🏥 July Recap
 |
|||||||
|
|||||||
|
|
|||||||
Happy Thursday, Hospitalogists! You guys really like these news recaps so basically I've turned my news aggregation workflow into a newsletter to share with all of you at the end of every month. Chock full of facts and happenings from the month! If I missed anything give me a shout and enjoy. Also - I wanted to give a quick shout out to Predoc who is sponsoring Hospitalogy for the first time. More to come from them but had a great chat with Nish and Judy! Show Predoc & team some love below and learn what they're all about! They are doing some really cool backend stuff with multi-agent systems, records retrieval, and data normalization. Was this email forwarded to you? Sponsored by Predoc 75% of physicians report losing valuable clinical time thanks to incomplete patient data left stranded at non-connected providers, buried in PDFs, or left waiting in fax queues. Predoc retrieves records straight from non-connected sources, cleans them up, and drops complete data into workflows you already use, without a separate portal or extra login. It's the layer that makes your existing infrastructure actually work the way it was supposed to. Hospitalogy Ecosystem RecapUpcoming:
Essays & Analysis:
July Healthcare News Recap:Q2 Earnings & Payor MovesHCA cut its 2026 outlook as ACA fallout bit, guiding down by as much as $1.2B on exchange coverage losses. Shares dropped nearly 10% and pulled CHS, Tenet, and UHS with them (full earnings analysis here). Adjusted EBITDA range moved to $15.4B–$16.1B from $15.55B–$16.45B, with uninsured volume cutting roughly $400M from Q2 pretax earnings. UnitedHealth posted $5.5B in Q2 profit and raised guidance again — EPS of $6.38 against $4.90 consensus — with the MA book stabilizing. Two days after HCA's warning, in the same macro environment. Elevance beat on Q2 and the stock fell anyway on a -1.75% Medicaid margin, with more state exits signaled over 12–18 months. Molina gutted its ACA book to six states after a marketplace MLR of 88.9%, cutting roughly $1B of 2027 exchange premium. Humana is shedding about 600K Medicare Advantage members in a 2027 margin purge targeting 3% pretax by 2028. UnitedHealth published a self-commissioned FTI audit blessing 96.6% of HouseCalls diagnoses across 200 visits and 494 diagnoses. Validation set included UNH's own paid claims; researchers flagged the design. Deals & CapitalIntermountain agreed to buy two Idaho hospitals from Surgery Partners for $1.15B. Scaled nonprofit densifying a market; SGRY funding its ASC platform by selling acute beds. Prisma and Erlanger signed an LOI on a $2B tie-up creating a 27-hospital, $9B system. Ascension won Williamson Health at roughly $700M against a bidder pool that included Optum and HCA, with about $1B committed in total. Optum showing up in a hospital sale process at all is the detail to sit with. Vertex bought Crinetics for $10B, its largest deal ever, in a first half that logged 45 pharma acquisitions. AI-enabled doctor platform Doctronic acquired pediatric longevity startup Summer Health. Payment & PolicyCMS proposes deep 340B cuts and broad site-neutral expansion in the 2027 OPPS rule. Proposed reimbursement reduction of 28–33.4% on 340B drugs, plus site-neutral policy pushed into imaging. HRSA is also moving ahead with a rebate test program.
CMS floats a 1.68% physician conversion-factor cut and an ACO overhaul for 2027, alongside a request for comment on CPT code stewardship and a shared-savings rate bump toward 60%. Expiration of the 2026 2.5% increase drives the cut; relief requires Congress.
