October 6, 2023

The Weekly Gist: The Grin and Bear It Edition

by Christy Davis

In a week that saw our hometown Commanders suffer an embarrassing drubbing by the Chicago Bears, who came into the nationally televised contest sitting on a 14-game losing streak, and one that also saw the passing of Bears legend Dick Butkus, we were ready for some more uplifting ursine news. Right on cue, it’s time for Fat Bear Week 2023! Get your picks in now for your favorite overweight brown bears, who have spent the Alaskan summer packing on the pounds for the long winter ahead. This year’s contest features fan favorites 32 Chunk, 128 Grazer, and of course the spoiler pick, 435 Holly. (Who can forget the drama of last year’s contest, which slipped out of Holly’s giant paws at the last minute?) A great way to counterbalance an otherwise grim week on the Bear front!


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

  1. Kaiser Permanente healthcare workers initiate record strike. On Wednesday, 75K Kaiser Permanente (KP) healthcare workers in five states and Washington, DC walked off the job as part of the largest healthcare strike in US history. The striking workers are a diverse group, based mostly in California, that includes support staff, X-ray technicians, medical assistants, and pharmacy workers. They will continue their work stoppage until Saturday morning, though union leadership is threatening an even larger strike in November if a new contract agreement is not reached by then. Their employment contract expired on September 30th, and while negotiations have progressed on issues like shift-payment differentials and employee training investments, union leaders and KP executives remain at odds over key wage increase demands, with the unions asking for a $25 national minimum wage, and KP proposing $21. The company has sought to minimize disruptions to patient care during the strike, bringing in temporary labor to keep critical infrastructure open, but has told its members to expect some non-urgent procedures to be rescheduled, some clinic and pharmacy operating hours to be reduced, and call center wait times to be lengthy.

The Gist: Kaiser Permanente has enjoyed solid relations with its unions for decades, making this strike a significant break from precedent, fueled by post-pandemic burnout and staffing shortages. While KP is keeping all essential services open, care disruptions are inevitable with around one third of its total workforce on strike. The stakes of these labor negotiations extend far beyond just KP and its employees, as union success could inspire other unionized healthcare workers to adopt similar tactics and demands. (Case in point: Employees at eleven Tenet Healthcare facilities in California represented by SEIU-UHW, one of the unions representing striking KP workers, just voted to authorize their own strike.) While happening alongside high-profile strikes in other industries, labor unrest is a troubling trend for health systems, whose margins remain well below historical levels amid persistently high labor and supply expenses.

  1. CBO report finds CMMI hasn’t saved Medicare any money. Late last week, the Congressional Budget Office (CBO) released its analysis of the Center for Medicare and Medicaid Innovation (CMMI)’s spending outlays, revealing that in its first decade of operations it produced a $5.4B net increase in federal spending instead of a projected $2.8B reduction. Moreover, CBO revised its CMMI projection for 2021-2030 from a $77.5B net spending reduction to a $1.3B increase, predicting CMMI may only begin to generate annual savings in 2031. CBO says its updated projections largely reflect revised expectations on CMMI’s ability to identify and scale models that actually reduce Medicare spending. CMMI was created by the Affordable Care Act (ACA) 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.

The Gist: This critical report confirms what many in the healthcare world already believed: the ACA’s value-based care initiatives have largely struggled to reduce Medicare spending. There are plenty of policy factors to blame, including the lack of mandatory participation for providers and conflicting incentives across care models, but one factor left out of the CBO report is CMMI’s disproportionate emphasis on accountable care organizations (ACOs) to produce meaningful cost savings, even as years of data proved otherwise. ACOs are designed to reduce spending primarily through utilization management, but research has shown that prices, not utilization, are responsible for the US’s high medical spend relative to other countries. While CMMI’s mission is still laudable and important, the center must make good on its 2021 “strategic refresh” if it hopes to continue receiving Congressional support.

  1. Costco offers members $29 telehealth visits. Last week, warehouse club giant Costco announced it will offer its members access to same-day, primary care telehealth visits for as low as $29, as well as lab panels and therapy visits, via a partnership with NYC-based telehealth platform Sesame. Costco’s 125M members in all 50 states will have access to Sesame’s network of over 3,500 affiliated providers for virtual care services, as well as a 10 percent discount on all other Sesame services, some of which are available in person. As Sesame does not accept health insurance, the offering is targeted at cost-conscious Costco members with either high-deductible plans or no insurance who are willing to pay cash. This is Costco’s first foray into healthcare delivery, though it offers pharmacy and optical services and runs a health insurance marketplace for businesses.

The Gist: Costco’s telehealth offering most closely resembles Amazon Clinic, though its $29 price is less than half of Amazon’s $75 average price for video visits. With yet another retail giant throwing its hat into the healthcare delivery ring, consumers now have a growing number of convenient and affordable care options for low-acuity conditions, though at the potential cost of confusion and reduced coordination. 

