | $144.7 Mil | $89.4 Mil | $483 Mil |
| Program Services | $83.7 Mil | $130.3 Mil | $87.9 Mil | $467.3 Mil |
| CEO Pay (2023 $Mil) | $2.52 Mil | $3.3 Mil | $6.65 Mil | $21.4 Mil |
* Includes $284M for royalties
They’re the most prominent in an industry now experiencing unusual attention. They have much in common:
- All face increased scrutiny among from Congress, the White House, consumers (voters) and employers who think the industry wasteful and sometimes fraudulent.
- All face increased pressure from their dues paying members to deliver more value while member-subgroups exit “the big tents” in favor of special interests better aligned with their policy and economic leanings.
- All are increasingly controlled by fewer, bigger members whose business practices and executive compensation attract unwanted outside attention and increased discontent among less influential members. Squeaky wheels are loud.
- All are “big businesses” and all spend heavily on lobbying activity.
- All are increasingly dependent on successful state and local advocacy efforts as federal policy volatility complicates their efforts.
- All spend member money to influence elections.
- All opine to the need for systemic transformation of the health system to address issues of costs, quality, access, innovation and funding (but none has put-forth a comprehensive solution).
- All blame hyper-regulation, unfair competition and expensive technologies for their increased operating costs (though negotiated prices and indirect costs for administration are kept secret).
- All see no major change in the structure, funding and performance of the U.S. system in the foreseeable future. Pressure to reduce costs is the constant for all.
- All believe they’re role is unique and a seat at the table necessary to national regulatory reforms.
- All collect operational data from member organizations to create “best practices” guidance for members.
- All pay their CEOs and top leaders well.
- All are governed by large Boards composed of sector CEOs primarily: representation outside their ranks is nil.
- All employ ‘blame and shame’ tactics to deflect criticism from media and muckrakers who expose business practices in sensitive areas.
- None has addressed affordability in healthcare head-on (though all say they’re concerned).
- None has offered a comprehensive view of the system’s future that balances access, innovation, quality, innovation and affordability.
- And none has seen public trust and confidence in their respective institutions improve since 2022.
Advocacy effectiveness is the primary role on which each of the Big Four bases its dues and value proposition to members. In support of advocacy, messaging effectiveness is critical to each.
Most engage outside agencies to implement key elements of the communications. All fund outside research that supports their views and create Commissions and Task Forces to fund special campaigns. And each defends its role and is vulnerable:
- AMA (www.ama-assn.org): Physicians are professionals whose training and experience is foundational to the entire system. ‘Fighting for physicians’ in compensation and insurer intrusion, scope of practice encroachment and clinical health public policy (i.e. vaccine policies, et al) are its primary foci. But the majority of physicians is not an AMA member, its $300 million/year contract with the federal government for use of its CPT coding system is seen as a conflict of interest in some circles and supply and compensation limitations in primary care are problematic.
- AHA (www.aha.org): Hospitals serve the public’s interest by providing high-quality care 7/24 to anyone, regardless of an individual’s ability to pay. Hospitals are vital safety nets to communities and necessary to economic and community health and wellbeing. But hospital costs contribute significantly to medical inflation, profitability and executive compensation among some hospital operators seem at odds with community benefits and transparency about prices and business practices is low.
- AHIP (www.ahip.org): “AHIP as the leading voice on our changing health care system, covering topics including delivery and payment reform, high-cost drugs, Medicare Advantage (MA), Medicaid, public health, and provider networks.” Health insurers enable individuals and groups to purchase needed high-quality products and services affordably. But the role is intrinsically at odds with the financial interests of suppliers and providers who resist financial constraint and public opinion that insurers profit by denying needed care. Disputes between providers and insurers is increasing drawing unwanted media attention.
- PhRMA (www.phrma.org): Drug companies create medicines that treat conditions and cure diseases based on rigorous research for which financial risks are high. But manufacturers use patent protections and opaque pricing to generate profits deemed excessive in other sectors of healthcare. Price controls directed at drug companies has growing support.
Each is vulnerable:
In the days ahead, household finances will be in the spotlight as 2026 health insurance premium increases are announced, prices for food, housing and transportation spike and as layoffs by government and private employers increase.
And, as Open Enrollment for 2026 coverage starts, Big Beautiful Bill cuts to Medicaid hit states and the federal shutdown continues, the Big Four will face tougher questions:
- How do some of their members fare well when many in their ranks don’t? Is it Execution? Scale? Market strategies? or luck?
- Since cost increases seem unmanageable and affordability unattainable, what are the alternatives?
- And since its labor intensity buoys the economy in most communities but elevates costs, how can workforce modernization be accelerated
Healthcare spending is not insulated from broader economic forces requiring messaging by ‘Big Four’ and by each member to be more clear, more accurate and less misleading. The big question each must ask Members and Boards is this: ‘are we prepared to pivot from the status quo to a better system of health might require uncomfortable changes necessary to serve the greater good?
The erosion of public trust and confidence in our political system is instructive. Healthcare can (and must) do better.
That effort is urgently needed. The Big Four should take the lead together!
Paul
PS: The eighth annual HLTH conference convenes today in Vegas at the Venetian Expo Center. As a long-time industry watcher, the growing roles played by HLTH and Nashville’s SESSIONS in the industry’s commerce are notable. It’s a business!
