🏥 My 6 Big Bets on the Future of Healthcare

Blake Madden

May 21st, 2026

In partnership with

Happy Thursday, Hospitalogists,

I just got back from the ShiftMed Transformation Summit full of energy after touring Raymond James stadium and learning all about the latest in workforce transformation (some really great stuff happening at ShiftMed)!

Earlier this spring I gave a talk where I discussed 7 macro forces shaping healthcare, and 6 big bets on where healthcare is headed next. I’m sharing those slides here along with my major talking points and prognostications (I just wanted to use that word). As always I would love your thoughts and takes on whether you think I’m right, wrong, or out of touch with reality.

(The hospital operator Q1 recap will hit your inboxes next week)

Enjoy!

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The 2026 Bet List: Where Healthcare Is Headed Next

Every year I put out a predictions list, and then I actually check whether I was right or wrong halfway through. This year in one of my rapid fire predictions, I called for a Humana rebound.

Whoops.

That has clearly not happened. So take all of this with a grain of salt, eh? That said, I finished in the 90th+ percentile on my March Madness bracket, but dead last in my Masters pool. Am I qualified for anything? You guys let me know.

Enough of my internal monologue. What follows is a summary of the seven macro themes shaping healthcare today and the six forward-looking bets I walked through on stage. These are my closely held beliefs about where we're going — informed by lots of conversations with health system executives, investors, operators, and founders over the past year.

The Macro Landscape: Seven Forces Shaping Healthcare in 2026

Before getting into the bets, I wanted to level set the room on the tectonic plates underneath everything. A lot of what I hear in conversations across the industry skews pessimistic, and I get it — the political pressure and stroke-of-pen risk in healthcare right now is enormous. PBM reform, M&A scrutiny, the One Big Beautiful Bill Act, looming Medicaid cuts, site-neutral reform, ACA subsidy expiration. The list is long and the uncertainty is real.

But the macro forces go deeper than policy. You've got 70+ million seniors aging into Medicare, and the managed care models designed to serve them — particularly the vertical integration playbook championed by the Optums of the world — are showing serious structural faults. Optum is consolidating from 18 EHRs down to 3 and I'm sitting here asking, "Why wasn't that one of the first things you did?" The vertical integration thesis was supposed to create synergy. What it actually created, in a lot of ways, was vertical disintegration, until the financial engineering ran its course.

Layer on top of that the GLP-1 phenomenon and the obesity wars. There's more consumer demand than ever in healthcare — people are proactively reaching out to DTC platforms, health plans, and compounding pharmacies to get onto GLP-1s. The rise of the peptide gray market and the longevity craze are creating an unprecedented wave of consumerism we haven't seen before in healthcare. Then you've got the accelerating outpatient migration, the affordability crisis (healthcare spending hit $5.3 trillion, roughly 18% of GDP, with costs growing 7.2% in 2025), physician practice economics getting hammered by declining professional reimbursement, and a sicker younger generation driving increased demand for longitudinal whole-person care.

These macro themes are most of the tectonic plates shaping the healthcare continents over the past few years.

Bet #1: The AI Bot Wars — Payers Are About to Play Hardball

This one is culminating faster than I expected. On the provider side, AI deployment has been comparatively straightforward. The two biggest use cases — ambient documentation (the Nuances and Abridges of the world) and RCM/CDI — go hand in hand. More perfect notes means more complete capture of clinical data, which means more opportunities to identify and attach diagnoses to claims. Sales cycles have been short. Adoption has been swift. Over 70% of hospitals are planning to use AI in RCM and CDI.

Payers, meanwhile, have been in experimentation mode. UnitedHealth Group and others have publicly identified over 1,000 AI use cases, and they're trying to figure out which ones to prioritize. Call centers have been top of mind, but the big unlock is prior authorization — and payers are now taking notice of what they consider AI-enabled upcoding. Coding-related denials have grown over 100% in two years. The data on this is striking: diagnosis rates for conditions like postpartum anemia are rising meaningfully while actual transfusion rates remain flat. Payers see that and say, "That's upcoding." Providers see that and say, "We're actually getting paid for what we're owed."

