Last week was business as usual for the U.S. health system as other events grabbed the lion’s share of media attention:
- Healthcare affordability and fraud were frequent mentions as GOP candidates railed against socialized medicine and industry’s lack of competition at the 2-day ‘Trumpalooza’ event in Dallas.
- An apocalyptic prediction released on X by Evan Hubinger, a former Anthropic alignment lead, that ‘there’s a 10% chance that RSI (recursive self-improvement) AI could kill all humans in the next decade’ prompted social media frenzy and calls for AI regulation.
- Wars in Iran and Ukraine continued.
- The Jewish High Holy Days began with celebrations of Rosh Hashanah Friday just after 9-11 commemorations concluded across the land.
- And the August CPI report from the Bureau of Labor Statistics showed prices elevated as the Iran war’s energy shock spiked an inflation and prompted concern the Fed might raise interest rates at its meeting this week.
With the exception of continued commentary about the Lindsay Clancy’s mistrial and post-partum psychosis defense, the healthcare system was virtually unscathed last week. For many in healthcare, ‘out of sight, out of mind’ is OK. It allows the system to operate without distraction from unwelcome criticism—disdain for media coverage has long been the preferred modus operandi in healthcare, preferring instead its own PR, ads and behind the scenes advocacy to keep things in order to its liking. It isn’t working.
Reality: The U.S. healthcare industry is not the crown jewel of our national pride. At the opening ceremony of the 2012 Olympic Games in London, the Danny Boyle-produced tribute to the National Health Service opened the games. A similar sentiment about the U.S. system is unimaginable. In its place, a dark cloud hovers above U.S. healthcare today. It is the industry’s biggest threat. The eminent cloud burst will wrack havoc on every provider, every investor, every user and every taxpayer in the U.S. unless preparedness is taken seriously.
It did not form overnight: it’s been building for 30 years but it darker and more threatening today than ever before. Here’s why:
- Systemic arrogance: For decades, Americans have been told our health system is the envy of the world. We’ve embraced the industry hubris—the best doctors, the best hospitals. the newest drugs, the latest technology and most modern facilities and so on. But through these decades, costs have soared while population health and longevity have declined. Better ways to diagnose, treat, and deliver services are confined to privately-funded organizers whose shareholders see financial upside, while the less lucrative needs are left to public programs and do-gooders to bootstrap. Benign neglect for educating the U.S. population about how the health system works, how it’s organized and financed, how to use it is is the system’s original sin. It was designed so that dependence on the system via doctors, insurance, hospitals and drug companies was its foundational presumption. Evidence shows done right; it works. But it hasn’t. It declares its exceptionalism while hiding its business practices to avoid scrutiny. It rejects self-care deeming it only applicable to simple problems and presumes its concept of value always keeps ‘high quality’ distant from ‘low price’ in the public psyche. And it reinforces politics and policies that keep primary care, preventive health and social services for lower income and older populations subordinate to specialty services. Ironically, its workforce—25 million strong—that’s been warning of the cloud burst loudest. They think compensation for health executives is excessive, un-deserved and contributing to the storm.
- Corporatization-driven wealth: The industry’s business practices have created massive wealth for some. 45 of the Fortune 500 companies is an investor-owned healthcare corporation. The industry’s executive class is among the highest paid compared to peers in other industries and the differential between the industry’s working class and its senior managers is the highest of all industries. Physicians have protected the profession’s distinction as the U.S. highest paid career even after accounting for the three-fold median gap between primary care and some surgical specialties. Polls show the majority of voters aren’t sure what ‘not-for-profit’ means or if it matters. Investing in healthcare is a safe bet, especially when overall market conditions are less welcoming. That’s the secret sauce that let’s the industry maintain prominence in wealth creation for risk takers, high compensation for its managers, executives and surgeons and carry grow in the aggregate faster than GDP and household wages. It’s a business, not a calling, for its management ranks, their advisors and private funders, because corporatization produces sizeable wealth for some.
- Blame and Shame Advocacy: The major trade associations in healthcare have contributed to the cloud’s growing intensity. Protection of their members’ interests has takes precedent over the overall sustainability of the health system. That’s understandable: their Boards expect no less from their CEOs and teams. Thus, blame and shame advocacy is a priority over coalition building for systemic reform. But voters, employers and lawmakers increasingly recognize the obvious, no trade group in healthcare effectively represents the system as a whole. Short-term wins on proposed regulations, spending authorizations and policy shifts threatening to a specific tribe are their domain. It’s for others to fix the system even as the cloud gets darker.
