🏥 Regulations with unintended consequences for care delivery

Passionate answers, including blasts from the pasts and some of the usual suspects

Blake Madden Jun 9th, 2026 Read in browser

In partnership with Happy Tuesday, Hospitalogists, Today, I’m sharing great answers Hospitalogists gave us when we asked what regulation has had the most unintended consequences for care delivery and what care model they believe in that the system isn’t built to support. I’m also including key takeaways and an on demand replay link from an April virtual event where Lumeris, MaineHealth, and I discussed scaling primary care with agentic AI. Also - I’ve been made aware that the last send around the top 37 health systems had pretty blurry images. You can view the higher res images on the desktop here, and the excel file itself is here for Plus members. Enjoy! Was this email forwarded to you? 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Read the Recap ASK HOSPITALOGY Regulatory Impact What regulation has had the most unintended consequences for care delivery? (Great question with a wide variety of passionate answers - thank you to all the Hospitalogists who participated!) THE 1972 ESRD ENTITLEMENT TAKE Janis Naeve - Managing Director at Bright Frontier The 1972 ESRD entitlement. Congress meant well — dialysis was new, people were dying. But it hard-coded a reimbursement architecture around end-stage rescue that’s never really been unwound. Fifty years later, capital and care delivery are still organized around the back end of disease. We built a system that’s excellent at keeping sick people alive and poor at keeping people from getting sick. That distortion runs straight through how CKM conditions get detected, treated, and financed today. THE INSURANCE COST TAKE Laurie Calvin Insurance for families is too high. It has limited preventive and routine care coverage. Everyone is trying to make profit for investors. They aren’t worried about the care the person needs. My daughter in the northwest near Tacoma pays a little over $800 per month for 2 people. Her daughter has Tricare. My son and daughter-in-law pay close to that same amount for 2 people. I’m old enough to remember healthcare before Medicare and Medicaid. THE DRGs TAKE Bruce Solomon I'm showing my age, but the implementation of DRGs in many ways accelerated the business orientation of healthcare. It forced hospitals to start to think about what their revenues and expenses by service line, procedure, etc. and some even started to cost account and make strategic decisions around them. Now over 40 years later, many delivery organizations still do not do this well. THE EMTALA TAKE J Epperson - Healthcare Governance and Compliance Officer at J A Epperson Analysis and Advisory Ltd. 1986 EMTALA, in my opinion, had the most unintended consequences. EMTALA solved a real problem. Hospitals were turning patients away based on their ability to pay. That part worked. The unintended consequence is where things shifted. It made the ED the default access point for uninsured care It removed pricing signals at the front door It pushed non-emergent care into the most expensive setting in the system Once that happened, everything else followed: ED overcrowding Cost shifting into commercial insurance Higher premiums and copays Hospitals building financial barriers elsewhere to compensate Now we’re managing downstream effects instead of the original issue. EMTALA didn’t break care delivery. It re-routed it without a balancing mechanism. That’s the gap. The law created a guarantee without a gatekeeping structure. Before EMTALA: Access was inconsistent and sometimes denied After EMTALA: Access is guaranteed, but only through the highest-cost channel There was never a companion design for: Primary care access for the uninsured Urgent care incentives Behavioral nudges toward appropriate care settings So the system did what systems do: It optimized around the rule. Patients learned: “ED = guaranteed care.” Hospitals learned: “Recover costs somewhere else.” Payers learned: “Raise cost-sharing to redirect behavior.” EMTALA didn’t create the demand. It changed where demand shows up and the system never rebalanced. Every move after that — hospital cost rebalancing, insurance higher copays and deductibles, and additional regulation — was an attempt to correct the downstream effects of EMTALA's redirection of demand. THE ACA TAKE Helen Avery - Principal at THM Consulting ACA. Despite making insurance affordable, it drove up patient deductibles thus making patients default to wanting only preventative care. This is troubling in a few ways. When problems are found and require a switch to diagnostic tests from screening, patients end up with large unexpected bills, therefore