Sections in today’s report:
- Quotables
- Corporate News
- Economy
- Hospitals
- Insurers
- Physicians
- Polling
- Prescription Drugs
- Public Health
Quotables
Axios on affordability: “Something big is being missed in the congressional showdown over enhanced Affordable Care Act subsidies: Health insurance premiums are eye-wateringly expensive for the average person without some kind of subsidy. Health care in the U.S. is expensive, we know, we’ve all heard it a million times. But most of us don’t really feel its full expense, which removes a lot of the urgency to truly address health care costs…Whether it’s through government tax credits or employer premium assistance, most Americans with private health insurance don’t pay the entirety of their premium. But we’re all paying the freight one way or another, either through taxes or paycheck deductions…
By the numbers: This year, the average premium for a benchmark ACA plan is $497 a month, or nearly $6,000 a year, according to KFF. The average employer-employee premium for single coverage was $8,951 last year, also according to KFF. The average premium for family coverage was a whopping $25,572… Without any form of subsidization, a single person making $60,000 would spend 10% of pretax income on an ACA plan, and 15% on an employer plan. Now let’s say that $60,000 income is supporting a family of four. The average premium without subsidies would cost that family 43% of its pretax income. The median U.S. family income, according to the Census Bureau, was $83,730 in 2024. Health insurance premiums would be 31% of pretax income.
Between the lines: The definition of “affordable” is obviously very subjective, but it seems safe to say that some of these numbers — especially for families — aren’t meeting it.
What we’re watching: Open enrollment is coming, and people with ACA coverage aren’t the only ones facing premium increases.
- Health benefit costs are expected to increase 6.5% per employee in 2026, according to Mercer. Many employers are planning to limit premium increases by raising out-of-pocket costs for employees.
- On average, ACA marketplace plans are raising premiums about 20% in 2026, according to KFF.
- How much of that increase gets passed on to enrollees will depend on whether the enhanced subsidies are extended, but the premium increases are partially due to insurers having accounted for the subsidy expiration.
The bottom line: Policymakers have two broad options: They can keep fighting over who pays for what, or they can do bigger, systemwide reform. If you’re waiting for the latter, don’t hold your breath!
Axios Future of Health Care October 17, 2025
Trilliant on hospital price variability: “Hospital and health plan price transparency regulations have revealed what was previously suspected but, for legal and technical reasons, unknowable: the price of a medical service or procedure depends on where it is done and who is paying for it. Two commercially insured patients receiving identical medical care at the same facility on the same day can incur very different costs, entirely dependent on their plan’s negotiated rates with that hospital. If healthcare value is defined as the relationship between the health outcomes achieved and the cost of delivering those outcomes, then by logic, variation in healthcare prices for the same service at the same hospital is an example of waste. With 49% of the population reporting issues with healthcare affordability, reducing variation in commercial negotiated rates has the potential to reduce cost without impacting quality or access.”
How Regression to the Mean in Commercial Rates Would Impact Healthcare Costs
STAT on FDA internal tension: “Robert F. Kennedy Jr.’s tenure atop HHS has been marked by increasing tension between career scientists and political leaders at health agencies. That tension is nearing a breaking point at the FDA…
That breaking point arrived after agency scientists received an unusual inquiry in August from the leader of the center that regulates prescription medicines to learn more about leucovorin as part of Kennedy’s bid to identify autism’s root cause by September.
Experts say the push to approve leucovorin, a generic drug that’s mainly used to alleviate side effects of cancer treatment, as an autism treatment is a sign that the U.S. is headed toward a new era of drug regulation: one where political decisions lead, and evidence follows.”
FDA under Trump and RFK Jr.: Political pressure weighs on staff | STAT
Politico on Insurer-provider disputes: “More and more insurers and providers are taking their disputes over issues like payment rates and care denials public as medical cost pressures weigh on the health industry, Kelly reports.
At least 90 contract disputes between health insurers and providers have played out in public so far this year, according to FTI Consulting, which tracks the disputes. That’s compared with 51 public disputes in 2022, 86 in 2023 and 133 in 2024.
The uptick is driven by providers increasingly refusing to back down from demands on a range of contract terms — from reimbursement to insurers’ prior authorization requirements. And insurers, facing an uncertain regulatory environment on Capitol Hill, are similarly unwavering in their push to contain costs for employer clients.”
Insurers and providers lock horns – POLITICO
Pearl on trust in physicians: “For more than half a century, physicians ranked among the most trusted professionals in America. Even before modern medicine, when treatments usually failed, patients admired their doctors’ knowledge, dedication and compassion. Today, that trust has eroded, with profound implications for the future of U.S. healthcare.
Gallup polling shows just 44% of Americans rate the quality of care they receive as “good” or “excellent,” the weakest showing since Gallup began asking the question in 2001. Meanwhile, trust in doctors’ honesty and ethics has dropped 14 points since 2021, falling to its lowest point this century.
At first glance, you might assume that this decline resulted from recent developments: COVID-19, political polarization and rising vaccine skepticism. Instead, today’s drop in confidence is the predictable result of decisions set in motion some 20 years ago.”
(28) Explaining patients’ declining trust in doctors | LinkedIn
Boston Globe on shutdown: “The latest government shutdown is in its third week, but it’s already different from the stop-and-start variety Washington has come to treat as a ritual. This one has the potential to stretch far longer — not because the issues are more complex, but because both parties have incentives to let this go down for a while.
