September 15, 2023

The Weekly Gist: The Schumer University Edition

by Chas Roades and Lisa Bielamowicz MD

If you’ve got a high school senior in the middle of applying for college right now, and you’re looking for the latest and greatest in education, you might want to consider a new school that opened recently in our hometown of Washington, DC. But beware: given how much the faculty makes, you might be in for some tuition sticker-shock. Plus, the application process is a little cumbersome. We’re talking about what one wag referred to as “Schumer University”, a series of Senate hearings intended to get lawmakers up to speed on the latest trends in technology. Class was in session this week, and more than 45 Senators filled the classroom to hear from a panel that included Elon Musk, Bill Gates, Mark Zuckerberg, Sam Altman (Open AI’s CEO), Sundar Pichai (head of Alphabet, which owns Google), and several other tech luminaries. In total, the “faculty” included more than a half-trillion dollars of net worth (not counting the Senators). Talk about an all-star lineup! We don’t know quite what was on the syllabus: the session took place behind closed doors. (Musk and Zuckerberg were seated at opposite ends of the table, so we’re pretty sure there was no hand-to-hand combat.) Also unclear whether the students were assigned homework, but no worries—they can always get ChatGPT to do it for them!


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

  1. Walmart reportedly exploring purchase of ChenMed. Bloomberg reported this week that retail behemoth Walmart has engaged in talks to acquire a majority stake in ChenMed, a closely held value-based primary care company based in Miami, FL. The deal would significantly expand Walmart’s primary care footprint and capabilities, adding to the 39 Walmart Health centers slated to be in operation by the end of this year. ChenMed, which operates 120+ clinics across 15 states, delivers primary care to complex Medicare Advantage beneficiaries, taking risk for the total cost of care, and has grown its membership by 36 percent annually across the last decade. It has remained privately owned by the Chen family, but recently revamped its leadership structure and tapped UnitedHealth Group (UHG) veteran Steve Nelson to run operations. ChenMed has an expected value of several billion dollars, a price that could be driven upwards if other bidders express interest. Bloomberg’s sources emphasized that the deal could still be weeks away and that no terms have been finalized.

The Gist: Should this purchase go through, it might change Walmart’s status as a “sleeping giant” in healthcare. ChenMed’s primary care model and strong foothold in the Southeast would dovetail with Walmart’s store clinic footprint and its 10-year partnership with UHG to drive value-based care adoption in that region. With ChenMed competitors Oak Street, One Medical, and VillageMD now backed or owned by some of Walmart’s biggest competitors, Walmart may view ChenMed as its best opportunity to scale its primary care footprint through a large acquisition. However, much of ChenMed’s success to date has been attributed to its strong culture and track record of physician recruitment and retention—something a large company like Walmart may have challenges preserving. 

  1. Intermountain and UPMC switching from Oracle Cerner to Epic. Two of the nation’s largest nonprofit health systems, Salt Lake City, UT-based Intermountain Healthcare and Pittsburgh, PA-based UPMC, have recently announced plans to end their electronic health record (EHR) contracts with Oracle Cerner and transition, enterprise-wide, to Epic. Intermountain, which operates 33 hospitals across seven states, plans to integrate Epic’s EHR into all of its facilities by 2025; its legacy SCL Health hospitals in Colorado and Montana already use Epic. UPMC, which operates 40 hospitals in three states, has set mid-2026 as the target for consolidating its nine EHRs into a single platform with Epic. It has been using Oracle Cerner in inpatient settings and Epic for ambulatory care. Both systems cited provider feedback and a desire to simplify patient record-keeping as key reasons behind their decisions to switch.

The Gist: With two more marquee health systems jumping ship for Epic, Oracle Cerner faces a steeper battle to maintain a foothold with health systems and may need to rethink its target market and value proposition. Cerner initially appealed to large, progressive, value-oriented systems with highly customizable offerings, but over the years the resulting “Franken-Cerner” systems (as one CIO put it) became hard to maintain and scale. Meanwhile, Epic continues to grow its lead in the domestic EHR market: it now covers roughly half of acute-care beds in the US and holds records on 78 percent of US patients. Sitting on troves of health data, Epic is also well-positioned to become a leader in the rollout of next-generation healthcare AI, which it has already set in motion through its partnership with Microsoft. 

  1. FDA approves updated COVID vaccines. On Monday, the Food and Drug Administration authorized new COVID vaccines from Moderna and Pfizer-BioNTech, and the Centers for Disease Control and Prevention followed Tuesday by recommending the shots be given as a single dose for most people five years of age and older. Children older than six months but younger than five, as well as completely unvaccinated people of any age, may be eligible for multiple doses. These vaccines were formulated to target the XBB.1.5. variant, which was the dominant strain in January but has since receded, although initial results suggest they remain effective against all currently circulating variants. Pharmacies and healthcare providers are expected to have the updated vaccines available by early next week.