I call this the Dance with Dragons. (I'm a Game of Thrones fan — I even had an AI-generated image of UHG and HCA as literal dragons facing off on stage. The audience…had a more muted reaction but we take what we can get.) But here's what I keep coming back to: at the end of Game of Thrones, how many dragons were left? Maybe one. While payers and providers are deploying bots against each other in the claims process, the governmental pressures — Medicaid cuts, site-neutral reform, the OBBBA — are bearing down on both of them.

The deeper question I posed to the room was…are we using AI to entrench already misaligned incentives that create friction and inefficiency, or are we actually trying to find ways to collaborate, leaving ourselves better with this newfound technology? Most of the payer-provider conflict in the claims process comes down to miscommunication about documentation requirements. If both sides deploy AI to escalate that miscommunication, things might actually slow down before they get better.

Bet #2: Health System 2.0 Takes Shape

This is near and dear to my heart, because it's what Hospitalogy is really about at its core — the business and strategy and finance of health system transformation.

The traditional hospital business model is breaking. Everything outside of the core inpatient functions — ED, ICU, labor and delivery — is moving outpatient and unbundling. Cardiovascular procedures, a bulk of surgeries, imaging, primary care. As more services migrate outpatient, competition intensifies and investment follows, especially in areas hospitals thought were relatively insulated. There are even birthing centers now. So inpatient services are waning in influence.

The leading health systems are responding by transforming from siloed service-line departments into consumer-centric enterprises. At the JP Morgan Healthcare Conference, every major system's investor deck was talking about digital engagement, monthly active users, sign-up numbers. Demand is becoming less inelastic. Consumers are getting more choice over where they get their MRI or their surgery. Systems are being forced to think about density, access points, and the digital front door. AI is enabling this through increasing information symmetry.

I used HCA as a case study because they're the fee-for-service king — $70B+ in revenue, one of the most profitable systems in the country. Even HCA sees the writing on the wall. They've publicly stated they want to grow from roughly 12 outpatient access points per hospital to 20:1 by 2030. That's a 60-70% increase in ambulatory density. Their Austin market has 111 access points — making them essentially unignorable for any payer trying to build network adequacy.

Other systems are following suit. Sutter, Hartford Healthcare, AdventHealth (which carved out its primary care division into a separate consumer-focused entity). Even CVS, with its Oak Street Health and Signify Health flywheel in Chicago, is playing this game from the payer side.

And then there's the financial bifurcation story. The performance gap between top-performing health systems and the rest of the pack is widening. The price makers — systems in growing suburban markets with high commercial payer mix — are running 8-12% operating margins. The median nonprofit sits closer to 1.3-1.8%. The data is positively skewed because a few outperformers pull the average above the median. This bifurcation has real implications for capital allocation: the financially stronger systems will invest more aggressively in ambulatory initiatives, partnerships, and technology, compounding their advantage over time.

The Ascension case study drives this home perfectly. They were bloated, dealing with cyber attacks, stuck in bad markets like Chicago, essentially with their backs against the wall. Then they leaned up, selling sell 35+ hospitals, cutting losses, acquiring AmSurg (a 300+ ASC platform), and doubling down on core markets. Their story now is: "We're break even today, targeting 20% EBITDA margins in 3-5 years, fewer hospitals but more access points per hospital, and our call option is a national ASC platform."

Yet buried at the bottom of their financials is another story, also playing out as a major growth vector in healthcare - specialty pharmacy revenue growing 46.3% year-over-year. Which brings me to the next bet.