Shutdowns usually end when the short term political costs outweigh the long-term ideological rewards. The 2013 impasse over the Affordable Care Act lasted 16 days. The record-breaking 2018–19 shutdown dragged on for 35 days. Those fights revolved around specific disputes — health care funding, a border wall. This one is about something broader: remaking the federal government on the one hand and remaking the Democratic Party on the other.
That distinction changes everything. The two parties are not negotiating over a line item; they are making long-term plays….
All shutdowns eventually end the same way, when the public runs out of patience. Polling shifts, markets react, air travel becomes unbearable, and stories of unpaid government workers and shuttered small businesses dominate the news. At that point, the ideological argument gives way to the political math…”
James Pindell, Boston Globe October 15, 2025 mailchi.mp/bostonglobe.com/starting-point-forecasting-the-shutdown?e=9a6bf96d6a
NPR on employer health costs: “U.S. health care is the most expensive in the developed world, and it’s getting worse. The average annual premium for an employer-based health insurance plan for a family of four was more than $25,500 last year, according to the health policy nonprofit KFF. Of that average total, employers contributed about $19,200 and workers contributed about $6,300.
Total premiums have risen more than 24% since 2019 and are widely expected to surge next year. For-profit companies — including drugmakers, pharmacy benefit managers, hospitals and insurance companies — have collectively driven up the costs of accessing medical care in the United States.
Drugmakers are developing more effective medications, including GLP-1 weight loss drugs and cancer treatments — but they’re also charging a lot for them. More people are going back to the doctor after the pandemic kept them away, driving up demand — and prices. And many insurance companies and other for-profit businesses within the health care system have merged or consolidated, often allowing the remaining businesses to raise prices for their services.
Some 154 million people in the United States get health insurance through their employer — and many could see their paycheck deductions surge next year, by 6% to 7% on average.
Employers don’t have a lot of control over these costs. But they do control how much they pass on to their workers — and across the country, some employers big and small have decided not to make their workers pay anything upfront.”
PK note: Interesting editorial emphasis in NPR coverage on “for profit” ownership in healthcare.
How these employees pay nothing for their insurance premiums : NPR
NC Governor Josh Stein on medical debt relief October 13: “Unlike most other forms of debt, medical debt is not a choice. No one chooses to have a heart attack or get diagnosed with a chronic condition—you just have to deal with it. Today’s announcement will free people from the financial stress so that they can focus on getting healthy.”
Background: Per KFF (February 2024), Americans owe hospitals $220 billion with approximately 14 million people (6% of adults) owing more than $1,000 and about 3 million people (1% of adults) owing more than $10,000. North Carolina’s Medical Debt Relief Program relieved medical debt for almost a quarter of the state’s population; recipients on average had $2,600 in debt erased and removed from credit reports.
$6.5 billion of debt erased for millions of Americans
Axios on tech: “Over the years, acronyms have come and gone to describe America’s tech darlings — the companies college grads dream of joining and Wall Street investors love to watch, Axios’ Erica Pandey writes.
First, it was FAANG: Facebook, Amazon, Apple, Netflix and Google.
Then came the Magnificent Seven or “Mag 7” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla).
Now, in the age of generative AI, a new term is taking hold: MANGO — Microsoft, Anthropic, Nvidia, Google DeepMind and OpenAI.
Why it matters: It’s a reflection of the moment. The companies commanding attention today are the ones leading the AI revolution.”
Axios AM October 15, 2025
ANA on Joint Commission addition of nurse staffing to National Performance Goals: “Today’s achievement is a defining moment for the nursing profession and for patient care across the nation. For decades, nurses have sounded the alarm that safe staffing saves lives. The inclusion of nurse staffing as a national performance goal validates what nurses have always known, that adequate staffing is essential to prevent patient harm, improve patient outcomes, and create a safer environment. While this marks a tremendous step forward, we will continue to advocate for all accrediting bodies to adopt similar standards so that every hospital upholds safe staffing as a top priority.”
Jennifer Mensik Kennedy, PhD, MBA, RN, NEA-BC, FAAN, President of the American Nurses Association on HAP NPG Report
Federal Reserve Chair Jerome Powell on economy: “Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” “there is no risk-free path for policy as we navigate the tension between our employment and inflation goals.”
Trade Tensions, and Signs of Conciliation, Send U.S. Stocks on a Wild Ride – WSJ
Corporate Healthcare Announcements, Regulator Actions
Oracle, AMD: Advanced Micro Devices is partnering with Oracle to deploy 50,000 MI450 chips in data centers run by Oracle starting in the third quarter of next year…Demand for computing infrastructure continues to surge and software developers are rushing to lock down access to the latest AI processors.
Oracle, AMD Partner on New AI Chip Deal – WSJ
Humana: A Texas federal judge on Tuesday upheld the Centers for Medicare & Medicaid Services’ 2025 star ratings for some of Humana Inc.’s Medicare Advantage plans, saying the agency had the right to hand down a poor rating to the insurer.
Humana’s 2025 Medicare Ratings Sound, Judge Says
BlackRock, Nvidia: The Artificial Intelligence Infrastructure Partnership, MGX and BlackRock’s Global Infrastructure Partners said Wednesday they have agreed to acquire Aligned Data Centers from Macquarie Asset Management and co-investors in a $40B deal.
