🏥 The Gen AI Juggernaut, Year 2

Plus macro themes for Q1 hospital operators and visuals across HCA, Tenet, UHS, CHS, and Ardent

Blake Madden May 26th, 2026 Read in browser

Hospitalogists, I hope you had a great Memorial Day weekend! Me? I probably brought my eventual total joint replacement surgery a few years closer after spending the weekend digging out a sand pit for my toddler. He loves it. Which makes it all utterly worth it. I’ll do some yoga. Today I’m diving into some awesome commentary on AI in healthcare along with some big themes and takeaways for hospital operators from Q1 earnings. Enjoy and as always, the replies are open. I got some great responses from the Oura post I sent out so I’d love to share those and future responses here in the newsletter! Was this email forwarded to you? Subscribe Here The GenAI Juggernaut, Year 2 Eric Larsen is an incredibly visionary thinker in healthcare and an inspiration to me personally. His recent pod episode on the Heart of Healthcare Podcast (Linked here) is a must listen - two great minds (alongside Steve Kraus, and usually the wonderful Halle Tecco) thinking about the future of AI in healthcare and some provocative bets to rewire our thinking about how truly transformative the tech can become if we let it. The convo was so good I went ahead and impulsively made a one-pager covering some of the key concepts mentioned to internalize them. Can't help myself. Some of the most interesting claims he laid out: Healthcare will soon enter a deflationary period, driving up to 700bps away from healthcare GDP % of total Labor automation will be the driving force along with payors playing catchup in the bot wars Velocity of AI deployment, or diffusion, will determine winners & losers. Sutter Health specifically was called out here (and a prediction on more cross-market mergers coming) Nobody is really talking meaningfully about job displacement and therefore no meaningful discussion around reskilling. What does an AI-abundant future really look like in capitalism? Clinical AI will be won by whoever puts their money where their mouth is and accepts liability If you have a chance to listen to the episode, I would love your reaction. Lots of great dialogue already on LinkedIn and elsewhere, and the whole point here is to mobilize the oligopoly advance the conversation. I also highly recommend Larsen’s own podcast, Insurgents and Incumbents - one of the only other pods I listen to religiously! Hospital Q1 Recap - Macro Themes and Visualizations Here were the key themes from the public hospital operators in Q1: ACA subsidy impact takes shape, as expected: Same-facility exchange admissions declined 15% at HCA, 10% at Tenet, 5% at UHS (with reserving implying closer to 10-12%), and 3.9% at CHS, against FY assumptions of 15-30% volume decline. Every operator expects attrition to steepen as 2025 grace periods expire and silver-to-bronze migration compresses revenue per encounter. Supplemental payments: Supplemental Medicaid program approvals provided $200M+ of FY upside, with Florida as next in line. Georgia's grandfathered approval and Texas ATLAS reinstatement gave HCA $120M of unexpected Q1 benefit and CHS $25M, with HCA raising its supp pmts guidance by $200M as a result. Florida remains pending across HCA, Tenet, UHS, and CHS guidance - with upside if approved. Capital allocation moves ambulatory and into technology as outpatient ambulatory is the universal capital destination. Every operator deployed capital toward outpatient. HCA (urgent care, ASCs, freestanding ED), Tenet (USPI ), UHS (Talkspace plus Thousand Branches build-out), CHS (Surgical Institute of Alabama plus two de novos), Ardent (4 urgent cares opened, 2 ASCs and 1 freestanding ED in pipeline). Hospital-centric M&A is over (rather we’re seeing inpatient expansion in strategic areas), while ambulatory is where the growth and the multiple expansion lives. AI moved from PR slide to quiet operating discipline: Tenet "almost doubled" Conifer analytics productivity and deployed governance for green-lighting or shutting down pilots; UHS scaled 8 use cases in acute revenue cycle; Ardent went live with virtual sitting across 2,000+ patient rooms. CHS and HCA remain earlier in disclosed deployment, creating a compounding gap that should surface in 2027 margins. Note that…most of these investments are in the clear and obvious ROI camp of revenue cycle management. Mild flu and January winter storms cost the group $200M+ in EBITDA: This segment took far too much of analyst questions, but a weak respiratory season (which is good for society, mind you) led to relatively weak Q1 volumes. Respiratory admissions fell 40-42% YoY at HCA, Tenet, UHS, and Ardent, with HCA quantifying the combined respiratory and weather drag at $180M. Every operator framed the impact as temporal and not structural, with March volumes returning to plan across the group. To that point, all operators reaffirmed 2026 guidance laid out earlier in the year. We’re in wait and see mode for Q2, where we’ll have greater clarity over much of the above. HCA One-Pager Sponsored by R1 A 30,000-data-point patient record. A thousand payer dialects. And the largely manual RCM process trying to translate it creates an estimated $200B+ in annual administrative burden and ~9.5% in preventable first-pass denials.  R1 lays out a new architecture for the healthcare revenue cycle: the Revenue Operating System, an intelligence layer that sits between clinical and financial systems to accurately and consistently translate clinical reality into payer-ready outcomes.  With the Phare Revenue Operating System, the differentiator is not AI alone, but 20 years of real-world revenue cycle intelligence embedded into the system. See for Yourself MISCELLANEOUS MADDENINGS As you’re reading this I am at the local indoor range on the launch monitor absolutely wailing on some golf balls. My upcoming annual trip to Pine Dunes in Frankston Texas is nigh, and I need to be in top form lest I be subject to the jawwing of my playing partners. The game is not quite there yet folks. Thanks for the read! Let me know what you thought by replying back to this email. — Blake

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