Bet #3: Drug Distributor Vertical Integration Is Accelerating

The specialty drug growth story is a little underrated from a broader perspective, but here's what's happening: the McKesson's, Cencora's, and Cardinal Health's of the world are buying physician practices. Not just any practices — specialty practices in targeted therapeutic areas, specifically to preserve market share in specialty drug distribution.

A buddy of mine who works at one of these shops told me flat out: they're writing blank checks to acquire specialty practices and lock in 20-year deals. The economics are more or less, making money on drug margin and rebates at 2-3% on massive volumes, then upside in the physician practice economics. If you own the physician practice that's prescribing and administering the drugs, you've locked in the revenue stream for decades.

This creates some fascinating competitive dynamics. These distributors are now a new capital partner for specialty physician practices, competing directly with health systems that run their own oncology service lines and surgery centers. But it also holds significant ramifications for cost, competition with health system service lines, and employer budgets. What’s interesting to me are the new state corporate practice of medicine enforcements in the wake of these strategic M&A moves, and how those two forces (regulatory vs. economic) may collide someday.

One particularly interesting angle I heard from a large employer contact: cancer is increasingly becoming a chronic disease. Patients are living longer and managing symptoms over extended periods with drugs like Keytruda and CAR-T. That is fantastic from a human perspective — but it's extraordinarily expensive over a long time horizon. Combined with GLP-1s and other specialty therapeutics, this cost problem isn't going away. The specialty drug growth story is going to reshape profit pools across payers, providers, distributors, and employers for years to come. I'm glad that math isn't my job.

Bet #4: Healthcare Is Going Direct

Based on what I'm seeing and hearing, combined with the vitriol around MA denials and the secular shift in payer mix, we're entering a cyclical phase where financially healthier health systems are willing to take more bets on direct contracting.

The examples are piling up. Baylor Scott & White launched Levanto Health — a direct-to-employer primary care and benefits admin platform running a 10.7% margin on $1.5B in premium revenue. Northwell Health struck a deal with the 32BJ Health Fund covering 100K union workers in NYC, projecting 20% cost savings in Year 1. Henry Ford partnered with Nomi Health (which stands for "No Middleman Health Care" — and I couldn't help pointing out on stage that they are, in fact, a middleman). Lantern, previously Employer Direct Care, is deploying a "Networks of Excellence" national approach that's an iteration on centers of excellence.

And then there's Mark Cuban. He's been brought up in every session I've attended this year. He's setting up regional direct contracting negotiations, and I've talked to both him and his chief of staff. One of the bigger questions they're grappling with: who is the ultimate check on the employer direct contracting system? Where are the guardrails? The devil, as always, is in the details.

The strategic implication I laid out: the most operationally sophisticated systems will formalize dual-track strategies — maintaining payer relationships for broad coverage while building direct channels for better economics. But this pathway isn't available for every system or in every market. You need critical mass of lives and appropriate facility/specialty coverage.

Bet #5: The Coming Age of Healthcare Consumerism

Consumerism is happening in healthcare, but not broadly. The term I like to use for consumerism in healthcare is…bounded consumerism.

True consumerism in healthcare can’t work given truly asymmetric information, relative urgency around decisions, lack of true data portability, lack of standardized comparability, and complex pricing dynamics. But bounded consumerism will work - and continue to emerge - in certain pockets in healthcare. While not all of healthcare can handle market-based activity, we can apply the following concept to expand bounded consumerism in healthcare:

Use market dynamics where they improve efficiency and responsiveness, while placing guardrails around areas where markets fail structurally.

The first bounded consumer market in healthcare will happen in primary care. Primary care is relatively affordable compared to the rest of healthcare. HSAs give people purchasing power for wearables and DTC services. And as AI expands into consumer-facing health, we're going to see a ton of experimentation.

Broadly, companies are talking about agentic AI — the ability to automate actionable things on a patient's behalf. AI-native primary care platforms where a doctor orchestrates a 10,000-person panel. We're going to see a lot of this in the next few years.