Tech Republic https://www.techrepublic.com/article/news-blackrock-microsoft-nvidia-aligned-data-centers/
HCA: Mission The North Carolina Department of Health and Human Resources (NCDHHS) said Mission Hospital (Asheville) has been placed on Immediate Jeopardy. Officials said the hospital’s staff following practices resulted in an unsafe environment for patients: As a result of incidents to an Immediate Jeopardy as of Sept. 25
State recommends Mission Hospital be placed on Immediate Jeopardy due to patient safety risks
Guardant: “A Guardant’s liquid biopsy only requires a few vials of blood. Can it really prevent cancer? Eltoukhy, who trained as an electrical engineer at Stanford during the late ’90s dot-com boom, had watched classmates start companies like Google and Facebook. He took a job at Illumina, working to make genome sequencing cheaper — cutting the cost of a once-unthinkable endeavor from billions to around $1,000. It was a lesson in how Moore’s Law — technology getting exponentially faster and cheaper — could transform biology, too.”
How Guardant Developed a Blood Test for Cancer – Business Insider
Deloitte: “Senators have launched an inquiry into companies paid billions in taxpayer dollars to build eligibility systems for Medicaid, expressing concern that error-riddled technology and looming work requirements “will cause Americans to lose Medicaid coverage to this bureaucratic maze.”
The letters, dated Oct. 10, were sent to four companies and follow a KFF Health News investigation that exposed widespread issues in states using Deloitte-run systems to assess Medicaid eligibility for millions of people. Failures have resulted in the erroneous loss of health coverage and other vital safety-net benefits for low-income people. Malfunctions in those systems can cost millions and take years to fix.”
Deloitte’s Medicaid eligibility systems scrutinized by senators – Modern Healthcare
Johnson & Johnson said Tuesday it plans to separate its artificial hip and knee business into a stand-alone company to be called DePuy Synthes—the latest attempt to slim down by the healthcare giant. J&J said it would shed the orthopedics business because of its lower growth and lower margins compared with other parts of its medical-device unit, which include heart devices, surgical products and vision-care products. The planned separation is the latest move by J&J to slim down in recent years and focus on faster-growing businesses. In 2023, J&J split off its consumer-health division, which made famous brands such as Tylenol and Band-Aid, into a stand-alone company called Kenvue.
J&J Lifts Full-Year Sales Outlook, Fueled by Pharma, Med-Device Gains – WSJ
Albertsons: “To better appeal to inflation-weary consumers, Albertsons is expanding its portfolio of privately branded products…Private-label items currently make up about a quarter of sales, and Albertsons aims to lift that share to 30% over time. Shares rose 11%, to $18.80, in midday trading, on pace for their largest percent increase in three years, as the company’s private-label push helped boost sales in the recent quarter. The stock remains down 4.3% since the start of the year.”
Albertsons Lifts Outlook as Price Cuts, Private-Label Push Boost Sales – WSJ
General Motors: “In 2021, GM had said it was committing $35 billion on EVs and autonomous vehicles. Money went toward new models, EV battery development and converting traditional auto factories into EV plants. The company said $1.2 billion of the charge is related to adjustments in its EV capacity and the remaining $400 million is for fees tied to contract cancellations and other charges related to commercial settlements. The charge comes on top of an estimated $4 billion to $5 billion that GM projects it will pay in tariff-related costs this year. The company has said it plans to offset those charges with spending reductions and increased domestic production.”
GM Takes $1.6 Billion Charge on EV Pullback – WSJ
Longitude Health: Dr. Vishal Agrawal, former chief strategy and corporate development officer at Humana is the new CEO of Longitude Health, a health system-led venture that aims to improve hospital operations. Dallas-based Baylor Scott & White Health, Houston-based Memorial Hermann Health System, Winston-Salem, North Carolina-based Novant Health and Renton, Washington-based Providence formed Longitude in October 2024.
Longitude Health www.longitudehealth.com
Economy
CNN on workforce shift: Fewer women: “More than 450,000 women have dropped out of the US labor market since January, according to the Bureau of Labor Statistics. Outside of the pandemic, it’s one of the steepest declines on record.
While there is a confluence of factors at play, the surge has been driven largely by women with young children. The broader trend, however, has economists sounding the alarm that the losses not only could erase the historic gains women have made since the pandemic, but also reshape the labor force for years to come….
Child care is unaffordable across most of the US. The cost of child care for infants can force women out of the workforce and back to caregiving duties. In Mississippi, where it’s cheapest, child care costs $6,868 a year. In Washington, DC, this rises to $28,356.”
‘The juggling made burnout inevitable’: Women share why they’ve left the workforce
Commonweath Fund: Economic Impact of Subsidy Suspension:
- Federal funding for marketplace premium tax credits will decline by $31 billion in 2026 from current levels.
- The resulting reductions in funding for health care, together with related downstream economic effects for businesses that serve health providers and their staff, will cause state economies (gross domestic products, or GDPs) to fall by about $40.7 billion. The loss to state economies would be 31% greater than the amount the federal government would save from not providing the enhanced tax credits. These estimates are conservative.
- Approximately 339,100 jobs are projected to be lost in 2026, as loss of income forces health care providers and other businesses to reduce their workforces. Slightly less than half of these jobs (154,000) will be health care–related, while the rest (185,000) will be in other sectors of the economy.
- The loss of individual and business income will cause state and local tax revenues to decline by $2.5 billion.
- Losses will be higher in states where more residents are enrolled in an ACA marketplace plan.
- These 10 states (TX, FL, GA, CA, SC, TN, AL, LA, NC, MS) will collectively lose about 250,000 jobs, accounting for three-quarters of the jobs lost across the United States.