they are upset and shy away from future screening tests. Another way this is problematic is that patients are delaying care until it is emergent or to a point where treatment is no longer “easy” or has the best outcomes. THE ICD10 CODING TAKE Deidre Castle - Controller at Mass General The enactment of ICD10 coding. The adoption of ICD10, replacing the existing ICD9 has placed not only technological burdens on health care providers through required updates to admission software and ERP systems, with hospitals/clinics finding themselves chasing proper reimbursement, sifting through coding errors. Volume over quality outcomes. Disclaimer - I am not a controller at MA General as stated in my tagline, unsure how that populated. THE WELL-INTENDED POLICIES TAKE Jason Hager - Strategic Consultant at Hager Partners I think most of the biggest disruptions came from well-intended policy colliding with how care actually happens. The HITECH Act turned documentation into a compliance exercise. HIPAA added friction to basic communication. The Affordable Care Act expanded coverage but boxed in benefit design, often leaving providers absorbing more uncompensated or under-reimbursed care. And the No Surprises Act fixed billing exposure for patients while creating new reimbursement uncertainty for providers. The pattern is always the same in hindsight. Policy gets written based on theory. The tradeoffs show up ultimately in care delivery. Hospitalogy members can join this discussion here. Not a member yet? Apply to join here. Care Models the System Can’t Support What care model do you believe in that the system isn’t built to support? THE PRIMARY AND PREVENTIVE CARE TAKE Keith Pinter - CEO at AristaMD Primary care and preventive care (aka risk-bearing PCP groups). Primary care depends on time, continuity, and broad coordination, but U.S. payment and scheduling systems tend to reward volume and procedures instead. That makes it hard for practices to spend enough time on first-contact care, follow-up, and keeping patients out of the hospital. The result is a system that often treats primary care as a front door (approximately 5% of total spend although it has the potential to directly impact up to 70%), while financing and operations treat it like a low-margin afterthought. Preventive care works best when a system can pay for screening, counseling, early intervention, and social supports before people get sick. Prevention often creates a cost now for benefits that show up later, sometimes in a different payor’s budget, which weakens incentives to invest - or worse, in ACOs the provider waits up to 18 months to see the impact in MLR (talk about the ridiculous way that payors with very strong balance sheets force the lowest margin, weakest balance sheet providers to finance their business). That is why the current structure tends to underfund prevention even though it is one of the better ways to improve outcomes. As was noted in Blake's interview with Nabla - "preventive approaches take years to measure impact, payors work on annual evaluation cycles...” THE MANAGED MEDICAL TAKE Jenifer Motley - A provider at IHSS Managed medical is a crock of crap that has everyone whomever paid into tricked into thinking it is great umbrellaed under preventive care. Investors (insurance companies) are pulling the strings and they aren’t even doctors. A lot of people have more than 1 health issue at a time and you can only be treated for the one ailment that is acting up at a time. I mean come on, how do you pay for 7 or 8 thousand people ahead of medical visits. Managed medical! Thanks to Woodrow Wilson. Is America amazing! THE LONGITUDINAL CARE MODEL TAKE Jason Hager - Strategic Consultant at Hager Partners I believe in a relationship-centered, longitudinal care model where physicians and nurses are empowered to care for patients over time, not just across isolated encounters. Although the industry often speaks about value-based care, most systems remain built for transactional, episodic interactions. My experience across the payer world and in care delivery has shown that when incentives and operations are aligned to support trusted clinical relationships, outcomes improve, and clinicians can practice at the top of their license. The real opportunity is designing systems that genuinely enable this model, not simply talking about it. Hospitalogy members can join this discussion here. Not a member yet? Apply to join here. Sponsored by Ursa Health Full-risk specialty care models are complex, high-stakes arrangements where even small differences in criteria or definitions can compound into millions of dollars across a multi-year contract.  