Political campaigns obscure facts and oversimplify solutions to complex challenges like fixing the health system. Protecting the status quo in healthcare is what its insiders want and it’s why they’re on defense.
Paul
PS On 9/11/01, I was in Harry Jacobson’s conference room at Vanderbilt Medical Center discussing plans for our new Center for Integrative Health. The pictures of planes crashing into the World Trade Center, souls jumping to their deaths, fire-fighters running toward danger and dusty New Yorkers in zombi-like bewilderment are etched forever in my memory. It makes faith and family more meaningful and industry issues less. But in those days and after, our country seemed, if only for short while, united for a purpose. That spirit is needed for transformational change to the health system. It’s collapsing like the twin towers.
Sections in today’s report:
- Quotables
- Economy
- Hospitals
- Insurers
- Physicians
- Population Health
- Prescription Drugs
Quotables
Ken Terry on healthcare system sustainability: The CMS report projects that the percentage of all Americans with health insurance will decrease only from 91.7% to 90.5% over the next decade. . By 2034, most people will have less access to healthcare and it will be more expensive, relative to their incomes, than it is today. Whether that will lead to a breakdown in the healthcare system is unclear. But when a system is unsustainable, it eventually stops working.
We don’t have to wait for that to happen. Instead, we can work together across the political divide to build a new system that provides high-quality, affordable healthcare for all. Such a model would rescue primary care from its dangerous decline. It would focus on improving population health, so fewer people would need expensive specialty and hospital care. It would eliminate the market power of big health systems. It would rein in the big insurers without putting them out of business. Above all, it would be dedicated to healing and compassion and the principle that everyone deserves good healthcare.
Will Healthcare Become Unaffordable for Most of Us? – 4sight Health
Mercer on employer health costs 2027 forecast: “We field the National Survey of Employer-Sponsored Health Plans over the summer, and each year in mid-August we take an early look at the responses so we can release the projected health benefit cost increase for the upcoming year as soon as possible. While it’s usually exciting to see this important data point for the first time, this year it was almost hard to look — and yes, it was as bad as we feared, if not worse.
Total health benefit cost per employee is expected to rise 8.2% on average in 2027 — the highest increase since 2003 — even after accounting for planned cost-reduction measures. Employers said that the cost of their current plans would increase by 11%, on average, if they took no action to lower it.
Based on these projections, 2027 will be the fifth consecutive year of elevated health benefit cost growth after a decade of more moderate annual increases. It will also be the highest increase in this five-year period. The average projected increase for 2026 was 6.7%.
Survey: Health benefit costs expected to jump 8.2% in 2027, the biggest increase since 2003 https://www.mercer.com/en-us/insights/us-health-news/survey-health-benefit-costs-expected-to-jump-in-2027/
WalletHub on happiest states in the U.S. “The happiest states are those that provide above-average quality of life in a wide variety of areas, from strong state economies and great physical and mental healthcare to adequate amounts of leisure time and good weather. It’s also important to note that while the adage that money can’t buy happiness has a lot of truth to it, having enough money to live comfortably is still essential. But anything beyond that won’t necessarily enhance happiness as much as having fulfilling hobbies, relationships and opportunities for personal growth.”
Happiest States in America in 2026
Bannow on Clancy trial: “Thirteen medications across 30 different prescriptions. Five clinicians. Two hospitals.
In the four months before killing her three children and attempting to kill herself, Lindsay Clancy desperately sought help for her deteriorating mental condition. But as her murder trial has made clear, the help she got was scattered across multiple providers who gave conflicting advice and, crucially, didn’t talk to one another.
For Americans with private insurance, Clancy included, this kind of fragmented care is the norm. Not only are providers siloed within their own employers with little incentive to communicate, there’s no universal electronic health records where they can see the totality of a patient’s care and medications. Experts following the Clancy case said if there had been someone in the driver’s seat responsible for overseeing all of her care, things may have turned out differently. “
Lindsay Clancy case shows the perils of health care silos | STAT
Consolidation in healthcare supply chain: “In this cross-sectional analysis, Vizient, HealthTrust, and Premier served as primary GPOs for more than 80% of US hospitals. While GPO concentration was already substantial in 2014, Vizient’s share nearly doubled, driven largely by its acquisition of MedAssets and other smaller GPOs, continuing a trajectory of consolidation documented through 2014. The pattern mirrors other health care intermediaries, including pharmacy benefit managers and wholesalers, where increasing concentration and vertical integration are well documented.
This study has limitations. Analyses were descriptive and did not establish causal relationships….