CMS proposes a provider-tax clampdown worth $246B, phasing hold-harmless thresholds to 3.5% by 2032. Supplemental and state-directed payments have carried a lot of Medicaid-heavy margin; HCA offset roughly $400M through Florida supplemental payments this quarter alone. HHS defers more than $1B in Medicaid payments to California and Minnesota — $867.5M and $199M respectively — under a fraud-review banner. Documentation hold as funding valve is a new mechanism worth tracking. Obamacare enrollment is cratering post-subsidy cliff, with Ohio and Oklahoma shedding about a third of exchange membership. Initial 2027 rate filings point to a 14% median premium increase across 77 insurers in 16 states and D.C., a second consecutive double-digit year. US health spending grew 7.3% to $5.7T in 2025, pacing toward $9T by 2034, with GLP-1s named a primary driver. Same week, CMS launched a Medicare GLP-1 Bridge extending access to roughly 4M beneficiaries. No Surprises Act arbitration payouts ballooned to about $15B in 2025, roughly 6x what the same care would have cost in-network. CMS is now acknowledging unintended consequences in writing. ACO REACH posted $988M in net savings for 2024 on $2.5B gross and a 4.2% savings rate, as the model sunsets. STAT opened an investigative series on employer coverage, leading with $23.6B in BCBS administrative services fees, up 26% since 2021. HHS also introduced a voluntary Make Hospital Food Healthier pledge, following its March memo on Medicare nutritional requirements. Asks cover ultra-processed foods, sodium, added sugars, and cooking methods. Enforcement & LitigationElevance wired $342M to CMS in the first successful Medicare Advantage overpayment clawback of its kind, with $935M more reserved. HHS-OIG decertified New York's Medicaid Fraud Control Unit, freezing roughly $60M in annual federal funding. Second MFCU action after Hawaii. CMS is seeking authority to retroactively revoke enrollment for "problematic" providers with 10-year reapplication bars, tucked into the home health proposed rule but applying across all Medicare provider types. California's AG landed a first-of-its-kind CPOM settlement with Carbon Health: $4.5M in penalties, $100K of it personally from founder Eren Bali, plus forced restructuring of the friendly-PC arrangement. Every digital health GC should re-read their MSA this quarter. Elevance sued CMS over the post-Clover star ratings recalculation on 7/2. SCAN and Alignment followed days later, with SCAN's complaint calling the program broken. Depending on which theory prevails, there are now multiple competing versions of the 2026 star ratings. Tampa General sued Eli Lilly after drug costs jumped 25–50% overnight, the first hospital-initiated strike in the 340B rebate and data-submission fight. The FTC, joined by Utah and LA County, sued Hims & Hers over Meta and Snap tracking pixels plus pre-consultation billing practices. HIMS fell 15%. Any DTC telehealth operator running the same ad-tech stack and the same pay-before-you-consult funnel should read the complaint as a template. Caremark settled the FTC's insulin case and pledged $13B in savings. Second PBM settlement; Optum Rx is the stated next target. 25 states and D.C. sued the administration over Medicaid work-requirement rules. AI & Health ITCMS floated a "Software as a Medical Service" Medicare payment category, the first dedicated reimbursement pathway for AI diagnostics. If it survives comment period, the business model math changes for every clinical AI company currently living inside health system SaaS budgets. Optum is deploying Anthropic's Claude across claims and RCM inside a $3B automation program, clinician-in-the-loop. OpenAI opened Health in ChatGPT to all US users, wired into Epic and Oracle records against 300M+ weekly health queries. Once a patient ports their own records in, HIPAA no longer applies, because OpenAI is not a covered entity. Epic president Sumit Rana is stepping away, and at least four more senior departures followed, including the AI chief, weeks ahead of UGM. The Month in Macro1. Coverage losses stopped being a projection. HCA guided down twice inside July, first to $6.3–6.7B with $1.0–1.2B attributed to exchange coverage losses, then trimming the adjusted EBITDA range again on uninsured volume that cost roughly $400M of Q2 pretax earnings. CHS reported uncompensated care at 32.9% of adjusted net revenue against 26.6% a year earlier. Tenet, UHS, and CHS flagged the same uninsured creep in the same reporting window. 