February 25, 2022

The Weekly Gist: The Hank the Tank Edition

by Chas Roades and Lisa Bielamowicz MD

A ray of sunshine in an otherwise bleak news week: Hank the Tank is off the hook! For those not following, Hank is a 500-lb. black bear who stood accused of more than 150 counts of “conflict behavior”—including breaking into dozens of homes and raiding refrigerators—in the South Lake Tahoe, CA area. Despite the protests of a growing legion of online admirers, California Department of Fish and Wildlife (CDFW) had set its sights on capturing Hank and euthanizing him. But this week, new DNA evidence vindicated the big guy. Or at least, proved that Hank wasn’t the only bear up to no good. It’s been a long pandemic, and it turns out Hank’s not the only one that’s become, to use the CDFW’s term, “severely food-habituated.” We’re right there with you, Hank.


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

  1. Centers for Medicare and Medicaid Services (CMS) overhauls the Direct Contracting payment model. On Thursday CMS announced it will replace all versions of its Global and Professional Direct Contracting (GPDC) model, which allowed primary care providers to take full or partial risk on managing cost of care for traditional Medicare beneficiaries, after progressive Democrats raised concerns about whether a growing presence of Medicare Advantage insurers and private equity-backed groups in the model might compromise patient care and access in the traditional Medicare program. GPDC will be replaced with a new three-year demonstration called Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH), to start enrollment in 2023. The 51 current participants in the GPDC model can move into ACO REACH as long as they meet new requirements, which include developing plans to identify and address health disparities, and ensuring providers control three quarters of governing boards (as compared to a quarter in the GPDC model). Private equity and insurer applicants can still apply, but must demonstrate a track record of direct patient care, delivering quality outcomes, and serving vulnerable populations.

The GistACO REACH is largely a “re-skinning” of the Direct Contracting program, rather than a significant overhaul. Physician, health system, and ACO groups, who were concerned that the program would be canceled altogether, were pleased with the announced changes to the model, although debate continues on whether the new guardrails will effectively address concerns around for-profit insurer and investor participation. Like Direct Contracting before it, ACO REACH will be an important vehicle for risk-ready providers to move more extensively into full-risk contracting, without launching a plan or partnering directly with a MA insurer.

  1. Department of Justice (DOJ) files suit to block UnitedHealth Group (UHG)’s $13B acquisition of Change Healthcare. DOJ alleges that allowing UHG’s Optum subsidiary to acquire Change, a direct competitor used by most large commercial insurers for healthcare claims solutions, would give UHG 75 percent of the healthcare claims processing and management market. This would significantly reduce competition, the DOJ claims, while simultaneously giving UHG access to its competitors’ sensitive plan design and pricing information. UHG called the DOJ’s position ‘deeply flawed’ and promised to fight the case.

The Gist: This is the second big move by antitrust regulators in a week to put the brakes on consolidation in healthcare: shortly after the DOJ sued to block Rhode Island’s two largest health systems, Care New England and Lifespan, from merging, those systems abandoned plans to combine. We are seeing the first real signs that the Biden administration is following through on plans to more closely scrutinize healthcare deals, including payer-led vertical integration. For both payers and providers, increased scrutiny will place a premium on the consumer value proposition of any combination—and force merging companies to deliver on the benefits of scale.

  1. Hospitals avoid feared staff exodus after COVID vaccine mandate implementation. The February 14th deadline for healthcare workers to receive their first dose of the COVID vaccine does not appear to have significantly worsened the hospital staffing crisis, even in rural hospitals. But the mandate hasn’t necessarily meant that all healthcare workers are now vaccinated, as some hospitals reported approving a flurry of medical and religious exemptions to avoid staff departures.

The Gist: Just as when states and early-adopter health systems enforced healthcare worker vaccine mandates last year, COVID vaccine uptake jumped just ahead of the federal deadline. After months of challenges, we may finally be moving beyond debates over healthcare worker vaccine requirements. And as hospitalizations from the Omicron wave continue to decline, most states and health systems are not planning to implement booster requirements.

  1. Maternal mortality increased sharply during first year of pandemic. According to new figures from the National Center for Health Statistics, the number of American mothers who died during pregnancy or shortly after giving birth in 2020 rose 14 percent, to 23.8 deaths per 100,000 live births. While the overall rate increased between 2019 and 2020, the largest jumps were in women of color: the mortality rate for Hispanic women, which was lower than that of White women, spiked by 44 percent, and mortality increased 26 percent for Black women. The maternal death rate in the US is much higher that of other developed nations, and has doubled over the last three decades, despite advances in medical care.