The growing dominance of 3 GPOs is relevant to ongoing scrutiny of health care supply chain intermediaries. Policymakers have raised concerns that concentrated purchasing power may produce monopsony-like supplier pricing, restrictive contracting practices that limit competition, drug shortages, and funding arrangements that do not incentivize lower hospital costs. Because GPO affiliation is often determined at the system level, ongoing system consolidation may further concentrate purchasing power. As these concerns persist, continued transparency and monitoring of GPO market structure will be important.”
Fortune on transformation timeline: “Nearly every CEO taking over a struggling organization confronts the same question, Fortune reported Aug. 31: How much time do they get to turn things around?
Research suggests immediate transformation is unrealistic, Fortune reported. Spencer Stuart’s research has described the first year of a new CEO’s tenure as a “launch period,” when a leader diagnosis inherited problems and sets priorities. The second year becomes a period of “calibration,” when boards look for early movement in metrics like operating performance. By around year three, those early decisions should increasingly show up in revenue, margins and returns. McKinsey research cited by Fortune found that about half of a transformation’s value tends to come to fruition in the first 18 months, with the rest arriving later.
“A turnaround does not have to be complete for a leader to make the case for more time,” Fortune reported. “There should, however, be evidence that the decisions made early in the process are producing results.”
When does a CEO’s turnaround clock run out?
Business Insider on QI in consulting: “It’s a question as old as the industry itself: What does a consultant actually do?
Traditionally, consultants have acted as an external support system, called in to crunch the numbers, trim head count, or identify growth opportunities.
Now, AI is reshaping what clients want from consultants and how work gets done, creating a new job profile that blurs the lines between tech and consulting.
Instead of generalist teams producing research and strategy decks, consultants are increasingly expected to provide something tangible: tools, systems, and holistic, ongoing support. The big firms aren’t only advising on tech strategy, they’re building and implementing it, often through multi-year transformation projects.
To win that work, consulting firms are racing to position themselves as “AI-native.”
Consulting’s Race to Become AI Native – Business Insider
Economy
BLS CPI Report for August: Highlights:
- The Consumer Price Index rose 0.4% in August from the previous month, after rising 0.1% in July.
- Prices were up 3.4% from a year earlier, holding steady from July.
- Excluding volatile food and energy costs, the so-called core gauge climbed 0.3% during the month and 2.4% from a year earlier vs. increases of 0.2% and 2.5%, respectively, in July.
- Gasoline prices jumped 3.9% in August, accounting for more than a third of the overall monthly increase Energy prices rose 2.1% for the month and are up 16.2% in the last 12 months,
- Core inflation accelerated, with shelter costs gaining 0.3% after a 0.1% increase in July.
- . “The medical care index decreased 0.2 % in August after rising 0.4% in July. The index for dental services fell 0.6% over the month. The hospital services index, physicians’ services index, and prescription drugs index were all unchanged in August.”
Consumer Price Index Summary – 2026 M08 Results
Study: Out of pocket costs by income, age groups: “This cross-sectional study used 2023 Current Population Survey Annual Social and Economic Supplement data to quantify health care contributions among US tax filers, by income quintile, payment type, and sociodemographic characteristics. Although total contributions were higher at each successive income quintile, out-of-pocket spending fell disproportionately on lower-income and sicker people. Uninsured tax filers younger than age sixty-five contributed approximately 64% of what their insured counterparts paid, despite lacking coverage. Virtually all tax filers contributed to US health care financing through its public financing streams, yet many remained exposed to significant financial risk or lacked coverage altogether. This reflects the fragmented structure of US health care financing, where financial contributions are not aligned with coverage or protection from medical costs.”
BLS Employment report, August 2026: The unemployment rate was unchanged at 4.1% in August, and the number of unemployed people changed little at 7.0 million. Both measures changed little over the year…
Total nonfarm payroll employment rose by 162,000 in August, higher than the average monthly gain of 31,000 over the prior 12 months. Employment in health care continued to trend up in August (+13,000) but at a slower pace than the average monthly gain over the prior 12 months (+32,000). Over the month, home health care services (+11,000) and hospitals (+8,000) added jobs.