- All states will have lower GDPs, fewer jobs, and less state and local tax revenue if the enhanced marketplace financial help expires.
Expiring Premium Tax Credits Lead to State Job Losses in 2026 | Commonwealth Fund
Mercer on employer health costs: “The call to action is clear – employers need to double down on cost management. The total health benefit cost per employee is projected to rise by 6.5% on average in 2026— the highest increase since 2010—even after planned cost-reduction measures. Without action, estimates suggest costs could increase by nearly 9%. These projections are based on an early analysis of the first 1,700 US employers responding to Mercer’s 2025 National Survey (complete results will be released later this year). After a decade of moderate annual increases around 3%, 2026 marks the fourth consecutive year of elevated healthcare cost growth. With mounting pressure on healthcare budgets, many employers are implementing short-term cost-saving measures while also pursuing longer-term, and sometimes disruptive, strategies to slow future cost increases.”
National Survey of Employer-Sponsored Health Plans
Twenty-one states and the District of Columbia, which contribute about a third of U.S. economic activity, are already in a recession, his analysis shows. Another 13 states, comprising roughly another third of the economy, are treading water, and the remaining 16 are growing, he said.
Hospitals
Trilliant Study: Hospital administrative costs: Per the Trilliant analysis based on CMS HCRIS and National Academy for State Health Policy Hospital Cost Tool data from 2011 to 2023 in which expenditures were segmented into direct patient care and administrative categories. Highlights
“Healthcare administration is commonly cited as accounting for 20-30% of U.S. health expenditures, which totaled $4.9T in 2023. These cited figures stem from a 1991 New England Journal of Medicine study that benchmarked U.S. healthcare spending against Canada’s healthcare spending. This study concluded that the average U.S. hospital devoted 20.2% of its spending on administration. The researchers repeated the study in 2003, concluding the share of U.S. administrative spending had increased to 25.4%. These studies have often been used to support the adage that 30% of U.S. healthcare is wasteful, even though the fundamental differences between the U.S. multi-payer system and Canada’s single-payer model limit direct comparisons and benchmarking between the two systems.”
- Administrative costs as a share of total hospital operating expenditures increased from 65.0% to 66.5%, while direct patient care declined from 35.0% to 33.5%.
- In 2023, hospital administrative costs reached $687B compared to $346B in direct patient care, a ratio of approximately 2:1.
- Administrative expenditures at U.S. hospitals grew 87.2% from 2011 to 2023, outpacing direct patient care spending growth of 75.4%.
New Study: Hospital Administrative Expenditures Exceed Direct Patient Care
Study: price variation across sites of care: “Site neutrality in payment practices has become a salient issue in the US health care debate, as rising prices have brought increased pressure for policy action… Using 2024 Transparency in Coverage data provided by Clarify Health on commercial prices for three insurers (UnitedHealthcare, Cigna, and BlueCross BlueShield), we compared payments for 13 common procedures across settings. Overall, in 2024, commercial prices were $1,489 (78%) higher in HOPDs than in ASCs, whereas Medicare prices were $633 (97%) higher. However, site payment differentials varied substantially across payers: Cigna had the lowest differentials between HOPDs and ASCs ($327), whereas United had the highest ($1,673). Cigna achieved this through provider selection, contracting with only 14% of HOPDs in applicable markets compared with an average of 76% for United and BlueCross BlueShield. If United and BlueCross BlueShield paid Cigna’s average HOPD rates for these procedures, together they would save approximately $1.4 billion a year. Our results suggest that payers can reduce site differentials through provider selection; they also imply that larger insurers with broader networks may continue to reimburse different sites differently in the absence of either government action or a shift in market dynamics.”
Sullivan Cotter: Executive Compensation survey: “Now in its 33rd year, this industry-leading benchmarking resource includes compensation data from more than 3,320 health care organizations on nearly 48,000 incumbent managers and executives.” Highlights:
“This year’s report found that the median base salary for all health care executives increased by 4.7%, a slight increase from 4.6% the previous year. At the system level, executives saw higher median increases (5.2%) than those at subsidiary hospitals (4.7%), consistent with prior years.
The most significant gains (7.0% or higher) in median base salary were seen in executive roles tied to core business and clinical operations, IT and digital strategy, patient and workforce experience, and regulatory/compliance.
The current operating environment is also impacting annual incentives, resulting in total direct compensation (TDC, equal to base salary plus annual and long-term incentives) rising faster than base salaries for the second consecutive year. While median TDC rose by 8.4% across all executives, growth is higher for health system leaders (8.9%) than it is for subsidiary hospital executives (5.5%). This reflects a moderately improved operating environment and above-target incentive payouts tied to 2024 performance.
While incentive plan structures and target award opportunities remained stable, a Sullivan Cotter pulse survey in April found that nearly half (46%) of health systems reported making design changes to their 2025 annual incentive plans. These included recalibrating goals, increasing financial weighting, and placing greater emphasis on system-wide performance.”
CHA lawsuit against CA Affordability Office: “The California Hospital Association has filed a lawsuit against the state’s Office of Health Care Affordability, alleging the agency’s cost-control measures violate state law and threaten access to care.
The 99-page lawsuit, filed Oct. 16, accuses OHCA of exceeding its authority by rushing to impose hospital spending caps without fully considering the effect on patients, providers or the healthcare workforce. CHA alleges the office has ignored legislative mandates to protect care access, health equity, quality and staffing.
