November 10, 2023

The Weekly Gist: The Farewell Pandas Edition

by Chas Roades and Lisa Bielamowicz MD

It was a difficult week in Washington as the region bid farewell to three of its most treasured residents: the giant pandas Tian Tian, Mei Xiang, and Xiao Qi Ji. Giant pandas have been the centerpiece of the National Zoo for more than 50 years, since their first arrival in Washington during the Nixon administration. On Wednesday morning, the three bears were loaded onto a specially outfitted Boeing-777, dubbed the “FedEx Panda Express”, along with 220 pounds of bamboo, crates of apples, carrots, and sweet potatoes, and other panda comfort foods. They have now arrived in Chengdu, China, where they will stay for a time before being resettled into their permanent homes. Given the chilly nature of US-China relations, it’s unclear whether the DC area will ever see more of these roly-poly, black-and-white creatures joining the menagerie—a sad loss for those of us who grew up visiting the bears on countless school field trips. Hòu hui yǒu qĩ, panda friends.


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

  1. Amazon announces One Medical membership discount for Prime members. On Wednesday, e-commerce giant Amazon announced that its 167M US-based Prime members can now access One Medical primary care services for $9 per month, or $99 per year, which amounts to a 50 percent annual discount on One Medical membership. (Additional Prime family members can join for $6/month or $66/year.) One Medical, which Amazon purchased for $3.9B last year, provides its 800K members with 24/7 virtual care as well as app-based provider communication and access to expedited in-person care, though clinic visits are either billed through insurance or incur additional charges. Amazon also recently started offering virtual care services through its Amazon Clinic platform, at cash prices ranging from $30 to $95 per visit.

The Gist: After teasing this type of bundle with a Prime Day sale earlier this year, Amazon has made the long-expected move to integrate One Medical into its suite of Prime add-ons, using a similar pricing model as its $5-per-month RxPass for generic prescription medications. At such a low price, Amazon risks flooding One Medical’s patient population with demand it may struggle to meet. But if Amazon can scale One Medical, while maintaining its quality and convenience, it may be able to make the provider organization profitable. Known for its willingness to take risks and absorb financial losses, Amazon is continuing to build a healthcare ecosystem focused on hybrid primary care and pharmacy services that delivers a strong consumer value proposition based on convenience and low cost.

  1. Walmart partners with a health system and insurer in Florida. On Tuesday, Walmart Health announced deals with nine-hospital system Orlando Health and Ambetter from Sunshine Health, a Centene subsidiary offering Affordable Care Act exchange plans, to become a preferred provider in the Ambetter Value Plan. Walmart Health’s 23 Florida-based centers will provide primary care services and care coordination in a narrow-network health plan that includes Orlando Health. The Ambetter Value Plan is available in seven counties, covering the Orlando, Tampa, and Jacksonville areas. While this partnership is limited to Florida, Walmart Health operates 48 centers in five states, with plans to open dozens more locations and expand into three additional states next year.

The Gist: With a strong foothold and customer base in states that haven’t expanded Medicaid, Walmart Health centers are well positioned to be part of low-cost, narrow-network plans targeted at individuals who don’t qualify for Medicaid, or who were recently removed from the program. While Walmart Health already works with major insurers, this first-ever network partnership with a health system is a notable step forward for Walmart, advancing its healthcare delivery business beyond meeting basic primary care needs into more complex care coordination. While other large retail and pharmacy chains have opted to buy their way into the primary care space, Walmart is thus far building its own retail store-based clinic enterprise, with plenty of room to scale.

  1. Medicare finalizes physician pay cuts as Congress considers stepping in. Last week, the Centers for Medicare and Medicaid Services (CMS) issued the final 2024 Physician Fee Schedule, which reduces overall payment rates for physicians by 1.25 percent, including a 3.4 percent decrease in the conversion factor for relative value units, compared to 2023. The rule also implements a new add-on payment for complex evaluation and management visits, which is expected to boost pay for primary care physicians. The American Medical Association (AMA) strongly opposes these cuts and immediately appealed to Congress for a reprieve. In response, the Senate Finance Committee unanimously advanced a bill to the Senate floor that would reduce the conversion-factor rate cut from 3.4 percent to 2.15 percent, while also delaying reductions in Medicaid disproportionate share funding for safety-net hospitals. Senate Majority Leader Chuck Schumer (D-NY) has indicated he intends to assemble a broad healthcare bill, including some or all of these provisions, by the end of this year.