Pluswhat we’ve been reading.

  1. How US is failing to keep its citizens alive into old age. Published this week in the Washington Post, this unsparing article packages a year of investigative reporting into a thorough accounting of why US life expectancy is undergoing a rapid decline. After peaking in 2014, US life expectancy has declined each subsequent year, trending far worse than peer countries. In a quarter of US counties, working-age Americans are dying at the highest rates in 40 years, reversing decades of progress. While deaths from firearms and opioids play a role, chronic diseases remain our nation’s greatest killer, erasing more than double the years of life as all overdoses, homicides, suicides, and car accidents combined. The drivers of this trend are too numerous to list, but experts suggest targeting “the causes of the causes”, namely social factors, as the death rate gap between the rich and poor has grown almost 15x faster than the income gap since 1980.

The Gist: This reporting is a sobering reminder of the responsibilities—and failures—borne by our nation’s healthcare system. The massive death toll of chronic disease in this country is not an indictment of the care Americans receive, but of the care and other resources they cannot access or afford. While it’s not the mandate of health systems to reduce systemic issues like poverty, there is no solution to the problem without health systems playing a key role in increasing access to care, while convening community resources in service of these larger goals.


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

Health “insurtechs” struggling to stay relevant

“Insurtechs” Clover Health, Oscar Health, and Bright Health all went public in the midst of the hot equity market of 2021. Investors were excited by the fast growth of these health insurer startups, and their potential to revolutionize an industry dominated by a few large players. However, the hype has dissipated as financial performance has deteriorated. After growing at all costs during a period of low interest rates, changing market conditions directed investors to demand a pivot to profitability, which the companies have struggled to deliver—two years later, none of the three has turned a profit. Oscar and Bright have cut back their market presence significantly, while Clover has mostly carried on while sustaining high losses. In the last two years, only Oscar has posted a medical loss ratio in line with other major payers, who meanwhile are reporting expectation-beating profits. While Oscar has shown signs of righting the ship since the appointment of former Aetna CEO Mark Bertolini, the future of these small insurers remains uncertain. As their losses mount and they exit markets, they may become less desirable as acquisition targets for large payers.


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

Javelin by Sufjan Stevens—The ever-fascinating singer-songwriter is back with his 10th studio release, and it’s a return to the soulful indie-folk that has earned Stevens a cult following, and comparisons to the likes of Nick Drake. Some of his best work in years, just in time for chilly autumn days.


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

Failing to earn the consumer’s referral

There is a local urgent care chain that we frequented regularly when my kids were young and cycling through rounds of ear infections and strep throat. The experience was always solid, driven by online scheduling, efficient operations, and good customer service. A few years ago, the clinics were bought by a local health system. We recently visited one for the first time post-acquisition, when my now teenage son needed to rule out a broken bone from a sports injury. This experience at the same urgent care left a very different impression. In contrast to the “easy in, easy out” experience I expected, we sat in an exam room for hours, even though the place was not crowded. While this could be due to the staffing challenges pervasive across the industry, other elements of the acquisition left a different impression. Gone was the advertised cash pricing (and I’m anticipating a higher bill once we get one). The new patient self-registration system was overly complex, built for a hospital, not an immediate care setting. The only signs of “systemness”? Multiple prompts to sign up for the health system’s MyChart patient portal (not interested, they have few facilities close by), and a printed referral to an employed orthopedic surgeon a forty-minute drive from home (with no guidance as to whether or when we should seek it, given that no bones were broken).

A few days ago, a scheduler from the system called to book the appointment. With no inquiry as to whether my son’s pain had improved, the interaction felt like a business transaction, not clinical follow-up. I declined. Just because a care site is acquired by a health system, that doesn’t mean that patients will feel any value from its being part of a system. Right or wrong, my impression was that health system ownership has made for a worse experience: inefficient, more complicated, and possibly more expensive. Nothing about the visit gave me confidence that there was a benefit to following up with an affiliated provider. The health system had failed to earn our referral. Systems buy assets like urgent care to create entry points that will generate downstream demand and hopefully build loyalty to the brand. But capturing that must start with delivering an excellent experience in every encounter, not merely changing the name on the building.


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

Last Monday, JC spoke with Torben Nielsen, CEO of Uptiv Health. They discussed how Uptiv is trying to change the model for infusion care by providing hybrid, whole-person care in partnership with other providers.

This Monday, JC will talk with Sara Vaezy, Executive Vice President and Chief Strategy and Digital Officer for Providence, about their Digital Innovation Group’s latest incubated technology, Praia Health, a new “platform-as-a-service” technology that aims to increase patient engagement.

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Hope you’re enjoying the crisp October weather as much as we are! Thanks for taking time to read the Weekly Gist. We’d love to hear from you—let us know what you thought, and what’s piquing your interest in the crazy world of healthcare. And don’t forget to tell your friends and colleagues about us and encourage them to subscribe.

As always, please let us know how 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