December 16, 2022

The Weekly Gist: The Chumbawamba Christmas Edition

by Chas Roades and Lisa Bielamowicz MD

Whether we’re trimming the tree, wrapping the presents, or doing whatever it is you do to a yule log, there’s nothing like the classics to provide the musical wallpaper. We’re talking Bing Crosby, Perry Como, Burl Ives. About the most modern we’re willing to venture is Mariah Carey’s 1994 classic, “All I Want for Christmas Is You”. Banger. But for the most part, the old stuff is the good stuff. Which is why it surprises us that musicians are still trying to revive their careers by grabbing for some of that sweet, sweet Xmas airplay. This year saw new Christmas releases from the likes of Chris Isaak, Debbie Gibson, Joss Stone, and even the Backstreet Boys (definitely too soon, and too ghoulish…canceled). What has-been artist would you like to hear sing about Santa? We’d vote for Chumbawamba—you’re never gonna keep them down!


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

  1. West Coast nonprofit health plans announce agreement to combine. Two nonprofit insurers, Long Beach, CA-based SCAN Group and Portland, OR-based CareOregon, have agreed to merge. The new organization—which will take the name HealthRight Group, while retaining the SCAN and CareOregon brands in local markets—will have $6.8B in annual revenue and cover around 800K lives. Continuing their previous areas of focus, SCAN will cater primarily to Medicare Advantage (MA) beneficiaries, and CareOregon will prioritize serving managed Medicaid enrollees. Executives from both companies cited scale as the primary motivation for the merger, with the companies aiming to both strengthen their foothold in current markets and expand their reach into new ones. The deal, which still needs approval from state regulators, is expected to close in 2023.

The Gist: HealthRight stands to be a strong player in the booming government-backed, managed care market in states currently dominated by large payers like Kaiser Permanente and UnitedHealthcare. SCAN has differentiated itself with services dedicated to underserved populations, including creating a MA plan designed for LGBTQ+ seniors, and offering California’s only integrated dual-eligible, special needs plans. We expect the addition of CareOregon’s 319K managed Medicaid members to provide a larger platform for these targeted initiatives, and we wouldn’t be surprised to see more nonprofit insurers joining forces with HealthRight to better compete with current market heavyweights.   

  1. University of Michigan Health to buy Sparrow Health. Ann Arbor, MI-based University of Michigan Health (UM Health), part of Michigan Medicine, announced last Thursday that it will acquire Lansing, MI-based Sparrow Health System, forming a $7B health system with over 200 care sites across southeast and mid-Michigan. The acquisition will connect Sparrow’s six hospitals to UM Health’s flagship academic medical center (AMC) and sole hospital, while extending the reach of Sparrow’s 70K-member health plan, in which UM Health had previously invested. Pending regulatory approvals, the deal is expected to be completed in the first half of 2023.

The Gist: Given Sparrow’s recent financial struggles—the system announced hundreds of layoffs in September after posting a $90M loss in the first half of 2022—this was a sensible pickup for UM Health, extending its reach into lower-cost community healthcare adjacent to its current market. Other AMCs have made similar moves in recent years, as the differentiated services of an AMC and the local patient reach of community hospitals make for a strong pairing—and this deal will go far toward advancing UM as a truly regional system. But even if UM Health got a good deal on the acquisition, the current status of Sparrow’s infrastructure and workforce will require considerable investment (UM Health has already committed $800M in the deal’s announcement).

  1. CMS proposes key reforms to marketplace exchanges. On Monday, the Centers for Medicare and Medicaid Services (CMS) released draft regulation that aims to improve consumer protections and navigation in the Affordable Care Act (ACA) insurance marketplace. Among other changes, the new rule would require greater availability of providers in insurers’ networks, limit the number of non-standard policies offered on the exchanges, establish new special enrollment period timeframes, and allow exchange navigators to conduct door-to-door enrollment on their initial visits.

The Gist: Driven by increased subsidies, enrollment in ACA marketplace plans reached an all-time high of nearly 14M in 2022. CMS stated that it proposed these changes partly in anticipation of millions of Americans losing Medicaid coverage at the end of the federal COVID public health emergency. Currently, over 60 percent of surveyed Medicaid enrollees are unaware of the impending redetermination process.  

Pluswhat we’ve been reading.

  1. Do hospitals share the blame for the COVID staffing crisis? The latest piece in the New York Times’ “Profits over Patients” series focuses on the staffing policies of Ascension, one of the nation’s largest nonprofit health systems, drawing a straight line from its cost-cutting practices over the last decade to its current staffing woes. Like previous articles in the series, the piece hones in on Ascension’s profit-seeking motives, pairing pre-pandemic accounts of Ascension executives boasting about savings from slashed labor costs with story after story of its frontline clinicians struggling to provide adequate patient care once COVID hit. In responses included in the article, an Ascension spokesperson rejected the idea that the system’s workforce policies were responsible for its current staffing crisis, claiming that Ascension has maintained better staff-to-patient ratios than many of its peers.

