Latest / Becker’s Healthcare Podcast / Health System Consolidation, Insurance Exits, and Industry Trends with Alan Condon

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Health System Consolidation, Insurance Exits, and Industry Trends with Alan Condon · Becker’s Healthcare Podcast

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  - There's a small circle of people who truly
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  - understand what it takes to lead a health
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  - system right now. The decisions are enormous.
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  - The variables are constantly shifting, and the stakes
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  - of getting a call wrong don't stay contained.
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  - That's not a complaint. It's a structural reality.
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  - And it's why the most effective c suite
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  - leaders are deliberate about where they go to
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  - pressure test their thinking.
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  - Becker's fourteenth annual CEO and CFO roundtable
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  - brings together more than 1,500
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  - executive level attendees
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  - and nearly 400 speakers for four days built
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  - around growth, financial sustainability,
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  - workforce strategy, and the leadership questions that don't
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  - have easy answers.
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  - Join us November second through the fifth in
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  - Chicago.
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  - For the agenda and event details,
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  - visit beckershospitalreview.com
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  - and click on the events tab in the
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  - upper right.
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  - This is Scott Becker with the Becker's Healthcare
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  - Podcast.
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  - We get a chance today to talk to
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  - Allan Condon.
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  - Allan is a magnificent
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  - leader, editor in chief at Becker's Healthcare,
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  - covers health care and health care systems.
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  - He is a big fan of Rory McIlroy.
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  - I think we've talked about that before
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  - and up overstepping my bounds. I hope that's
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  - correct, Alan. Is that right? You're buying out
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  - the money there.
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  - Yes. Yes. Yes. Yes. Yes. And then on
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  - top of it, he is the Rory McIlroy
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  - of Becker's Healthcare.
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  - So, Alan, just a fantastic journalist and brilliant.
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  - Talk to us about what are some of
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  - the top stories you're watching or covering currently?
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  - Yeah. Absolutely. High high praise indeed.
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  - Thank you very much, Scott.
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  - So I think, like we said, a ton
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  - going on at World Health Care Finance at
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  - the moment. I think the the first story
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  - I'd really like to to kinda drill down
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  - into quickly for for our audience is one
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  - story
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  - that's really spotlighting the growing trend across the
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  - industry, and that's we've just reported on the
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  - news. I believe Becker's was either the first
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  - or maybe among the first to break this
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  - news yesterday.
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  - Memorial
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  - Hermann Health System in Houston, Texas
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  - plans to shut down its commercial health insurance
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  - business.
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  - Now this wind down affects the health systems
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  - HMO,
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  - its PPO, its self funded
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  - products for employers.
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  - Essentially, the health system said it'd be very
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  - difficult
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  - to reach the scale that it needed
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  - to sustainably provide value for members going forward.
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  - I think the one caveat here for for
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  - our for our readers, our audience members, is
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  - that this closure notice does not include the
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  - health systems Medicare Advantage business, which serves about
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  - 15,000
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  - enrollees
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  - or so. And then just to kind
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  - of pull this out a little bit more
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  - into the wider picture here, Scott, is Memorial
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  - Hermann is joining a growing
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  - group of health systems that are either exiting
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  - or pulling back from the insurance business as
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  - financial pressures really persist industry wide.
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  - Just in May, a couple months back,
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  - Providence, Providence health plan is part of Providence
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  - said that it would shutter its health plan
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  - starting next year. A Providence huge huge nonprofit
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  - system, of course, based in the Pacific Northwest
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  - operating in multiple states. So, you know,
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  - but one in Texas, one in in on
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  - the in the Pacific Northwest.
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  - We've gone back a couple more months as
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  - well. We saw a handful of other health
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  - plans winding down operations leading into 2026.
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  - Carle Health here in Illinois, Michigan Medicine, another
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  - one. So really, really, tough, tough challenges going
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  - on with these pay vital models.
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  - Memorial Hermann, unfortunately, the latest system winding down
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  - its commercial health insurance operations.
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  - And this really has been a long term
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  - evolution
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  - where health systems get into insurance business. They
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  - get out of insurance business.
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  - We've been through periods of time where it
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  - seems like it was the flavor of the
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  - day. Everybody thought they had to be in
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  - it,
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  - and then almost always that goes poorly. They
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  - get out of it. And this seems like
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  - the latest salvo and the latest clarity that's
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  - very hard to play this game
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  - when you're competing against
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  - four
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  - payers,
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  - United, Cigna,
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  - Aetna, Elavance that are about the four largest
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  - companies in America, at least four of the
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  - top 20 largest companies in America, and United
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  - and CVS Aetna being number four and six.
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  - It's just very hard to play in that
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  - world where there's so much technology, so much
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  - everything.
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  - If you're a health system with 10,000,000,000 in
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  - revenues and they have 400,000,000,000
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  - in revenues,
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  - just can't have the resources to play that
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  - game. So they all end up getting out
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  - of it, it seems like.
