February 10, 2023

The Weekly Gist: The Catch the Superb Owl Edition

by Chas Roades and Lisa Bielamowicz MD

The 7-10 Jets didn’t come anywhere close to this weekend’s Big Game, but there’s a group of New Yorkers who’ll have their eyes on Flaco this weekend—no, not Flacco the backup QB, but Flaco the owl. Ever since some unknown villain cut open the Central Park Zoo enclosure holding the Eurasian eagle-owl (fun Latin name: Bubo bubo) last week, Flaco the raptor has been on the loose in NYC, hotly pursued by members of the Wildlife Conservation Society who are trying to return the bird to safety. Their worst fear: that Flaco will get hungry and gobble up a Central Park rat, which could prove poisonous—surely the most Big Apple way to die ever. So, while you’re watching those other Birds take it to the Chiefs this weekend, and filling your own belly with wings, spare a thought for poor old Flaco. Judging from his photos, he’s a truly Superb Owl.


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

  1. CVS to buy Oak Street Health for $10.6B. After rumors of a possible deal first surfaced in early January, CVS Health announced on Wednesday that it has entered into a definitive agreement to acquire value-based primary care provider Oak Street Health for $10.6B. The Chicago-based company will join CVS’s recently formed Health Care Delivery organization, bringing with it roughly 600 physicians and nurse practitioners working at 169 senior-focused clinics in 21 states. This move is the latest by CVS to expand its care offerings, following its $100M investment last month in primary and urgent care provider Carbon Health, and its $8B acquisition of in-home evaluation company Signify in September.

The Gist: If this deal goes through, CVS will have the key pieces of the national primary care physician network it needs for a value-based care platform focused on Medicare Advantage—although how they will combine Oak Street’s clinics with retail-based HealthHUBs and other primary care assets remains unclear. The fact that CVS is paying about a 50 percent share price premium shows how competitive the market for large physician organizations has become, driving up bidding prices such that only cash-rich payers, pharmacies, and retailers can afford them as they seek to emulate UnitedHealth Group’s Optum strategy. 

Of note, the same day CVS announced the deal, Aetna competitor and erstwhile investor in Oak Street, Humana announced a five-year network partnership with Oak Street competitor ChenMed. We’ll be watching for whose strategy proves most effective as we enter the next phase of the physician arms race between vertically-integrated payers, and the emphasis shifts from how many providers are employed to how they’re integrated and deployed.

  1. Biden targets drug costs in State of the Union address. In his second annual State of the Union address to Congress on Tuesday, President Biden pointed to his accomplishments in shoring up the Affordable Care Act, and presented a fairly modest healthcare agenda that could garner bipartisan support. Though the back-and-forth with Republican lawmakers over Medicare cuts made headlines, his prepared remarks focused primarily on drug costs, as he touted Medicare’s new drug negotiation powers and called for Medicare’s $35 monthly insulin cap to be extended to commercial health plans.

The Gist: The fate of the President’s drug cost proposals, along with his calls for more COVID funding, mental health treatment, and cancer research, rest in the hands of a Republican House unlikely to work with him. It brings us no joy to acknowledge that the 2024 Presidential race has already begun, meaning that substantive legislative action will likely take a back seat for the next two years. Looking ahead, we’d expect Biden’s reelection pitch to sound a lot like Tuesday’s speech, shored up by whatever he can deliver via rulemaking and executive orders.

  1. Britain’s National Health Service (NHS) workers stage largest-ever strike. Monday’s walkout of tens of thousands of nurses and ambulance staff was the largest in the NHS’s 75-year history. Labor demonstrations have been ongoing across the past few months, as workers demand higher pay and better working conditions amid rampant national inflation and increased workloads. Specific demands vary by union and nation within the United Kingdom. Welsh nurses called off their strike this week to review a proposal from Wales’ Labour Party-run government, while the Royal College of Nurses, the UK’s largest nursing union, has countered a nominal 5 percent pay increase proposal with demands for a five percent pay raise on top of inflation, which topped 10 percent in Britain in December.

The Gist: A glance at our neighbors across the pond shows that the US healthcare system is not the only one currently experiencing a labor crisis. The UK’s nationalized system has also failed to shield its workers from the combined impact of COVID burnout and inflation. But the NHS, as the UK’s largest employer and perennial object of political maneuvering, is more susceptible to organized labor actions. In contrast, American healthcare unions, which only covered 17 percent of the country’s nurses in 2021, must negotiate with local employers, whose responses to their demands vary. While this may enhance the bargaining power of US health system leaders, it also heightens the risk that we will fail to adequately secure our nursing workforce, a key national resource already in short supply, for the longer term.

Pluswhat we’ve been reading.

  1. Physician burnout as a symptom of our ailing healthcare system. In a guest essay for the New York Times this week, Dr. Eric Reinhart argues that physician burnout is not solely a product of physicians’ deteriorating working conditions, but is also driven by a loss of faith in the larger US healthcare system. He notes that physicians have begun to lose hope in their ability to improve the system in which they work. As outpourings of appreciation for heroic healthcare workers have ended, physicians find themselves working in a system whose myriad structural flaws have been exacerbated by the pandemic. While the system might serve certain physician groups well (particularly specialists who are advantaged by the American Medical Association’s billing code structures), it often fails the patients who trust them for their care, and doctors “are now finding it difficult to quash the suspicion that our institutions, and much of [their] work inside them, primarily serve a moneymaking machine”.