The Gist: Yet again, the New York Times is shining a harsh light on a health system that has been engaged in management practices common across the industry. While the piece omits some relevant information, such as the recent spike in labor costs, it’s useful to point out that many hospitals were so thinly staffed prior to COVID that they had virtually no slack in their labor pools, hindering their response to the crisis. In our experience, the reasons for this have less to do with lining executives’ pockets, and more to do with the realities of dealing with a worsening payer mix and rising input costs. While future hospital workforce strategy is going to have to focus on reducing dependency on nurses—especially in the inpatient setting—any effort to that end must augment nurses with team-based care models and technology solutions, rather than pushing further on already-tight nurse-to-patient ratios.


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

The current “tripledemic” is putting pressure on hospitals  

Hospitals across the country are being hit with a spike in respiratory syncytial virus (RSV) and influenza cases, while still dealing with a steady flow of COVID admissions, in what’s been dubbed a “tripledemic”. The graphic below uses hospitalization data from the Centers for Disease Control and Prevention (CDC) to show that each disease has been sending similar shares of the population to hospitals across late fall, with flu hospitalizations having just overtaken COVID admissions after Thanksgiving. These numbers reflect that we’re experiencing the worst RSV season in at least five years, and we’re set to endure the worst flu season since 2009-10. As RSV is most severe in very young children, its recent surge has revealed another capacity shortage in our nation’s hospitals: pediatric beds. From 2008 to 2018, pediatric inpatient bed counts fell by 19 percent, as hospitals shifted resources to higher revenue services. This strategy has now come to a head in many parts of the country, as RSV has driven pediatric bed usage rates to a recent high. (The Department of Health and Human Services’ pediatric capacity data only dates back to August 2020.) With three straight weeks of declining RSV hospitalizations, there is reason to hope that pediatric care units will soon feel a reprieve. However, flu season has yet to reach its peak, prompting calls for a return to widespread mask-wearing and a renewed emphasis on flu shots, given that more than half of Americans have not yet gotten vaccinated this season.


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

The Banshees of Inisherin (In theaters/HBOMax)—This reverse-bromance breakup movie, set on a small island off the coast of 1920s Ireland, will deservedly garner Oscars this season. More than just a parable of the Irish civil war, the film asks hard questions about the ties that bind, and what happens when they snap. Another tour de force from Martin McDonagh (In Bruges).


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

Did hospital wage increases come too soon?

It’s been a difficult year for the hospital workforce, both here and around the world, as the effects of the pandemic, the economy, and the legacy of lean staffing models have combined to drive up vacancy rates and threaten the sustainability of hospital operations. Everywhere we’ve gone in the past six months, workforce issues have overshadowed every other topic: how can hospitals attract and retain staff given the environment, how can they stabilize finances in the face of 15-20 percent increases in labor costs, how can they safeguard patient care with intense turbulence in the clinical workforce? This week we heard yet another wrinkle to this problem, one that had not occurred to us but in retrospect is obvious. A system CFO was lamenting the fact that even with big salary increases, the hospital workforce remains unstable. “It’s like we’re not even getting credit for raising base salary 15 percent across the board and giving big retention bonuses.”

As to why—it’s a timing issue. Her system, like many, delivered pay raises back in the late winter and early spring, when staff were still recovering from the Omicron surge and the urgency of reducing reliance on expensive agency labor became clear. But economy-wide inflation had only then begun to spike, and has since continued to be stuck at high levels. Staff don’t view the earlier salary increases as a response to inflation, but as predating it—and they’re asking for still more, to offset rising prices for food, transportation and housing. “I wish we’d waited to give the pay bump,” the CFO told us. “Even though our wage increases have outpaced inflation this year, the timing of events didn’t help us at all.” With the hospitals operating near capacity, and a severe flu season impacting both patient volumes and staff availability, her sense is that the system is back to square one on staffing—and more difficult financial decisions lie ahead.

And there you have it—the last Weekly Gist of the year. We’re so grateful for your readership this year! Thanks to our awesome team, we managed to increase our publishing frequency by 20 percent, and we welcomed literally thousands of new readers across the year. Truly blessed.

We’ll be back after the New Year, and have big things planned for 2023—stay tuned! Hope to see you then. In the meantime, best wishes for a safe and relaxing holiday season, and 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-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President