Employment Situation Summary – 2026 M08 Results
Study: state directed payments: “The 2025 budget reconciliation bill, H.R. 1, limits Medicaid state-directed payment (SDP) reimbursement for four provider types to Medicare-equivalent rates. This study assessed the provision’s potential fiscal impact on states based on recent Medicaid spending on SDPs subject to the payment limits. Total Medicaid spending on these payments in thirty-nine states that paid providers at rates higher than Medicare rates averaged $106.3 billion annually during the 2024–25 rating periods, which is 12.5 percent of total fiscal year 2024 Medicaid spending in these states. Spending on SDPs ranged from less than 1% of total state Medicaid spending in Maryland to 31% in Tennessee. When the analysis was limited to subset of the highest-paying SDP arrangements in thirty-six states, which paid providers at or near the average commercial rate, a reduction of approximately $51.8 billion in annual Medicaid spending across these states might be required, including more than a quarter of total state Medicaid spending in Nebraska, Louisiana, and South Carolina. By reducing Medicaid reimbursement, the new SDP limits—compounded by limits on provider taxes—are likely to create financial strain for providers and threaten Medicaid beneficiaries’ access to care.”
S&P vs S&P Healthcare: Over long horizons, the S&P 500 has significantly outperformed the S&P Healthcare sector, but healthcare is less volatile, tends to hold up better in recessions, and delivers steadier—but slower—growth. The gap has widened in recent years because the S&P 500 has been driven heavily by mega‑cap tech, while healthcare has been weighed down by biopharma underperformance, policy uncertainty, and slower earnings growth.
| Level | 52-week range | 5-Year
forecast |
Drivers | |
| S&P %00 | 7673 | 6316-7816 | 80-100%
cumulative |
AI, cloud, and mega‑cap tech.
|
| S&P Healthcare Index | 1945 | 1565-2045 | 30-40%
cumulative |
Low‑single‑digit gains; some subsectors (biopharma, equipment |
Healthcare is less volatile and more recession‑resilient because demand is non‑cyclical. Historically:
- Healthcare outperforms during downturns (2001, 2008, 2020).
- Healthcare underperforms during strong bull markets (2016–2020, 2023–2026).
“This makes healthcare a defensive sector, not a growth sector.”
Standard and Poor’s www.spglobal.com
Hospitals
Paragon on NFP hospital tax exemption accountability: “Nearly three-quarters of privately operated community hospitals are tax-exempt. American Hospital Association-commissioned research valued the federal exemption at $13.2 billion in 2022, with another $41.1 billion in state and local tax benefits.
Congress is beginning to ask important questions. The Tax-Exempt Hospital Transparency Act would require more detailed reporting of what hospitals claim as community benefits, including reporting by facility and service line. It would also require greater transparency around hospitals’ 340B operations, where discounted drugs intended to support safety-net care have become significant profit centers for many hospital systems.
This is a useful first step. Hospitals receiving billions of dollars in tax benefits should have to demonstrate commensurate value for patients and communities. Ultimately, the most meaningful community benefit would be for hospitals to charge more affordable prices. Better transparency will help policymakers determine whether hospitals are actually providing enough community benefit to justify their tax breaks.
Insurance
Study: private Insurance premiums and medical costs: “This cohort study, which analyzed state-level data on insurance premiums, health spending, and insurer markups from 2011 to 2024, found that mean insurance premiums grew by $3143 (78.4%), health spending grew by $2844 (84.2%), and insurer markups decreased in proportional terms from 18.6% in 2011 to 14.9% in 2024. Overall, the growth in health spending accounted for 91% of the overall growth in mean premiums.
In this cohort study, we found that growth in health care spending explained 91% of the growth in health insurance premiums from 2011 to 2024. Although average premiums increased over this period, insurer markups decreased in percentage terms.”
CMS issues Medical Frailty Guidance: “Last week, the Centers for Medicare and Medicaid Services released guidance for states allowing them to use a “tier system” to determine which Medicaid recipients are too ill to work or volunteer at least 20 hours per week…
Under H.R. 1, passed by Congress last year, states that expanded their Medicaid program must ensure all working-age recipients are meeting the 20-hour-per-week requirement unless they are disabled, caring for young children, or have a serious health condition. However, chronically ill people and their advocates have expressed deep concern over how they’re supposed to prove they are too sick to work.”
Medicaid offers simplified way to handle ‘medical frailty’ exemptions | STAT
Physicians
Study: Physician relocation: Per Marit Health, a significant percentage of doctors moved from the Northeast to the Southeast and the West from mid-2025 to mid-2026. California, Florida, Colorado, Georgia, North Carolina and Washington attracted the most physicians relative to the number who left over that span. New York, Pennsylvania, Virginia, Indiana, Michigan and Iowa experienced the greatest outflows.
The data suggest doctors are choosing to work in areas where demand for care is growing faster than clinician supply. Physicians are often looking for favorable climates, affordable cost of living and high patient volumes.
