December 9, 2022

The Weekly Gist: The Eternal Golden Arches Edition

by Chas Roades and Lisa Bielamowicz MD

Warren Buffett has one. So does Bill Gates. No, we’re not talking about private jets, mega-yachts, or mansions in the Hamptons. We’re talking about something even more precious: a McDonald’s Gold Card. And now, as part of a seasonal sweepstakes being run by the fast-food company, you too can score one of these rare possessions. The card entitles you to free food at McDonalds for life—or really, because us peons can’t really be trusted with the same VIP access granted to the likes of Buffett, Gates, and even Rob Lowe, two free meals at Mickie D’s per week for the next 50 years. No word on whether the card will get you early access to fan favorites like the McRib sandwich, or extra tokens in the beloved McDonald’s Monopoly game. What it will get you is 5,200 free meals—if the fast food doesn’t kill you first. Either way, it’s an eternity of Happy Meals.


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

  1. Mark Cuban’s pharmacy company announces employer offering. The Mark Cuban Cost Plus Drug Company (MCCPDC)—formed by the business mogul to sell prescription drugs for low, transparent prices—and the Purchaser Business Group on Health (PBGH)—a nonprofit coalition of around 40 large employers—announced a partnership to deliver prescription medications through employer health benefit plans. The partnership will rely on EmsanaRx, a pharmacy benefit manager (PBM) launched by PBGH last year, to handle prescription fulfillment and pharmacy data management for self-funded employers. This service, expected to be available to employers in March 2023, will take MCCPDC beyond its original model of direct-to-consumer, cash-pay pharmaceuticals. However, the scope of the new venture is not yet clear, as EmsanaRx has not announced how many employers have signed up.

The Gist: Mark Cuban’s company is showing it’s not afraid to disrupt the incumbent PBMs driving up overall drug prices for employers and their employees. While the value proposition of transparently low-markup pharmaceuticals is clear, MCCPDC is not the only one attempting to unseat traditional PBMs, whose hold on employer benefit design has proven difficult to shake so far. (Case in point: Amazon’s slow moves in the space, despite its 2018 acquisition of online pharmacy PillPack). Given his celebrity profile, Cuban’s planned rollout will be closely watched—and more developments are expected soon, as he recently signaled that he hopes to start selling low-cost insulin directly to consumers.

  1. Atrium and Advocate Aurora complete merger. Charlotte, NC-based Atrium Health and Downers Grove, IL- and Milwaukee, WI-based Advocate Aurora Health have formally combined to become the nation’s fifth-largest nonprofit health system. Taking the name Advocate Health, the $27B system will control 67 hospitals across six states in the Midwest and Southeast. The merger, announced in May of this year, unites the systems on even footing, with equal representation on a new board of directors, and a co-CEO arrangement for the first 18 months. The Atrium, Advocate, and Aurora brands will continue to be used in their respective local markets.

The Gist: Structuring Advocate Health as a joint operating agreement, and creating a new superstructure atop the two legacy systems, should allow the combined entity more flexibility in local decision-making, while still potentially generating cost savings from back-office efficiencies. While we expect these kinds of mega-mergers between large regional systems to continue, it remains to be seen whether the newly combined systems can successfully create value by building larger “platforms” of care to win consumer loyalty, deploying digital capabilities, attracting talent, and becoming more desirable partners for nontraditional players.  

  1. CMS proposes new prior authorization requirements for payers. On Tuesday, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule that aims to streamline the prior authorization process by requiring certain payers to establish a method for electronic transmission, shorten response time for physician requests, and provide a reason for denials. This rule replaces one proposed in December 2020 that was never finalized. In addition to applying to Medicaid and Affordable Care Act exchange plans, the new rule would also apply to Medicare Advantage plans, which the previous rule did not. If finalized, it will take effect in 2026.

The Gist: Managing prior authorization requests is one of providers’ greatest sources of frustration, with over 80 percent of physicians rating it as “very or extremely burdensome” in a recent Medical Group Management Association survey. Not only would patients would benefit from faster turnarounds, but even major payers agree that the status quo is suboptimal, and payer advocacy organization AHIP has signaled support for transmitting prior authorization requests electronically. The challenge for regulators will be to strike a balance that satisfies the competing interests of payers and providers—turnaround time is likely to be a sticking point—but the one good thing about a system that no one likes is that there’s plenty of room for improvement.

Pluswhat we’ve been reading.

  1. Why large health insurers are buying up physicians. An enlightening piece published this week in Stat News lays out exactly how UnitedHealth Group (UHG) is using its vast network of physicians to generate new streams of profit, a playbook being followed by most other major payers. Already familiar to close observers of the post-Affordable Care Act healthcare landscape, the article highlights how UHG can use “intercompany eliminations”—payments from its UnitedHealthcare payer arm to its Optum provider and pharmacy arms—to achieve profits above the 15 to 20 percent cap placed on health insurance companies. So far in 2022, 38 percent of UHG’s insurance revenue has flowed into its provider groups, up from 23 percent in 2017. And UHG expects next year’s intercompany eliminations to grow by 20 percent to a total of $130B, which would make up over half of its total projected revenue.