The Gist: Physicians were hopeful that inflation’s toll on labor and supply costs would earn them a break from continued Medicare pay cuts, but CMS remains committed to reductions within its budget neutrality framework. Earlier this year, the Medicare Payment Advisory Commission (MedPAC) recommended for the first time that physician payments be tied to an index of physician practice inflation, but that would require legislative intervention, which Congress has not taken up. The AMA calculated that Medicare physician pay has lagged inflation by 26 percent since 2001, pointing to burnout and large numbers of physicians exiting the profession as a result. Until calls for Medicare payment reform are heeded, physicians, like health systems, will have to adopt new, lower-cost models of care to cope with what they will continue to see as insufficient reimbursements.

Pluswhat we’ve been reading.

  1. Physicians want more oversight of clinical AI tools. Published this week in the New York Times, this article explores why many physicians are skeptical about using artificial intelligence (AI) to make medical decisions, even after the tools have been approved by federal regulators. Physicians currently have a menu of roughly 350 AI-powered software programs cleared by the Food and Drug Administration (FDA) to process diagnostic scans, on top of programs developed internally by provider organizations which don’t require FDA oversight. But concerns over the “black box” of software development have restrained uptake. Alongside the many accounts of successful AI diagnostic tools, there are failure stories that typically cite inadequate, unrepresentative training samples that are often biased along demographic lines. Physicians are calling for regulators to improve the rigor and transparency of their evaluations before caregivers will get behind these tools.

The Gist: While regulatory regimes tend to lag the rapid pace of technological advancement, this piece makes the case that many physicians won’t be satisfied with blanket approvals. Providers want to be confident that AI programs are supporting the right decisions for their specific patients, which can only happen if they have access to the same data as regulators and developers. The Biden administration appears to be moving in that direction, having issued an executive order that calls for the creation of a monitoring system for AI applications in healthcare. AI’s potential to transform medicine is limited as much by providers’ trust as the capabilities of the technology itself.


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

CMMI increased Medicare spending in its first decade

In this week’s graphic, we highlight the recent Congressional Budget Office (CBO) analysis of the budgetary impact of the Center for Medicare and Medicaid Innovation (CMMI), which has gotten off to a disappointing start. CMMI was created by the Affordable Care Act in 2010 to test new payment models and other initiatives for reducing the federal government’s healthcare costs, but of the nearly 50 models it has run, only four have become permanent programs. Originally projected to generate $2.8B in savings between 2011 and 2020, CMMI was responsible for a net spending increase of $5.4B, having achieved only one quarter of its projected Medicare savings. Moreover, the CBO predicts that CMMI won’t produce net annual savings until 2031. There are several factors to blame for CMMI’s initial shortcomings, including the lack of mandatory participation for providers, conflicting incentives across care models, patient attribution challenges between providers, and insufficient commercial payer support to scale new care models. CMMI intends to simplify its approach, according to its 2021 “strategy refresh”, which should address some of these issues, though requiring commercial payers to participate in new models seems unlikely. However, despite the discouraging results so far, CMMI’s mission is still laudable and important, and the transition to value remains a key priority for federal regulators.


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

The sudden strategic importance of the CNO

One welcome side effect of the current economic challenges health systems face has been the return to prominence of the chief nursing officer (CNO) as a pivotal driver of system strategy. So many of a hospital’s important operating and margin pressures intersect with the CNO’s domain: staffing shortages, nurse recruiting and retention, workplace violence, rising union activity, care model redesign, adoption of new care technologies (including AI), the shift of the clinical workforce into non-hospital settings, and on and on. Never has the role of the CNO been more important to ensuring systems’ continued ability to deliver high-quality, cost-effective care in a sustainable way. Even more heartening, we’ve been part of a number of system board retreats and strategy discussions over the past several months at which the CNO has been an important voice in the room. We’d argue that, given how important these issues will be over the coming years, it may be time to give CNOs a permanent role in health system governance, just as boards often include physician members. One additional agenda item that will be critical for systems to address, given the demographics of nursing executives: what’s being done to cultivate the next generation of strong nursing leadership to fill the CNO role? A topic worth keeping an eye on.


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

Last Monday, JC spoke with Washington Post national health reporter Dan Diamond about the political fight on Capitol Hill over the reauthorization of the President’s Emergency Plan for AIDS Relief, better known as PEPFAR. The 20-year-old foreign aid program has long enjoyed bipartisan support in Congress, but this year its reauthorization has been put on hold amid claims that it provides funds for abortions overseas.

This Monday, we’ll hear JC’s conversation with Brad Kittredge, the CEO and founder of mental telehealth platform Brightside Health. They met up at the HLTH conference in October to discuss the services that Brightside offers, along with its recent announcement that it will begin serving Medicare and Medicaid beneficiaries.

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That’s all for this week. Wishing all of those who have served, along with their families, a very happy Veteran’s Day. Thanks for reading the Weekly Gist, and for taking the time to get in touch with your feedback and suggestions. Please remember to share this with friends and colleagues, and encourage them to subscribe.

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