Physician Salary in US https://www.marithealth.com/o/-/physician/salary
PE investment in IVF: “In November 2025, a private equity firm best known for backing consumer brands made a move that looked more like a retail deal than a healthcare one: a 42.5% stake in a 121-clinic physician network spanning 20 states.
L Catterton, the firm behind stakes in Peloton and other consumer names, became co-lead investor in US Fertility alongside existing owner Amulet Capital Partners, which reduced its ownership stake by half, to 42.5%, while remaining a co-lead investor and increasing its dollar commitment to the company. Physicians and management retained 15% ownership. The deal came with up to $1.7 billion in combined capital, including a $120 million revolving credit line and a $125 million growth loan, per S&P Global. “
The firm behind Peloton is betting on physician practices next – Becker’s ASC
Population health
Study: State abortion policies and infant health outcomes: “In contrast to other high-income countries, adverse birth outcomes and infant mortality rates have remained persistently high in the US, with data finding that 8.6% of births are low-birth-weight births and 10.4% of births are preterm births, with infant mortality rates of 5.61 per 1000 live births. As these rates vary across states and time, state-level factors may play a role. Studies have found associations of multiple economic policies, some alcohol and tobacco policies, political party control of state government, and state-level discrimination and equity indicators with infant health….
Findings In this cohort study, 5 abortion policies (first- and second-trimester gestational bans, limits on advanced practice clinician provision of abortion, ultrasonography information requirements, private insurance coverage bans, hospital transfer agreement requirements) were associated with multiple increased adverse infant health outcomes, whereas abortion policies (waiting period requirements and in-person medication abortion requirements) were associated with decreased low birth weight.
These findings suggest that multiple types of abortion policies—and not only total abortion bans—are relevant for infant health.”
Study: Voluntary vs. mandatory VBD in ESRD: “End-stage renal disease (ESRD) is a focus of Medicare value-based payment models due to suboptimal quality of care and high health care costs. In 2021 and 2022, 2 models were introduced—the mandatory ESRD Treatment Choices (ETC) model and the voluntary Kidney Care Choices (KCC) model—that included complementary incentives to increase home dialysis use.
Researchers analyzed whether overlapping participation by nephrologists in the mandatory and voluntary models was associated with higher home dialysis use compared with participation in either model alone or participation in neither model. Results:
Nephrologist participation in the mandatory ETC model only was not associated with changes in home dialysis use among their attributed patients receiving dialysis compared with neither model. Participation in the voluntary KCC model only was associated with an 8.4% relative increase, in home dialysis use, and participation in both models was associated with an 11.8% relative increase compared with neither model. Nephrologist participation in both models was associated with increases in home dialysis use that were similar to participation in KCC only,”
Prescription Drugs
National Comprehensive Cancer Network survey re: drug shortages According to the results, 100% of responding cancer centers are experiencing a shortage for at least one anti-cancer agent; with more than 20% of centers currently in shortage for five or more different medications. Results:
- 94% noted a shortage of ifosfamide, a generic chemotherapy that is used in treatment for a variety of cancers, including bladder, ovarian, testicular, uterine, soft tissue sarcoma, osteosarcoma, and several adult and pediatric leukemias and lymphomas.
- 71% of centers noted a shortage of carboplatin and 16% for cisplatin, which are key chemotherapies used as the backbone of regimens to treat numerous different tumor types. The immunotherapy Bacillus Calmette-Guérin (BCG) for bladder cancer was also in short supply for more than half of the respondents.
New NCCN Survey Highlights Persistent Cancer Medication Shortages Across United States https://www.nccn.org September 10, 2026
Study: Generic drug purchasing: Generic drugs represent 90% of filled prescriptions in the US and, because they are generally inexpensive, are often accompanied by lower patient out-of-pocket payments than brand-name medications. However, some patients take multiple generic drugs, and the relative contributions of brand-name vs generic drugs toward out-of-pocket spending has not been described. Results:
- In 2022, 51.91%of individuals filled at least 1 generic medication and 15.81%filled at least 1 brand-name medication.
- Overall, 50.66% were female and mean age was 39.78 years.
- Individuals filled a mean of 1.81 generic and 0.22 brand-name medications per year.
- Mean annual out-of-pocket spending was $51 for generic drugs and $41 for brand-name drugs.
- For generic medications, 14.29% spent more than $100, and 5.32% spent more than $250.
- For brand-name medications, 6.11% of individuals spent more than $100, and 3.77% spent more than $250, annually.