The lawsuit challenges five key OHCA actions, including:
- The establishment of a 3.5% statewide spending growth target for 2025, declining to 3% by 2029;
- The creation of a hospital sector;
- The formation of a hospital sector spending target equal to the statewide cost target;
- The criteria used to identify “high-cost outlier” hospitals; and
- Lower spending growth caps for those outlier hospitals — starting at 1.8% in 2026 and decreasing to 1.6% by 2029.
The lawsuit comes just months after OHCA voted to impose stricter caps on seven hospitals it identified as “high-cost outliers” — including Stanford Health Care in Palo Alto and Community Hospital of the Monterey Peninsula — prompting backlash from providers concerned about access, staffing and financial sustainability.”
California Hospital Association sues state over ‘unat…
Nursa analysis: Hospital acquired infections and cleanliness: “Every year, up to 36 million Americans are hospitalized. However, nearly 800,000 leave with further complications: a hospital-acquired infection. As Clean Hospitals Day approaches on the 20th of October amid a dangerous spike in superbug infections across the U.S…
- In 2023, U.S. hospitals reported 794,619 hospital-acquired infections (HAIs) linked to facility cleanliness, including catheter-associated urinary tract infections and surgical site infections.
- 96% of U.S. hospital patients reported their room and bathroom were “sometimes” or “never” clean.
Nursa www.nursa.com
Kaufman Hall: M&A Landscape: “Healthcare M&A is in transition. Buyers and sellers are recalibrating as new clarity around federal policy and reimbursement impacts takes hold; this new clarity is reshaping strategy and reframing opportunities. Transaction activity is regaining momentum, but the real story may lie in a new direction for hospital and health system M&A as organizations seek resilience and growth by investing beyond the hospital. Q3 signals suggest that 2026 could mark the beginning of a more active and refocused era of healthcare transactions as organizations translate strategy into execution.”
M&A Quarterly Activity Report: Q3 2025 | Kaufman Hall
Insurers
Study: Coverage in non-Medicaid expansion states: Key Findings:
- Non-expansion states (10) average 12.1% uninsured vs. 6.7% in expansion states.
- These 10 states hold 42% of America’s uninsured while making up just 28% of the population.
- Texas alone accounts for more than 40% of the national coverage gap (588,000 people).
- All 10 non-expansion states supported the Republican candidate in the 2024 election.
- States that voted Republican average 9.8% uninsured, compared to 6% in Democratic-leaning states.
America’s Uninsured Map Mirrors Its Electoral Map
Oz on Medicare Advantage: “I came both to celebrate what you’re trying to do, but also be honest about some of the issues that we’re seeing at CMS. The opportunities we have if we do this correctly are massive. I see Medicare Advantage as this essential lever arm, this tool that we can use for good — and sometimes not — but if we use it correctly and nimbly, we can do all kinds of things to refine and improve the system. We want to reward insurers for providing ideal care, optimal care, but we don’t want to have it cost more than fee-for-service Medicare.”
Note: MA cost Medicare $84 billion more than traditional Medicare FFS in 2025.
Oz reiterates need to improve Medicare Advantage payment accuracy | Healthcare Dive
Physicians
Sullivan Cotter: Physician compensation: From the 2025 Physician Compensation and Productivity Survey:
“This year, median physician total cash compensation (TCC, equal to base salary plus incentives) rose more sharply than it has for a decade, driven primarily by clinician supply and demand imbalances. While TCC grew year-over-year across all major specialty categories, adult medical specialties experienced the largest increase from 2024 to 2025 at 7.5%. Over the past 5 years, however, primary care specialties have led the charge with an overall increase of 21.8%…” Other findings:
- RVU (wRVU) productivity remained relatively consistent overall, with year-over-year changes averaging around 1.5%. From 2024 to 2025, reported median wRVU productivity for adult medical (3.0%), pediatric surgical (2.4%), and adult surgical (2.0%) specialties saw the greatest increases.
- Base salary and wRVU productivity continue to be the most prevalent compensation plan components in primary care, medical, and surgical specialty compensation plans. As for physician incentive pay, individual productivity and patient experience continue to be the most common measures, with nearly 75% of responding organizations incorporating these into their compensation plans. Additionally, the use of outcomes-based measures has increased by 4.6% from 2024 to 2025.
- Other incentives like sign-on bonuses (90%) and student loan repayment (52%) are being deployed more frequently by survey participants to aid in recruitment efforts. For many physicians, financial security and work-life balance outweigh the risks and variability of incentive-heavy models.”
Rater8 survey: use of AI Tools for physician selection: rater8 surveyed 1024 consumers in June 2025 asking “How willing are you to rely on AI tools that summarize and rank doctors based on online information?”
- Very willing, I trust AI as much as my own research: 23.4%
- Somewhat willing, I’ll consider answers from AI tools alongside other sources: 33.2%
- Neutral, I might use AI tools, but wouldn’t rely solely on them: 28.8%
- Not very willing, I’d rather do my own research: 8.0%
- Not willing at all, I don’t want AI involved in this process: 6.6%
Rater8 is a practice reputation management consultancy.
rater8 2025 Report | The Next Evolution of Patient Choice
Cohere survey: Prior authorizations: Cohere Health® and Wakefield Research surveyed 200 U.S. hospital or medical system workers, including both clinicians and office professionals between April 9th and April 23rd, 2025, Findings:
- 97% of office administrators and 93% of clinicians have observed that prior authorization delays can lead to avoidable hospitalization or emergency care.
