October 13, 2023

The Weekly Gist: The Bucket List Edition

by Chas Roades and Lisa Bielamowicz MD

It’s never too late to get to your bucket list items, but don’t wait too long. That’s the lesson we learned this week from Dorothy Hoffner, a 104-year-old retired telephone operator from Chicago, who set a record earlier this month as the oldest person ever to skydive. Dorothy made the jump from 13,500 feet over Ottawa, IL, repeating a feat she first performed four years earlier at the sprightly age of 100. Sadly, just ten days after setting the remarkable record, Dorothy passed away in her sleep at the senior living facility where she resided. What a way to go out! May we all be so fortunate and adventurous in our old age.


What happened in healthcare this week—and what we think about it.

  1. General Catalyst announces intent to buy a health system. On Sunday, venture capital (VC) firm General Catalyst unveiled the Health Assurance Transformation Corporation (HATCo), a new subsidiary company which aims to acquire a health system to serve as a blueprint for the VC firm’s vision of healthcare transformation. Sharing this news on the first day of the HLTH 2023 conference in Las Vegas, General Catalyst declined to comment on which health systems are targets, or how much it is willing to spend, but CEO Hemant Taneja suggested that investment returns would be evaluated on a longer timeline than the typical 10-year venture capital horizon. Marc Harrison, the former CEO of Intermountain Health who joined General Catalyst in 2022, has been tapped to lead HATCo. The new company will build on General Catalyst’s previously announced partnerships with health systems, including Intermountain, HCA Healthcare, and Universal Health Services, with the goal of connecting healthcare startups with health systems in order to test and scale their technologies.

The Gist: While private equity firms have backed health systems before, a VC firm expressing interest in health system ownership is a surprising development. Even on a longer timeframe than most venture plays get, it’s difficult to imagine a health system ever delivering the outsized returns VC investors usually demand. It’s possible HATCo’s true value will come from scaling and selling the services of tech startups in General Catalyst’s portfolio after vetting them at their health system “proving ground”. HATCo’s more ambitious aim to align payers and providers in a pivot to value-based care is a familiar one, but the new venture will find itself up against skepticism from insurers and other entrenched stakeholders, which has been difficult for even the most motivated health systems to overcome. 

  1. Two retail pharmacy giants reveal new virtual care offerings at HLTH. On Monday, Walgreens announced that it will begin offering direct-to-consumer virtual care in nine high-population states where nearly half of its pharmacy customers live. It will offer chat visits for $33 and video visits ranging from $36 to $75, relying on an undisclosed third-party partner to provide the service. The service will be cash-pay only when it begins later this month, but Walgreens plans to incorporate insurance coverage in the future. This week, Walgreens also appointed Tim Wentworth, former CEO of Cigna’s Evernorth health services organization and pharmacy benefit manager Express Scripts, as its new CEO. Wentworth will take the helm as the retailer tries to shore up its finances while continuing to expand into healthcare services.

And on Tuesday, Walmart announced the nationwide expansion of its virtual primary care option for employees. The 1M+ US associates and their dependents covered by the company’s health plan will have access to virtual primary care visits with zero copay, along with some specialist visits and home-based lab testing services. Walmart first piloted virtual primary care in 2020, working with Included Health, and cited employee health improvement and reduced hospital admissions as drivers of its decision to expand the program.

The Gist: Though consumer use of virtual care use has declined since its early pandemic peak, nearly all large retail and pharmacy chains now offer virtual on-demand services, bringing consumers a wide range of convenient and affordable care options for low-acuity conditions. Walmart’s strategy to leverage telehealth to expand primary care access for its employees makes a lot of sense as, prior to 2020, nearly half of its covered population was not receiving primary care. Walmart stands to lower its overall healthcare spend by giving employees increased access to routine care and earlier intervention, with an opportunity to expand the offering to all consumers down the road.

  1. California takes a step toward establishing universal health coverage for residents. California Governor Gavin Newsom signed a bill directing the state’s Health and Human Services Agency to work with the federal government to create a waiver allowing Medicare and Medicaid funding to be reallocated toward a universal health insurance system for its residents. The established timeline sets California on track to submit its final waiver for federal approval in 2026. The law does not specify whether universal coverage would be via a single-payer system, which is what Newsom favored in 2018. The California Nurses Association opposed the bill on the grounds that it does not commit to a single-payer outcome, while the California Association of Health Plans protested against its threat to end private coverage in the state.

The Gist: This is California’s 10th attempt at universal care, with all previous attempts having ended in failure because, despite both popular and political support in the state, there has not been consensus on how to pay for it. This most recent bill only passed because it was separated from a funding bill, since shelved, addressing the over $300B in tax revenue needed to pay for it. This process-first approach may be seen as a calculated appeasement of the Democratic Party’s left wing, as Governor Newsom clearly holds aspirations for higher office—but so far, healthcare has not ranked among the top issues for the current roster of candidates targeting the White House in 2024.

