May 19, 2023

The Weekly Gist: The Chicago Chonkosaurus Edition

by Chas Roades and Lisa Bielamowicz MD

We’ve been getting reacquainted with Chicago lately, now that we have a connection to the Windy City, and it’s been fun to revisit our favorite restaurants, art galleries, and music venues there. But what makes the town truly great are the residents—like the two guys in this nature video that went viral this week. Joey Santore and his buddy Al Scorch (undoubtedly fans of Da Bears) were kayaking on the Chicago River (that’s a thing?) and came upon a giant snapping turtle sunning itself on some rusty chains (where else?). The only thing better than the nickname they gave their new friend—“Chonkosaurus”—is Santore’s idea for what to do next. “We should take him out ta’ eat!”


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

  1. UnitedHealthcare to require prior authorization for some colonoscopies. Starting June 1, UnitedHealthcare will require physicians to submit prior authorization requests for certain types of colonoscopies. While routine screening colonoscopies will remain exempt, United beneficiaries requiring surveillance or diagnostic colonoscopies—which are performed on patients at greater risk of developing colon cancer or those already exhibiting worrisome symptoms—will need advance approval for the procedures to be covered by the payer. A UnitedHealthcare spokesperson said that this policy change is due to concerns that colonoscopy overutilization generates unnecessary medical risks and higher healthcare spending for patients. The American College of Gastroenterology released a statement criticizing the new policy on the grounds that prior authorization requirements create harmful delays for patients and are a significant source of provider burnout.

The Gist: So much for the planned rollback of prior authorizations that UnitedHealthcare recently touted. While the insurer is not wrong in saying that some studies have documented overutilization of colonoscopies, prior authorization is a blunt tool that takes care decision making out of practicing providers’ hands, redirecting that power (along with more profit) to the payer. To process prior authorization requests in a timely manner, insurers now commonly rely on AI algorithms, which are an imperfect solution. For patients exhibiting signs of colon cancer, improper denials and delayed approvals for colonoscopies could have life-threatening implications.

  1. CVS Health exits the clinical trials business. On Wednesday, CVS revealed plans to phase out its clinical trials unit by December 2024. The company launched the business line in 2021, building off its successful participation engaging CVS patrons in COVID vaccine and treatment studies. With 40 percent of Americans living near a CVS pharmacy, the company had hoped to facilitate the decentralization of the clinical trials business, recruiting patients who lived in markets without academic medical centers, with goals to engage 10M patients across 150 research sites. However, to date it has only enrolled 33K participants, just over 10 percent of its COVID vaccine volunteer patient cohort.

The Gist: While CVS appears to be focusing on its faster-growing Medicare Advantage and provider businesses, following its expensive acquisitions of Oak Street Health and Signify Health, the promise for decentralized clinical research remains. Traditional clinical trials often suffer from low participation; recruiting from more diverse populations would improve enrollment and could enhance the quality of research conducted. Decentralization is also a win for patients, providing access to clinical trials for lower-income patients who may have difficulty regularly traveling to academic centers. Other players, ranging from startups to retail giants like Walmart and Walgreens, remain active in this space. While we hope they may bring new models to market, they will likely evaluate their programs against similar business decisions and profit objectives.

  1. Biden selects new National Institutes of Health (NIH) Director. On Monday, President Biden announced his intent to nominate Dr. Monica Bertagnolli, a cancer surgeon who currently heads the National Cancer Institute, to be the NIH’s next director. The NIH has operated under an acting director since December 2021, when former Director Dr. Francis Collins stepped down after 12 years of service. Dr. Bertagnolli’s nomination, which was reported last month to be in the works, is now subject to Senate approval.

The Gist: This nomination comes in the midst of an overhaul in the Biden administration’s scientific leadership. The White House has received criticism for the time that it has taken to fill the NIH director role, which has been vacant for over a year. The rising political and public criticism faced by public health and research leaders in the wake of the pandemic has likely given some potential candidates pause as to whether they want to take on contentious confirmation hearings. The administration now faces the impending departures of Centers for Disease Control and Prevention director Dr. Rochelle Walensky, and White House COVID response team coordinator Dr. Ashish Jha (whose exit coincides with the end of the federal public health emergency).  The ability to fill these vacancies quickly will be an important test of the administration’s action plan to address current and future public health challenges—and whether strong candidates will be willing to serve in a divisive, politicized environment.

Pluswhat we’ve been reading.

  1. The rise and fall of Babylon Health in the United Kingdom. Published last Sunday in The Times of London, this article traces how the once-darling Babylon Health became an “unmitigated disaster”, for which the UK’s National Health Services (NHS)has paid a significant price. Babylon used its vision for a privatized NHS with slashed wait times and AI-powered treatment to boost its public offering, via a special-purpose acquisition company, with a $4.2B valuation in June 2021. Many of its promises have been revealed to be overly ambitious, if not doomed from the start, with its AI-powered diagnostics and funding model proving especially flawed. A pivot to managed care in the US failed to stem a tide of mounting losses, and the company announced plans to go private last week.