The Gist: While elevating burnout to the level of culture, ideology, and faith in the US healthcare system may be met with skepticism by health system leaders interested in concrete solutions to their workforce problems, it’s important to acknowledge that material benefits and operational improvements may not fully solve engagement challenges. Compared to peer nations, our healthcare system can be uniquely seen as unfair and unequal, whether because of medical debt, maternal mortality, or declining life expectancies—and many providers feel ill-equipped to address these concerns in their daily work. This piece serves as a reminder of why most clinicians chose healthcare in the first place: to save lives and help people. The younger generation of physicians is rethinking what that mission means, and how it should include more than just care delivery—and they’re more open to aggressive policy solutions to address systemic inequalities.


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

What will end with the COVID public health emergency

Last week the Biden Administration announced that the federal COVID public health emergency (PHE) will expire on May 11. While the recent Omnibus law will lessen the impact, the graphic below highlights several important provisions for providers which are currently set to end with the PHE. The Centers for Medicare and Medicaid Services (CMS) will no longer provide hospitals with a 20 percent inpatient payment boost for treating traditional Medicare patients hospitalized with COVIDThe cost of COVID testing and treatments will shift from the federal government to consumers as private and public insurers can charge for tests and care, while the uninsured will bear the full costs of COVID vaccines and treatment. Medicare’s current flexibilities around skilled nursing facility (SNF) admissions will end, as it reinstates the three-day prior hospitalization rule for SNF transfers, and ceases paying for SNF stays beyond 100 days. The end of the PHE also means that providers will no longer be able to prescribe controlled substances virtually, without an initial in-person evaluation. This is especially significant given the volume of mental health and substance abuse treatment that shifted to telehealth across the course of the pandemic. While the Drug Enforcement Agency has been working on regulations to address this, a proposed rule has not yet been released. Together, these changes amount to lower payments for health systems, COVID cost exposure for patients, and fewer flexibilities for providers managing care, even as thousands of patients are still being hospitalized with COVID each week.


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

Stonehouse (BritBox)—Fans of Succession who need a quick Matthew Macfadyen fix before Tom Wambsgans returns next month should check out this three-episode series, which recounts one of the more bizarre tales in 20th century British politics. It’s the story of a hapless but high-flying member of Parliament who faked his own death after becoming embroiled in financial difficulties and espionage accusations—the perfect role for Macfadyen’s understated, bumbling genius. Well worth signing up for a free trial on BritBox!


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

Has the backlash against physician employment begun?

Given the economic situation most hospitals face today, it was only a matter of time before we started to hear comments like we heard recently from a system CEO. “We’ve got to pump the brakes on physician employment this year,” she said. “This arms race with Optum and PE firms has gotten out of control, and we’re looking at almost $300K per year of loss per employed doc.” Of course, that system (like most) has been calling that loss a “subsidy” or an “investment” for the past several years, justified by the ability to pursue an integrated model of care and to grow the overall system book of business. But with non-hospital competitors unfettered by the requirement to pay “fair market value” for physicians, the bidding war for doctors has become unsustainable for many hospitals. Around half of physicians are now employed by hospitals, with many more employed in other corporate settings. There’s a growing sense that the pendulum has swung too far in the direction of employment, and now the phrase “stopping the bleed”—commonplace in the post-PhyCor days of the early 2000s—has begun to ring out again.

One challenge: finding ways to talk openly about “pumping the brakes” with the board, given that most systems have key physician stakeholders as part of their governance structure. Twice in the last month we’ve had CEOs ask us about reconfiguring their boards so that there are fewer doctors involved in governance—a sharp about-face from the “integration” narrative of just a few years ago. It’s a tricky balance to strike. We recently heard a fascinating statistic that we’re working to verify: a third of all hospital CEO turnover in the last year was driven by votes of no-confidence by the medical staff. True or not, there’s no doubt that running afoul of physicians can be a career-limiting move for hospital executives, so if we’re about to enter an era of dialing back physician employment strategies, it’ll be fascinating to see how the conversations unfold. We’ll continue to keep an eye on this shift in direction and would love to know what you’re hearing as well, and to discuss how we might be of assistance in navigating what are sure to be a series of difficult choices.


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

Last Monday, JC spoke with Dr. Nigel Girgrah, Ochsner Health’s Chief Wellness Officer, about burnout among healthcare providers, and the programs the health system is utilizing to support its 36K employees.

Coming up this Monday, JC speaks with David Black, co-founder and CEO of Even Health, a company that provides health systems, including Ochsner Health, and other employers access to professionally moderated peer groups that employees can access anonymously for mental health support.

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

That’s all for this week! Hope your weekend is filled with football and food, and your week ahead includes romantic time with your Valentine. We’ll see you back here next Friday for more healthcare news and commentary! In the meantime, let us hear from you—we love getting your feedback. And remember to share the Weekly Gist with friends and colleagues, and encourage them to subscribe, and listen to our daily podcast.

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-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President