- 55% of clinicians & office administrators have seen patients abandon treatment due to prior authorization delays, often, or even all the time.
- 92% of clinicians and 89% of office administrators are frequently unclear about whether a specific treatment requires prior authorization
- Only 16% of office administrators and 24% of clinicians use electronic prior authorization platforms for more than 40% of their submissions
- 99% of clinicians and 96% of office administrators trust the use of AI in making prior authorization approvals.
- 67% of clinicians and 65% of office administrators express a strong interest in a fully digital prior authorization experience.
CH-The hidden cost of prior authorization.pdf
CMS on payments to physicians: Effective October 1, 2025, CMS instructed all Medicare Administrative Contractors (MACs) to hold claims with dates of service of October 1, 2025, and later for services impacted by the expired Medicare legislative payment provisions passed under the Full-Year Continuing Appropriations and Extensions Act, 2025. In light of the continuing government shutdown, CMS will continue to process and pay held claims in a timely manner with the exception of select claims for services impacted by the expired provisions. To date, no payments have been delayed as statute already requires all claims to be held for a minimum of fourteen days, and this recent hold is consistent with that statutory requirement. Providers may continue to submit claims accordingly.
All Fee-For-Service Providers | CMS
Polling
AJQS Workplace survey: Results from the AJQS survey of 18,429 U.S. adults, aged 18 to 75 who worked for pay in the prior seven days conducted Jan. 13-Feb. 25, 2025:
- 40% of workers in the U.S. hold positions that meet their basic financial needs, where they feel safe and respected, can grow their skills, have a voice in decisions that affect them, and exercise some control over their time and work.
- 29% of employees are struggling financially (“just getting by” or “finding it difficult to get by”). Another 43% say they are “doing okay,” while only 27% of employees say they are “living comfortably.” Rates of financial comfort vary across demographic and occupational groups
- 55% report limited input on decisions involving technology, and 48% say they lack the voice they should have in shaping their working conditions. These voice gaps are widespread across employee roles and backgrounds.
- 24% of employees report discrimination or unfair treatment at work based on their identity. Rates are highest among nonbinary (52%), neurodivergent (47%), Middle Eastern/North African (41%) and LGBTQ+ (36%) employees.
- 71%) report having the freedom to decide how they perform their tasks. Yet 62% lack schedules that provide predictability or stability, and 54% often or sometimes work longer than planned.
Conference Board, Business Council CEO Poll: From Sept. 22 through Oct. 6, the Conference Board surveyed 130 CEOs in the Fortune Global 500, most of them in the U.S. Highlights:
- 64% of CEOs are preparing for a mild slowdown and higher inflation (stagflation).
- 81% expect AI to reshape most jobs in their company within 5 years but only 9% said it’s already happening
- 22%said they were preparing for a “balanced economy with trend growth and gradual reduction in inflation pressure.”
- Confidence dipped one point from the previous quarter, to 48—i.e. more negative than positive.
CEO confidence dips, Conference Board finds
Axios on trust in public health, AI use by clinicians: Among 1125 U.S. adults surveyed October 10-13, 2025 by Axios-Ipsos:
- Trust in public health: “Americans who say the U.S. is less healthy under the leadership of President Trump and Health Secretary Robert F. Kennedy Jr. now outnumber believers 2-to-1. Skepticism over child vaccine requirements has ticked up since Trump took office in January, while Americans’ trust in the CDC, NIH and FDA is declining. Confusion, suspicion and partisan cues are creating a deep divide between the public and the medical establishment, driven by the Trump administration’s proposed changes to childhood vaccination schedules and promotion of an unproven link between Tylenol and autism….19% of respondents said Trump’s and Kennedy’s policies have made America healthier, down 8% from our survey in late February.
- AI use: “Americans are comfortablewith the use of AI in health care settings — as long as it doesn’t replace doctors. 75% of the public is very or somewhat comfortable with AI scheduling appointments. Smaller majorities also are fine with the bots delivering test results (57%) or doing triage and asking basic health status questions (53%). But the public is evenly divided on AI assisting a doctor in making a diagnosis. And just 18% are comfortable with AI making a diagnosis on its own, while more than 8 in 10 aren’t.”
Axios-Ipsos American Health Index
MAHA parent survey: Findings from the KFF/Washington Post Survey of Make America Healthy Again (Kennedy) aligned parents:
- 38% parents identify as supporters of the MAHA movement, a coalition that includes parents across gender, age, race, and ethnicity.
- 56% MAHA parents say they trust Kennedy to provide reliable information about vaccines, more than twice the share of non-MAHA-supporting parents who say the same (23%).
- “There is broad agreement across parents on some of the biggest issues facing children’s health in the U.S. today, with large shares of both MAHA-supporting parents and non-MAHA parents saying the use of social media (78% and 74% respectively) and mental health challenges (68% and 69%) are either the biggest or a major threat to children’s health… Attitudes diverge on some other issues, with larger shares of MAHA parents than non-MAHA parents citing over-prescribing of medications (61% vs. 43%), neurodevelopmental disorders (48% vs. 38%), and fluoride in water supplies (33% vs. 25%) as at least major threats to children’s health. Parents who do not support the MAHA movement are more likely than MAHA parents to cite gun violence (68% among non-MAHA parents vs. 50% among MAHA parents), pollution (56% vs. 48%), difficulty affording enough food (50% vs. 41%), and infectious diseases (45% vs. 36%) as the biggest or major threats to children’s health in the U.S. today.”