The Gist: Due to the end of the COVID public health emergency in May, this COVID vaccination campaign will be the first not directly bankrolled by the federal government.While insurers are still required to cover vaccinations without cost-sharing, the uninsured may find free shots, which the Biden administration says it will still provide at certain locations, harder to access. Unlike past COVID boosters, reframing this shot as an annual vaccine that patients receive along with their flu shots should help with the rollout, as around 50 percent of Americans got a flu shot in 2022 while only 17 percent received the bivalent COVID booster. With COVID cases and hospitalizations currently rising, promoting widespread uptake is critical to dampening a likely winter COVID spike. However, public health officials will have to overcome many Americans’ wearied indifference toward COVID to motivate them to get vaccinated. 

Pluswhat we’ve been reading.

  1. Private equity could worsen cardiology’s overutilization problem. An article published this week in Stat documents private equity’s move into the cardiovascular space. There’s reason to suspect private equity ownership could exacerbate cardiology’s overuse problem, according to several cardiologists and researchers. Studies has found private equity acquisition results in more patients, more visits per patient, and higher charges. Outpatient atherectomies have become a poster child for overutilization, with the volume billed to Medicare more than doubling from 2011-2021.

The Gist: Fueled by the growing number of states allowing outpatient cardiac catheterization, all signs point to cardiovascular practices being the next specialty courted for PE rollups. However, the service line brings more complexities to deal structure and future returns than recent targets like dermatology and orthopedics. Heart and vascular groups are more heterogeneous, and less profitable medical management of conditions like congestive heart failure accounts for a greater portion of patient volume. Much more of the medical group business is intertwined with inpatient care and, unlike other proceduralists, around 80 percent of cardiologists are already employed by health systems. While that doesn’t mean health systems are safe from cardiologists seceding for the promise of PE windfalls, the closer PE firms get to the “heart” of medicine, the more they’ll find their standard playbook at odds with the broad spectrum of care that cardiovascular specialists provide—and the more they’ll find that partnering with local hospitals will be non-negotiable to maintain the book of business.


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

Behavioral health utilization driven by fast-growing telehealth use

The pandemic worsened the existing mental health crisis in the United States, greatly increasing demand for care. In this week’s graphic, we highlight new data from JAMA Health Forum on mental healthcare trends from 2019 to 2022. Overall behavioral health utilization increased in 2022 compared to pre-pandemic and peak-pandemic levels, fueled by a ten-fold increase in telehealth usage. In-person behavioral health utilization decreased early in the pandemic and declines continued in 2022, compared to pre-pandemic levels. Behavioral health still accounts for more than two-thirds of all telehealth visits, a trend that has remained largely unchanged since 2021. While many consumers and mental health providers continue to embrace telehealth as a means to expand access and increase affordability, a recent Morning Consult survey found that most Americans actually favor in-person visits for quality and efficiency—that is, if they can access it. Additionally, the future of some types of virtual behavioral healthcare remains murky as the Drug Enforcement Agency (DEA) has yet to establish rules for prescribing controlled substances via telehealth beyond November 2024.


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

Starfield (Xbox, PC)—The first new gaming universe in 25 years from revered developer Bethesda Game Studios (Skyrim, Fallout), this space-themed action-RPG is everything gamers have been hoping for, and more. A gorgeous, engaging, open-world adventure, with seemingly endless possibilities awaiting players. You’ll immediately understand why Microsoft paid $7.5B to keep this game exclusive to their platforms. Breathtaking.


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

Thinking about AI’s impact on the healthcare workforce

We had an interesting exchange with a health system CEO this week, which started as a discussion about what to tell his board about the rapidly changing AI landscape, but drifted into a larger conversation about how human-dependent healthcare is. His system has invested heavily in virtual care and has begun to make strides in applying automation and artificial intelligence to both clinical care delivery and key operational processes. He’s glimpsed the potential for process automation—AI’s less sexy sibling, now that “generative AI” has burst onto the scene—to radically reduce staffing costs in areas like revenue cycle management. And that’s making him wonder about the larger implications for workforce development—both inside his organization and in the economy as a whole. Like many health systems, his organization not only provides care to the community, but also employment opportunities and job growth. What happens when large swaths of healthcare delivery become more automated—how will the system look to retrain those workers for other roles? One clear area of workforce need over the coming decades will be hands-on caregiving for an older, sicker population that wants to age in place. Health aides, home health workers, community social workers and so forth—will those roles ultimately be filled by workers from other parts of healthcare (and the economy beyond) who find themselves displaced by AI and robotics? Will the Amazon warehouse worker of today become the home care worker of tomorrow? The conversation was fascinating and made us realize that we’ve paid too little attention to two key issues. First, the tension between healthcare as a cost problem and healthcare as a source of job growth. And second, the redistribution of workers into roles that will require hands-on, human presence (like caregiving) in the coming wave of AI and robotics. 


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

Last Monday, JC spoke with Rob Moskowitz, MD, Chief Medical Officer at hospital-at-home company Contessa Health, about the evolution of the care model and what pieces need to be in place to ensure its long-term success.

This Monday, we’ll hear the second part of their conversation, where they talk more in depth about how the care model will be both staffed and paid for moving forward.

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Thanks for reading the Weekly Gist! September has brought us cooler temps, college football, and board meeting season, so we’ll be away for the next week or two visiting with our members, but we’re looking forward to seeing you back here soon. In the meantime, let us hear from you! We’d love your feedback and suggestions, and we’re hoping you’ll recommend subscribing to your friends and colleagues as well.

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