Pluswhat we’ve been reading.

  1. How predictive AI models degrade over time. This informative article documents a concerning phenomenon in the fast-expanding world of AI-powered diagnostics: when hospitals deploy multiple AI models that track the same metrics, the success of one or more of them can create a feedback loop that undermines their collective predictive power. This makes it difficult to tell which AI-powered clinical models are effective in healthcare settings where multiple programs are implemented, for example in an intensive care unit. Even more concerning, retraining an AI model on patient data affected by other interventions can make that model perform even worse. This suggests that even if health systems carefully monitor their predictive AI models and catch when their performance degrades, it will be difficult to correct problems that arise.

The Gist: As health systems embrace AI models that promise to improve clinical outcomes, it’s important to grapple with the real-world limitations these breakthroughs still face. Unlike AI-powered productivity enhancers such as ambient notetaking, predictive AI clinical models are trained and refined based on live patient data that’s constantly changing, due both to external factors and the successful interventions of various models. And unlike other, more-centralized industries deploying AI, each health system and provider organization will bear the burden of ensuring their AI models continue to be effective.Careful and continuous monitoring of predictive AI programs will be essential, along with effective oversight and coordination of model deployment.


A key insight or teaching point from our work with clients, illustrated in infographic form.

Uneven operating margin recovery for national health systems

Using data from Kaufman Hall’s latest National Hospital Flash Report and publicly available investor reports for some of the nation’s largest health systems, the graphic below takes stock of the state of health system margins. After the median hospital delivered negative operating margins for twelve-straight months, 2023 has made for a positive but slim year so far, with margins hovering around one percent. Amid this breakeven environment, fortunes have diverged between nonprofit and for-profit health systems. The largest for-profit systems, HCA Healthcare and Tenet Healthcare, posted operating margins of around 10 percent between July 2022 and June 2023, while the three largest nonprofit systems, Kaiser Permanente, CommonSpirit Health, and Ascension, suffered net losses. Although Kaiser Permanente’s margin bounced back in the first half of this year, CommonSpirit and Ascension’s margins continued to decline, more than doubling the operating losses of the prior six months. One key to the recent success of the largest for-profit systems is their diversification away from inpatient care. Case in point: almost half of Tenet’s profits in 2023 have come from its ambulatory division, driven by its United Surgical Partners International (USPI) ambulatory surgery center network, which has posted 40 percent margins over the past several quarters.


A recommendation from our weekly diet of music, movies, TV, and other good stuff.

I Killed Your Dog by L’Rain—This third studio release from New York-based experimental pop artist Taja Cheek, who performs under the name L’Rain, has been billed as her “anti-breakup” album, with themes of love and loss interwoven throughout. Musically, it’s just as wide-ranging as her first two critically acclaimed LPs, playing with rock, folk, jazz, electronica, and dance pop. You’ll see this one on Best of 2023 lists in a few months—with good reason.


What we learned this week from our work in the real world.

Taking on the very hardest topic in healthcare

In a recent board meeting that included physician leaders, one doctor chimed in with a question we hear a lot when discussing Medicare strategy: what about end-of-life care—given that a huge proportion of spending takes place in the last weeks of life, and a lot of the expensive care we deliver in those months happens because patients and their families demand that doctors do “everything possible” to prolong life? The question posed was a good one: How can we lower cost of care and take on risk in Medicare Advantage if we spend so much money on futile care? And how will this situation ever change without a “national conversation” about the end of life?

Our answer: we’re never going to have that mythical “national conversation” about end-of-life care. No politician, insurer, or government agency is ever going to take on the third-rail topic of rationing. Getting to a more sustainable approach to end-of-life care can only happen if doctors and patients start to work together on planning for the end-of-life years before critical decisions have to be made. And that requires the time and space to have those conversations, in the context of a long-term relationship between doctor and patient. High end-of-life spending shouldn’t scare systems away from taking on risk; it should motivate them to seek more accountability for the cost of the Medicare patient’s care—and create the space in primary care physicians’ schedules to have these critical conversations.


All the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.

Last Monday, JC spoke with Sara Vaezy, Providence’s Executive Vice President and Chief Strategy and Digital Officer about the health system’s latest incubated technology, Praia Health. Praia Health is a new platform-as-a-service technology that aims to increase patient engagement by personalizing individuals’ health journeys and seamlessly connecting them to the right services, products, and resources.

This Monday, we’ll hear the second part of their conversation, where they dive further into Praia Health’s value proposition for health systems, and what Providence has learned from the various startup companies it has incubated.

[Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.]

That’s the update for this week. Thanks so much for taking time to read the Weekly Gist, and for getting in touch with your thoughts and feedback. We always love hearing from our readers—it makes the work so worthwhile! Don’t forget to share this with your friends and colleagues and encourage them to subscribe as well.

Most importantly, please let us know if we can be of assistance in your work. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-President and Managing Director

Lisa Bielamowicz, MD
Co-President and Managing Director