2. Payers repriced; providers absorbed. UnitedHealth beat and raised, Elevance guided EPS above $27, and Centene swung to a $1.1B profit. Molina cut its exchange footprint to six states and about $1B of 2027 premium; Humana is dropping roughly 600K MA lives to chase 3% pretax margin. Insurers can shed unprofitable membership through a bid filing. Hospitals treat whoever presents. 3. Federal payment policy compressed hospital economics from four directions at once. Proposed 340B cuts of 28–33.4%, site-neutral expansion into imaging, a $246B provider-tax clampdown phasing hold-harmless thresholds to 3.5% by 2032, and separate NPIs for every off-campus PBD by 1/1/2028. Add the deferral of $1B+ in Medicaid to California and Minnesota. Supplemental and state-directed payments have been the working lever for Medicaid-exposed systems, which is the lever CMS moved to constrain. 4. Enforcement functions as fiscal policy. Elevance's $342M clawback, decertification of New York's MFCU with $60M frozen, retroactive revocation authority across all Medicare provider types, $203M recovered through CMS's fraud effort, the Caremark settlement, and the Carbon Health CPOM action with personal founder liability. Recoveries score as savings without a congressional vote. 5. Medicare Advantage oversight is now litigated on both sides. Elevance, SCAN, and Alignment sued CMS over the post-Clover star recalculation within a week of each other, while CMS appealed its Clover loss to the Eleventh Circuit with roughly $120M of bonus payments attached. UnitedHealth self-published a 96.6% diagnostic validation rate. Star ratings and risk-adjustment integrity are permanent litigation surfaces with nine-figure stakes per ruling. 6. AI capital concentrated on administration, and consumer AI outran the privacy framework. Optum's $3B program points Claude at claims and RCM. CMS proposed the first dedicated Medicare payment lane for AI diagnostics. OpenAI rolled Health in ChatGPT nationwide with Epic and Oracle connectivity, and patient-initiated record transfer sits outside HIPAA entirely. Same month the FTC sued a health company over data handling. Epic lost its president and AI chief. 7. Capital rotated rather than expanded. Kaufman Hall logged 18 hospital deals and $7.7B in Q2, one of the strongest quarters since 2019, with two-thirds involving independent systems approaching partners proactively and only three distressed sellers. Intermountain paid $1.15B for beds Surgery Partners sold to fund ASCs. Prisma and Erlanger signed on $2B. Vertex spent $10B on Crinetics. Deal volume held; the direction was portfolio reshuffling inside healthcare, not utilization growth. 8. GLP-1s are simultaneously the cost problem and the policy expansion. National health expenditures grew 7.3% to $5.7T with GLP-1s named a driver, and CMS extended access to about 4M Medicare beneficiaries in the same news cycle. Sponsored by Regard It’s a common rev cycle practice: auto-generated notes supporting a diagnosis the physician never reviewed. Regulators have lost patience with it and enforcement is costly. Lens, an outpatient HCC capture tool, fixes this upstream, finding net-new diagnoses buried in labs, meds, and notes and attaching MEAT evidence to make every finding defensible. Through Regard’s HCC gap analysis, one health system found $18.2M projected annualized revenue from net-new HCCs across the population. Get the details and request your free HCC gap analysis here. Hospitalogy Top Reads & ResourcesSouth Korean women are projected to become the first population in recorded human history to cross an average life expectancy of 90 years by 2030 drawing a new crop of longevity tourists. AI won't fix a fragmented revenue cycle. Learn how R1 built Phare, healthcare's first revenue operating system, to connect workflows, data, and intelligence, driving better financial outcomes.* General Catalyst and the unbundling of Growth Equity Jensen Huang: why open models matter. *This read is brought to you by one of my brand partners who help make this newsletter possible! MISCELLANEOUS MADDENINGS Some guy responded to my last deep dive on hospital Q2 earnings, said my piece was terrible, and then said I wasn't funny! Can you believe that? The audacity! Anyway I crack myself up but maybe that's the emerging dad joker in me. Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
|||||||
|
No comments