The Gist: While some of this increase can be attributed to COVID infection (which leaves pregnant women at higher risk for severe disease), low vaccine uptake, and pandemic-related care delays, cardiovascular disorders such as pre-eclampsia are still the leading cause of mortality in pregnant and postpartum American women. This is a story of lack of access to coverage and care. While roughly half of all US births are covered by Medicaid, most Medicaid plans do not provide postpartum care coverage, putting low-income mothers at real risk.

Pluswhat we’ve been reading.

  1. As America’s physician demographics shift, so do doctors’ priorities. A recent New Yorker article details the history of the American Medical Association’s (AMA) opposition to single-payer healthcare, and the grassroots movement that nearly changed its position in 2019. Since its founding in the 1840s, the largest association of the nation’s doctors has wielded significant influence over healthcare policy, and has been the most effective opponent of several waves of progressive healthcare reform proposals across the last century. More recent changes in the demographic makeup of its physician constituents have begun to mirror the US population. A quarter of today’s practicing physicians graduated from foreign medical schools, and gender and racial gaps in medical schools have been reduced. Today, half of medical students are female, and half are people of color.

The Gist: The perspectives, needs, and politics of the physician community are changing. Younger physicians tend to be more left-leaning, and more are employees, rather than entrepreneurial business owners. While physician pocketbook issues historically dominated the AMA’s policy positions, today’s younger physicians are increasingly motivated by social justice concerns, leading to advocacy positions that would have been unimaginable a few decades ago. Physician societies continue to move closer to endorsing more extensive healthcare reform policies, over trying to ensure economic protection for the profession—and in the long run, this shift in physician support could prove a key driver in increasing public approval of “Medicare for All” and other coverage reforms.


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

Severance (AppleTV+)—Intriguing new thriller directed by Ben Stiller and starring Adam Scott, John Turturro, and Patricia Arquette, that takes “work-life balance” to a whole new level. The premise: office workers undergo a surgical procedure that makes them unable to remember their personal lives while at the office, and vice versa. Dystopic fun, especially in the midst of the “return to work” phase of the pandemic.


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

What is an insurance company in 2022?

The largest health insurers are quickly becoming vertically integrated healthcare organizations that span the care and coverage continuum. While 2021 was a mixed year for these companies as healthcare volumes bounced back, their diversified portfolios helped cushion losses from higher claims. The graphic below analyzes revenue growth by segment for the five largest insurers across the last two years. On average the insurance and pharmacy benefit management components of the companies grew at nine percent, while care delivery and integrated health services grew at much higher rates. UnitedHealth Group (UHG) and Anthem boasted the highest year-over-year revenue growth, driven by UHG’s Optum subsidiary and Anthem’s integrated health services. Cigna and CVS Health each earned less than a quarter of their total revenue from their insurance arms last year. While Humana lags the others in topline revenue, it has assembled a robust portfolio of care delivery investments and partnerships, surpassed only by UHG. As antitrust scrutiny on vertical integration increases (case in point: the DOJ is now challenging UHG’s acquisition of Change Healthcare), insurers will face the hard task of integrating their portfolio of service—and demonstrating that they deliver value to consumers and patients.


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

How the supply chain crisis is worsening the workforce crisis

In our recent conversations with executives, we’ve heard that the workforce crisis continues to be the most urgent issue confronting health systems. It’s a many-sided problem: early retirements hitting the nursing staff, leading to an overall loss of experience; early and mid-career nurses choosing to work for temporary staffing agencies for much higher pay, resulting in increased labor costs and resentment among remaining nurses; and a rising vacancy rate made more challenging by difficulty competing for talent against others offering higher pay and less stressful work environments. But one factor undermining frontline nurse engagement hadn’t occurred to us, until we heard a chief nursing officer describe it this week. The lingering supply chain crisis is forcing hospitals to change where they purchase basic items—think IV tubing and bags, surgery kits, some basic drugs—which in turn forces nurses to adapt to using unfamiliar supplies on the fly, making for a less predictable work environment. On a busy and staff-constrained nursing unit, even small changes to standard procedures can be incredibly frustrating for nurses, and even lead to patient safety issues. Just another way in which the current environment is creating unprecedented pressure on healthcare workers, with little prospect for improvement anytime soon.


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

On last Monday’s episode, we joined Alex in the studio to discuss how competition from disruptors is driving many health systems to create omnichannel “care ecosystems” to better attract and retain consumers.

Alex will be away next week. She’ll return on Monday, March 7th with the next in our series of shows discussing platform strategy. That episode will feature Derek Streat, Founder and CEO of Providence spin-out DexCare, which works with health systems to connect various point solutions to optimize the consumer experience.

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That’s all for this week—thanks for reading! We’ll be away next week, but will be back on March 11th with more healthcare news and hot takes…see you then! In the meantime, please send us your thoughts and feedback, and share the Weekly Gist with your friends and colleagues. We’d love to have them subscribe and listen to our daily podcast!

And 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-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President