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  - Yeah. Absolutely. I think you to your point,
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  - I I know, Jacob Evanston, our fantastic,
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  - leader of Becker's on the payer side, recently
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  - spent a day open Minneapolis in UnitedHealth Care's,
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  - headquarters, speaking to executives up there. Seems like
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  - from from health plan leaders on the provider
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  - side, we were excited over the last few
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  - months and years, really playing catch up, for
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  - lack of a better term, in this AI
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  - arms race in terms of how are you
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  - using AI, how are you using automation
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  - to tackle,
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  - combat some of those trends we're seeing in
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  - terms of denials on the on the payer
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  - side. But it seems like now those big
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  - four, those big five, reinvesting
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  - billions of dollars more into AI, automation, coding
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  - to really push further and further ahead. Now
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  - that make it a little bit more challenging
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  - for some of those providers to to help
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  - close that gap that we hear so often
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  - about.
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  - A 100. So I I I saw the
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  - story on that this morning that you had
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  - put out.
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  - Fascinating.
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  - What else are you watching closely currently, Alan?
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  - I think,
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  - I'd love to jump back and just touch
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  - a little bit on, Ascension again. I think
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  - this is another big deal. We obviously covered,
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  - Ascension's big, big acquisition a couple weeks ago.
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  - On Amsearch, $3,900,000,000
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  - deal. Ascension not slowing down at all in
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  - terms of its growth now.
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  - Acquired a hospital in Texas recently and now
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  - looking to acquire a nonprofit
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  - independent health system in Tennessee
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  - by the name of Williamson Health for this
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  - is around about a $700,000,000
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  - deal, could go up to $1,000,000,000
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  - in terms of investments and whatnot.
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  - EHR upgrades, capital investments, service line expansions will
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  - certainly be part of this deal should that
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  - acquisition go through.
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  - But, certainly, in speaking with
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  - Ascension CFO recently,
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  - some of their executive leaders,
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  - really, really honing in on these high growth
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  - markets.
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  - Texas, of course, being one, which they just
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  - acquired a hospital there from from CHS.
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  - Tennessee,
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  - really, really high growth market where we're seeing
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  - a number of health systems plan more hospitals,
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  - look to acquire more hospitals, build out these,
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  - health hubs around the hospitals.
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  - So Tennessee seems to be a really booming
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  - market at the moment.
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  - Number of key key players in health systems
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  - in that space, Ascension really looking to bolster
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  - and strengthen the footprint there with this deal.
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  - Thank you very, very much. And and fascinating,
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  - the growth in Ascension and great leadership there.
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  - So we've talked about moral harm and closing
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  - the insurance company. We've talked about Ascension's growth
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  - in the ambulatory market.
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  - And we're we're constantly seeing a little bit
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  - of closures, a little bit of layoffs.
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  - What are you seeing there or anything that
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  - particularly is striking your interest there?
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  - Yes. I think,
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  - it definitely
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  - seems, Scott, that we're seeing a definite uptick
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  - in
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  - layoffs,
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  - service line cutbacks, department closures, even potential hospital
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  - closure over the last six to eight weeks
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  - or so. And I expect that maybe to
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  - continue in the in the coming quarters as
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  - we get in the back we we have
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  - further and further into the back half of
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  - the year.
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  - I think another trend that I really like
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  - to spot light that we just covered just
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  - today as well is just this growing, growing
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  - number
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  - of independent hospitals, independent health systems who are
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  - really finding it as difficult as ever, arguably
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  - as more difficult as ever to survive in
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  - the current environment, looking for those really larger
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  - health system partners.
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  - Certainly a trend that we're seeing nationally across
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  - the across the country over the last two
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  - years,
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  - really begs the question as to what it
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  - really takes to survive as an independent hospital,
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  - particularly those in a in a rural setting,
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  - community setting,
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  - serving a high kind of Medicaid, Medicare population.
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  - We're seeing big, big systems snap up some
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  - of these,
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  - struggling independent hospitals all over the country. It's
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  - certainly a trend that we expect to continue
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  - over the coming quarters as well, particularly, like
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  - you said, looking into so much so much
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  - cuts coming down the pipeline from the federal
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  - level as it relates to Medicaid and whatnot.
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  - No doubt those independent hospitals and systems who
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  - have such a high dependency on those government
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  - payers,
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  - we really find it, even more challenging to
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  - to make ends meet and to keep those
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  - margin afloat next year.
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  - Thank you very, very much.
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  - Always a pleasure to visit with you, Alan.
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  - I always learn something.
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  - I'm fascinated by the
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  - health systems
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  - that jump into the insurance business
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  - and how poorly that always seems to go,
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  - but how it's almost feels like, you know,
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  - a dog chasing a car, they can't tell
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  - themselves,
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  - and then at some point, they realize not
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  - a good idea and jump back out of
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  - it. Seems like to have been just a
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  - vicious cycle for thirty years now. Just fascinating
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  - to watch. And it's gotten harder and harder
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  - as the payers have gotten bigger and more
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  - advanced.
• 9:21
  - Alan Condon,
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  - fantastic. Again, a pleasure to visit with you.
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  - Thank you for joining the Becker's Healthcare Podcast
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  - as always. Always a pleasure. Thanks so much,
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  - Scott.