KFF/The Washington Post Survey of Parents: Polling Insights on the MAHA Movement | KFF
Prescription Drugs
Study: Impact of small molecule patent extension to 13 years: Background: “The Inflation Reduction Act (IRA) requires Medicare to negotiate prices for certain brand-name drugs with gross annual Medicare spending exceeding $200 million. Small-molecule drugs are exempt from negotiation for 9 years following US Food and Drug Administration approval and biologics for 13 years. The pharmaceutical industry, some members of Congress, and the Trump administration have argued that this difference prioritizes the development of biologics over small-molecule drugs and have proposed aligning the initial eligibility periods for both at 13 years. To inform these policy discussions, we compared the revenues earned by manufacturers after 9 vs 13 years on negotiation-eligible products from 2012 to 2022.
“In this study, among drugs that met Medicare price negotiation eligibility criteria from 2012 to 2022, biologics generated $4.9 billion more in cumulative revenue than small-molecule drugs over 9 years on the market and $7.9 billion more over 13 years. The gap between biologics and small-molecule drugs was larger than reported in previous studies that included less commercially successful products than those eligible for price negotiation.”
Public Health
Cannabis, alcohol use as sleep aid among young adults: “More than 20% of US young adults struggle to fall or stay asleep. Cannabis and alcohol can help initiate sleep, but regular use may be problematic. Increasing tolerance can lead to greater use to produce consistent sleep outcomes, potentially contributing to use disorder and sleep problems. Young adulthood is a critical developmental period for both substance use risk and sleep problems, underscoring the need for national data on cannabis and alcohol use for sleep.”
Informal (unpaid) caregivers: “Both formal and informal caregivers play a vital role in older adults’ health. Formal caregivers have training and education in providing care and are paid for their services. Informal or family caregivers can be family members or friends who may or may not have any formal training in caregiving and who usually provide care without payment. More than one in five Americans are informal caregivers. In 2021, approximately 38 million unpaid family caregivers provided an estimated 36 billion hours of care to adult recipients, which translates to about $600 billion (up from $470 billion in 2017) in unpaid caregiving. Family caregivers typically provide care to support and maintain the health and well-being of those who need help with activities of daily living, such as grocery shopping, meal preparation, housework, and transportation. Caregivers can also perform complex medical and nursing tasks that trained healthcare professionals have historically provided, such as providing insulin injections or changing a catheter. Additionally, they may be tasked with advocating for their care recipients’ preferences, dealing with health insurance claims, and coordinating care between various providers and care settings. On top of these caregiving responsibilities, most family caregivers are also employed in the workforce and/or may be caring for older family members, children, and people living with disabilities.”
TFAH-Caregiving-Brief-FINAL-1.pdf
Blue State Governors organize to direct public health policy: “The public-health resistance to Health and Human Services Secretary Robert F. Kennedy Jr. is growing. Governors across 15 states including New York, California and North Carolina are forming a new public-health alliance to detect and respond to disease threats, saying federal-funding cuts and policy changes by the Trump administration are putting their citizens at risk and forcing them to find alternatives. The 15 governors represent about 115 million people, or about a third of the U.S. population. They said they hoped to recruit more governors, particularly Republicans, to address health concerns they said traditionally have been considered nonpartisan. A nonprofit group, GovAct, will coordinate the alliance, with philanthropic funding.
Exclusive | Blue States Are Setting Up a Shadow Public-Health Alliance to Counter RFK Jr. – WSJ
McKinsey Health Institute: healthy aging: “Enabling people to live healthier for longer is increasingly important, with societies facing demographic shifts. Almost 15% of the global population is expected to be 65 or older by 2040, up from 10% today. This underscores the imperative to focus not only on extending lifespan but also healthspan, or increasing the number of years people spend in good health… Age-related diseases and conditions account for one-third of the total global burden of disease, or approximately 633 million disability-adjusted life years (DALYs) annually, according to analysis from the McKinsey Health Institute. Reducing this burden by half could prevent early deaths, improve health in later life, and potentially add $2 trillion to the annual GDP through increased workforce participation.”
Stayin’ alive and well | McKinsey & Company
Study: Impact of obesity definition on prevalence: A recent Lancet Commission proposed an obesity definition that integrates body mass index (BMI [calculated as weight in kilograms divided by height in meters squared]) with anthropometric measures, marking a paradigm shift in how obesity is conceptualized and classified. Researchers calculated distinctions between the BMI-only prevalence vs. the addition of anthropometric measures. Results:
“In this cohort study, adoption of the new definition of obesity significantly increased obesity prevalence with major implications for clinical practice and public policy. The new framework effectively stratified individuals at high risk of organ dysfunction and long-term complications while introducing anthropometric-only obesity and preclinical obesity as distinct entities warranting further study.”
Study: FDA Food labelling: Researchers asked ‘Could front-of-package nutrition information (Nutrition Info) labels proposed by the US Food and Drug Administration (FDA) help consumers buy healthier foods compared with other proposed or existing labels?’
“In this randomized clinical trial with 5636 US adults, front-of-package labels did not lead participants to buy healthier foods compared with positive labels (i.e, labels that communicate only the positive attributes of a food). By contrast, spectrum labels that rated foods from least to most healthy led participants to buy foods that were healthier than those with positive labels only and those with Nutrition Info labels.