The Gist: There are myriad lessons from the demise of Babylon, a marquis example of a “digital-first” healthcare startup that burned through capital and crashed with the end of the era of cheap money: virtual care isn’t a magic wand to reduce wait times, and healthcare startups (and their investors) should think as much about the path to profitability as they do about rapid growth. While Babylon did have its finger on the pulse of promising technologies, it applied them irresponsibly: for patients, inaccurate AI diagnoses could be worse than no care at all.  Amid the current AI frenzy, healthcare would benefit from more “slow AI”, developed with clinical and scientific collaboration and rigorous academic study design and testing, over “fast AI”, with pressure to generate returns for private investors pushing entrepreneurs to rapidly develop and deploy technology.


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

National ASC chains look to dominate growing market

As care continues to shift to lower cost ambulatory surgery centers (ASCs), the graphic below looks at recent growth and consolidation in the ASC market. From 2012 to 2022, the five largest operators increased their collective ownership of ASC facilities from 17 to 21 percent, and were responsible for over 50 percent of total facility growth in that period. While physicians still fully own over half of the nation’s ASCs, the national chains tend to run larger, multispecialty facilities responsible for an outsized proportion of procedures and revenue. The likes of Tenet, Optum, and HCA are betting big on ASCs, banking on projections that the market will grow by over 60 percent in the next seven years. (Though AmSurg’s parent company, Envision Healthcare, filed for bankruptcy, AmSurg is buying Envision’s remaining ASCs to retain its significant foothold in the market.) While many high-revenue specialties, notably orthopedics and gastroenterology, have already seen a significant shift to ASCs, cardiology is one of the most promising service lines for ASC growth, with some predicting that a third of cardiology procedures will be performed in ambulatory settings in the next few years. The shift of surgeries from hospitals to ASCs is daunting for health systems, who stand to lose half or more of the revenue from each case—if they’re able keep the procedure within the system. In the meantime, low-cost ASC operators will continue to add new facilities that deliver high margins to fuel their growth.


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

The Great, Season 3 (Hulu)—A new season of this rollicking, raunchy black comedy based (loosely) on the life of the Russian empress Catherine the Great is reason for celebration. The show hasn’t gotten the acclaim it deserves, with sharp writing, clever plotting, and gorgeous production values, not to mention a tour de force performance by Elle Fanning in the title role. Huzzah!


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

Should some clinical services be considered a public good? 

We caught up recently with a healthcare leader who had spent time in Atlanta in a previous role, and the conversation turned to last year’s closure of Atlanta Medical Center. One major impact: the closure immediately left the Atlanta metro region, home to over 6M people, with only one Level 1 trauma center (a second Level 1 center opened an hour north of the city in February). “It’s devastating for the community to lose those services,” he shared, “but I also get why the health system made that choice, given how hard the economy has hit hospitals.” When all health systems are feeling the worst margin pressures in more than a decade, most would be reticent to step in and launch a new trauma program, which despite bringing prestige, is often a money-loser.

The conversation got us thinking about whether healthcare needs a new approach to securing essential services needed by the community which aren’t well supported by the payment system. Our current model largely relies on nonprofit systems to meet the community need as a tenet of that status. But as one CMO shared, “If there’s more than one system in the market, we toss the responsibility back and forth like a hot potato.” His solution: there needs to be top-down redesign of urgently needed critical services like trauma and behavioral health, as well as highly specialized services like transplant and pediatric subspecialty care, which he considered oversupplied in his market, with multiple subscale programs. His hope was that health systems could cross competitive lines and collaborate to think about a rational approach to “regional healthcare master planning”, along with a new funding model. It’s a tall order, he continued, but if health systems can’t find a solution on their own, they leave themselves open to government intervention that might mandate a solution—or further questions of the value communities are receiving from supporting nonprofit status.


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

Last week, we heard an encore pair of JC’s conversations with Ochsner Health Chief Wellness Officer Nigel Girgrah, MD, and Even Health CEO David Black. Even Health developed the anonymous, digital peer-support platform Cabana, which Ochsner has used along with other services. The two conversations delve into mental wellbeing among healthcare professions and programs available to support them.

Coming up this Monday, JC talks with Jeff Niles, Executive Vice President at Healthcare Workforce Logistics, a contingent staffing and recruiting company, about how it partners with health systems to implement a privately branded, vendor-neutral contingent workforce solution to help them lower costs, improve quality, and increase fill rates.

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That’s all for this week! Thanks for taking time to read the Weekly Gist. We’re off next Friday for the holiday weekend, but look forward to seeing you back here the following week for more news and commentary. Hope you have a great Memorial Day, and if you have a moment, don’t forget to share the Weekly Gist with friends and colleagues, and encourage them to subscribe. And remember to check out our daily podcast, too.

As always, 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