There's also a stratification happening within primary care that is underappreciated. At the top: high earners doing concierge, DPC, longevity platforms, executive physicals. Below that: MA beneficiaries in NP-heavy senior clinics. Then the commercial middle class with annual physicals and urgent care. And at the bottom: Medicaid, with razor-thin margins and overburdened FQHCs. What's exciting is that all of these tiers will have access to AI. I posed this question to the room: as a tradeoff, are we willing to accept potentially AI-delivered care for Medicaid populations if it vastly expands access, even with fewer humans in the loop?

The Rock Health data here is compelling. They polled about 8,000 people and found that consumer use of AI chatbots for health information doubled from 16% to 32% between 2024 and 2025. Most are using ChatGPT, Gemini, and Perplexity. These platforms have all launched health-specific offerings. They're not quite there yet — lots of hiccups — but they're extremely well-capitalized with top talent, and they're trying to be the everything layer.

Here's the thesis I floated that I haven't really bounced off many people: this is the next evolution of Doctor Google, except with an action layer that makes it more potent. If I'm a payer, I'm chomping at the bit. The consumers who are going to be major healthcare buyers in 5-10 years are going to be AI-native. They'll go to chatbots first because it's a trusted, intimate setting. How do payers invest in that channel to steer members, rather than letting the health system or someone else control the referral pattern? This could have very real implications for local market referral dynamics.

Bet #6: The Orchestration Era Is Here

More health systems and enterprise players want fewer contracts and fewer point solutions. In fact, in my conversation with Mercy’s CEO Steve Mackin, Mercy talked about how they sunset 1,300 point solutions after migrating to the cloud. What they want is a well-capitalized AI partner that can deploy an orchestration platform — a system of intelligence sitting on top of their system of record — and build custom solutions for their specific workflows and standards of care.

A lot of the technology is converging on the same use cases. Over time, the tech itself gets commoditized. So where does the true differentiation lie? Ironically, it comes down to the human components — expertise, trust, strategic alignment. Somewhat paradoxical

Most AI deployment today has been administrative. The biggest unlock to come is clinical AI — better medical education, faster standard of care improvements, leveraging and scaling clinical expertise across rural populations, and more. But there's a real tension here. I've talked to investors who deployed an AI tool in hospital supply chain that could aggregate purchasing data, predict demand, find better pricing — and the tool got killed by the people on the inside. It reduced an 8-hour task to 5 minutes. The implications for job security were obvious, and trust never followed.

I brought up Block (formerly Square) as a non-healthcare example — Jack Dorsey cut the workforce by some draconian percentage, saying they'd identified use cases that could be replaced with AI. Is that going to happen in healthcare? No, absolutely not. But when I've asked health system leaders how they'd handle a tool that could cut department headcount by 80%, the answer is almost always: "We'll find them other jobs, reskill them, redeploy them." The more realistic future is slow attrition — jobs not backfilled, roles consolidated over time. Healthcare moves incrementally, and the rate of AI adoption is at odds with that.

What Stays the Same - Healthcare is Human

I closed with something that matters more than any of the bets. In every conversation I have about AI, about Medicaid cuts, about uncertainty — the discussion always converges back to the human stuff. Trust. Empathy. Compassion for the people sitting next to you who are scared about what's coming.

More than ever, our industry needs humble, servant-hearted leadership right now. It's easy to get pessimistic — and yes, we're dealing with a lot. But it's debilitating to live that way. I try to maintain this almost naive, childlike sense that things can and will improve. Control what you can control. Assume the best in people (admittedly harder in Dallas traffic). Keep your north star on the patients and colleagues you serve.

The humanity of healthcare — that compassion, that servant-hearted nature — is our industry's greatest strength. It's going to carry us through whatever comes next.

Breaking News

🏥 My 6 Big Bets on the Future of Healthcare

The 2026 Bet List: Where Healthcare Is Headed Next

The Macro Landscape: Seven Forces Shaping Healthcare in 2026