On June 24, Atlas Oncology Partners and Ursa Health will share operational lessons from building and scaling a full-risk oncology model and strategies to: Dynamically model, validate, and negotiate multi-state, multi-payor contract terms Mitigate the financial and population impacts of small parameter changes (with real contract modeling examples) Achieve contract precision at speed and scale with transparent, reproducible data that payors trust Register for the Webinar Scaling Primary Care With Agentic AI: The Next Era of AI Deployment in Health Systems In April, I sat down with Dr. Robert Chamberlin of MaineHealth and Doug Rogers of Lumeris to talk about how leading health systems are thinking about agentic AI as a strategic advantage in primary care. If you weren’t able to join us at the time, the following are key takeaways from the virtual event or you can watch it on demand here. 🔑  Key Takeaways State of Primary Care MaineHealth operates 9 hospitals with ~400 of its 2,000 clinicians in primary care — serving the oldest state population in the U.S., where primary care demand is especially acute Health systems still treat primary care as a loss leader within a predominantly fee-for-service structure, even when leadership genuinely believes in its value The bottom line on capacity: if every PCP did everything evidence-based guidelines require, it would take 26 hours per day per panel — you can't hire your way out of this Where AI Actually Fits The "infinite intern" framing resonated: an AI agent that takes histories, summarizes charts, manages in-basket messages, and executes care plan follow-up so the physician walks in ready for the meaningful conversation The highest-value opportunity isn't the visit itself; it's the interstitial care that nobody has time to deliver today — medication adherence check-ins, chronic disease monitoring, preventive care outreach MaineHealth currently sends 30,000 MyChart messages for preventive care and gets a ~10% response rate — that's the bar AI needs to clear, and the bar is low On Trust & Implementation AI as a care team member must be anchored to the existing physician-patient relationship; it can't succeed as a standalone product floating outside the practice The ambient documentation analogy is instructive: once clinicians experienced it, trust followed quickly; the same pattern will apply to agentic AI Standing orders are the right mental model for oversight — you set the protocol, validate it up front, and then let the system run without reviewing every action The Consumerism Threat Is Real Patients are already using ChatGPT and Gemini for health questions — and trusting the answers If health systems don't scale primary care with AI, tech companies will fill the void, and fragmentation follows The CMS Access Model, as currently structured, actively channels patients toward for-profit tech companies, whether health systems are ready or not Payment Models Are the Actual Unlock CPT codes are a fundamentally broken instrument for valuing primary care — the 99214 doesn't capture panel management, it captures a visit The LEAD model's sub-capitation component is the right direction; MaineHealth's Medicaid program is exploring a primary care capitation model as well MaineHealth's Trellis Health — a subscription-based, direct-to-employer primary care practice — is the interim workaround while payer contracting catches up The pro forma case to CFOs: an AI-enabled care team member allows a panel of 1,500 to become 1,700 or 2,000, which flows through to 340B capture, pay-for-performance, and shared savings attribution Lumeris / Tom Framing Lumeris's thesis with the Tom platform: empower, augment, and extend the physician-patient relationship, not replace it Physician advocacy matters: providers need to introduce the AI agent to patients the same way they'd introduce a new MA joining the care team Real-time monitoring of agent behavior is table stakes — health systems should be asking vendors what clinical oversight infrastructure actually looks like under the hood ON YOUR RADAR  Read: Michael Greeley’s latest on Florida’s healthcare and life sciences innovation ecosystem including this handy chart below. Resource: Navvis was named a leader in the IDC MarketScape for U.S. value-based care strategic consulting services (2025–2026). See what the IDC highlighted, including how Navvis delivers physician-led transformation, tech-agnostic integration, and true operational partnership.* Roundtable: Join me for the June Roundtable for Hospitalogy Plus Members, June 26 at 1:00 PM EDT. Register here. *This resource is brought to you by one of my brand partners who help make this newsletter possible! Thanks for the read! Let me know what you thought by replying back to this email. — Blake

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