The Gist: The profit motive behind payer-provider vertical integration is as clear as it is concerning for the state of competition in healthcare. UHG now employs or affiliates with 70K physicians—10K more than last year—seven percent of the US physician workforce, and the largest of any entity. Given the weak antitrust framework for regulating vertical integration, the federal government has proven unable to stop the acquisition of providers by payers. Eventually, profit growth for these vertically integrated payers will have to come from tightening provider networks, and not just acquiring more assets. That could prompt regulatory action or consumer backlash, if the government or enrollees determine that access to care is being unfairly restricted. Until then, the march of consolidation is likely to continue.


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

Physician burnout reaches record levels 

The long hours, stressful conditions, and labor shortages brought on by the pandemic have done serious harm to the physician workforce. The graphic below tracks physician burnout, a combination of emotional exhaustion, loss of agency, and depersonalization that has become the primary measure of the pandemic’s toll on workers, to reveal that physicians are demoralized like never before. Physician burnout levels had been decreasing since 2014, in part due to practice consolidation and the expansion of team-based care models. Burnout reached its lowest levels in 2020—perhaps explained by a pandemic-induced sense of purpose—but 2021 then saw a dramatic spike in every measure of physician dissatisfaction, as the heroic glow of the early pandemic faded, and an overtaxed and understaffed delivery system became the new norm. In explaining how the pandemic has impacted their career decisions, surveyed physicians list unsustainable burnout and stress as their top concern, and 11 percent say they have exited the profession, either for retirement or a non-clinical job, in the past two years. Four in ten surveyed physicians report changing jobs since 2020, mainly within similar or different practice settings, citing a desire for better work-life balance as their primary motivation. (It should be caveated that these data are from a smaller survey of 534 physicians, 40 percent of whom identified as “early career”.) While the solutions here aren’t new, they are challenging: we must continue to implement team-based care models that provide physicians top-of-license practice and improved work-life balance, remove administrative tasks wherever possible, and ensure that we are communicating and engaging physicians—employed and independent alike—in organizational strategy and decision-making.


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

Jeanne Dielman 23, Quai du Commerce, 1080 Bruxelles (HBOMax)—Just named “Greatest Film of All Time” in Sight and Sound’s once-a-decade poll of leading film critics—the first film directed by a woman to claim top spot—this 1975 masterpiece by Chantal Ackerman is a movie you’ll never forget, and likely one of the most difficult you’ll ever see. A landmark of feminist cinema, it’s three-plus intensely mesmerizing hours of viewing. Don’t miss it.


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

Workplace violence continues to strain hospitals 

Even before the pandemic, healthcare workers accounted for nearly three quarters of non-fatal injuries from violence in the workplace. Given the level of emotion and stress experienced in hospitals, that’s not surprising. But during the pandemic, once-sporadic violent outbursts became routine, leaving many healthcare workers fearful for their safety. According to several health systems we’ve recently spoken with, violent events haven’t waned as the number of COVID admissions has fallen. One hospital CEO recently told us, “I never would’ve imagined that security would consume so much of my time. We keep looking for a great solution, but despite a ton of effort and a lot of money, it’s barely made a dent.” The cost of additional security—more personnel, metal detectors, restricted access—can run into millions annually for the average hospital. Another CEO shared, “We want the hospital to be a healing environment, not feel like a prison, so we were looking for less-threatening alternatives. But those were even more expensive. Placing a canine team in the ED would run over $1M per year!” And violent episodes are not limited to hospitals, with systems reporting an increase in incidents at outpatient and clinic sites where it’s not feasible to place onsite security, given the number of smaller-scale locations.

Human resource leaders report that experiencing workplace violence, either personally or through a colleague, has been a tipping point for those considering leaving the field. According to one CHRO, workers experiencing repeat violence has been increasingly common: “We recognized the importance of having someone very senior—CEO, COO, or CMO—personally reach out to staff who have been assaulted in the workplace. But there are people who we’ve now had to call two or even three times. It’s hard to even know what to say in those situations.” In addition to visible security and constant staff communication, providers must lobby state and federal lawmakers for legislation that requires tracking and reporting of healthcare workplace violence, and increases penalties.  The Workplace Violence Prevention for Health Care and Social Service Workers Act was passed by the US House of Representatives in 2021, and was recently introduced into the Senate, so it’s time to contact your representatives and urge them to move this bill forward.

Thanks for joining us for the Weekly Gist! We appreciate your readership, and we’d love to hear from you—let us know what you thought, and what you’re seeing out there. Remember to share this with a friend or colleague, and encourage them to subscribe, and listen to our daily podcast.

And 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