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Service Line Disruptors 2026: Pay-Viders, PE, and the Threat You're Not Watching · The Strategy Catalyst Dispatch

• 0:05
  Anika (2): Welcome to the Strategy Catalyst Dispatch, a podcast from the Strategy Catalyst team at the Health Management Academy.
• 0:11
  Anika (2): I'm your host, Anika Rashid Senior Analyst, and each episode we'll explore The trends and insights shaping healthcare strategy today.
• 0:20
  Anika (2): Let's dive in.
• 0:26
  Anika: A few weeks ago, our team convened a group of strategy leaders on a webinar from health systems across the country to dig into a question, which outside players are the most likely to reshape your service lines this year, and what can you actually do about it?
• 0:40
  Anika: I'm gonna walk you through what we learned, both from our research and from the real time reactions of the strategy executives who we're navigating these pressures.
• 0:48
  Anika: Right now we're gonna cover three categories of disruptors.
• 0:52
  Anika: Providers, private equity and drug distributors.
• 0:56
  Anika: For each one, I'll share our team's predictions for 2026, A provocation designed to push our thinking and how strategy leaders in the room responded.
• 1:04
  Anika: Then we'll close with a simple framework for thinking through your response service line by service line.
• 1:10
  Anika: So quick note from what you're about to hear, most of what follows is drawn directly from that webinar session.
• 1:15
  Anika: So you'll hear my colleague Liz Jones, research director on the Strategy Catalyst team, walking through the research, And I'll jump in throughout to add context and share perspectives from the strategy executives who joined us on the line.
• 1:28
  Anika: Let's get to it.
• 1:31
  the disruptors we're going to cover today are payviders.
• 1:34
  Private equity and distributors.
• 1:36
  as we walk through these, what we wanna focus on is what's changed and how they're behaving now, and which service lines are likely to feel the pressure this year.
• 1:47
  The big shift is that all three are behaving with more discipline and more precision than they did perhaps a few years ago.
• 1:55
  So starting with Payviders, after several tough years in Medicare Advantage, we're seeing.
• 2:01
  Fewer headlines about acquisitions, but the important change isn't that they're slowing it's selectivity.
• 2:09
  Integrated plans still have capital and data advantages, and they're using vertical integration to quietly reshape referrals and value-based care flows rather than buying platforms wholesale.
• 2:21
  In 2026, we anticipate this will show up most clearly in service lines where upstream control matters more than scale.
• 2:29
  On private equity, it looks very different than it did even two or three years ago.
• 2:34
  Macro pressures like higher rates and reputational risk and tougher operating realities.
• 2:39
  That's all made care delivery a less attractive asset for private equity.
• 2:44
  So what we're seeing instead is a pivot that we're gonna dive into in that section.
• 2:48
  The implication for health systems is not reduced competition.
• 2:52
  It's a temporary reshuffling that opens some strategic windows that we can talk about there.
• 2:58
  And then on the bottom, distributors, They, we think are the fastest moving and often least visible shift wholesalers.
• 3:06
  Acquiring care platforms isn't new.
• 3:09
  In 2026, we anticipate it will accelerate and become more intentional.
• 3:14
  So the macro driver here, maybe not surprising, is buy and bill economics.
• 3:18
  Controlling the drug channel allows distributors to influence site of care, margins and growth without owning the full provider.
• 3:26
  Enterprise oncology is a clear example here, but we'll talk about some others where it's ex expanding.
• 3:32
  So across these three disruptors, the common 2026 theme, I hope you hear is influence is shifting Upstream, control of access and referrals increasingly matter more than outright ownership.
• 3:46
  And that's why the impact varies so sharply by service line.
• 3:51
  Anika: That's the common thread, upstream control.
• 3:53
  Anika: Now, let's take each disruptor one at a time, starting with the one this group was most concerned about.
• 3:58
  Anika: Payviders.
• 4:00
  the key point is that slower m and a activity reflects financial and policy headwinds, not a lack of strategic ambition or a loss of strategic ambition.
• 4:11
  Integrated plans have already secured the hard part, patient access data, and payer leverage.
• 4:18
  In 2026, the strategic shift we think is gonna be selective moves that influence downstream economics without requiring full platform ownership.
• 4:27
  Impact will vary significantly by service line often before enterprise level effects are visible.
• 4:33
  So small shifts in steerage materially can change margins.
• 4:39
  So taken all together, these illustrate why payviders don't need scale across an entire service line to exert leverage.
• 4:47
  The through line here is control of high cost utilization points, not provider breadth.
• 4:53
  And by controlling those upstream decision points, they can affect referral flows, pricing, power, and risk pools.
• 4:59
  So service lines like post-acute infusion and behavioral health are most exposed because the access and steerage matter more than brand, right?
• 5:07
  So these deal choices are showing how payviders are prioritizing influence over integration and shaping those upstream decisions.
• 5:15
  They can affect downstream volume, pricing, and risk pools.
• 5:20
  So that's a quick overview of, to get a feel.
• 5:24
  Very quickly, why Payviders are an important disruptor to consider this year.
• 5:28
  Anika: With that, here's our prediction for payviders.
• 5:31
  Even after a tough couple of years with Medicare Advantage, payviders still have capital on hand to bounce back and continue snapping up care delivery assets.
• 5:40
  We expect to see targeted reentry over the next 12 to 24 months, especially in home health, post-acute and CV imaging.
• 5:49
  Now for our somewhat intentionally controversial provocation, the assertion here is that the next wave of payvider activity will be about benefit design and referral control rather than provider ownership.
• 6:01
  And I might add this, they could do this in ways that health systems can't easily counter or compete with.
• 6:06
  So I want you to think on that a minute.
• 6:08
  Do you agree with that provocation?
• 6:10
  Do you disagree?
• 6:11
  Why?
• 6:13
  Anika: When Liz put that provocation to the room, it sparked some pushback.
• 6:16
  Anika: One strategy executive made a contrarian.
• 6:18
  Anika: Case.
• 6:19
  Anika: Providers aren't going to stop acquiring providers.
• 6:22
  Anika: They argued because they're the most logical exit for PE-backed physician groups.
• 6:26
  Anika: PE firms are under pressure to sell these assets and pay providers are often the only buyers with the capital and strategic interest to take them on.
• 6:34
  Anika: So even if pay providers are shifting toward benefit design and referral control, this strategy executive expected acquisitions to continue, not necessarily because of offensive strategy, but because they're the landing spot for PEs retreat.
• 6:49
  Anika: Another strategist was skeptical of the benefit design thesis for a different reason, access for referral steering to work.
• 6:58
  Anika: He pointed out you need enough providers in your network to be selective about where you send patients and in a lot of markets, primary care and specialty, that access just isn't there.
• 7:10
  Anika: You can't narrow your network if there's no one left in it.
• 7:14
  Anika: But he also added another wrinkle.
• 7:16
  Anika: The labor market has shifted.
• 7:18
  Anika: A couple years ago, employers couldn't afford to frustrate employees with restrictive health plans because people would leave.
• 7:24
  Anika: Now, with employees having less leverage, employers may be more willing to impose tighter benefit designs and absorb the complaints.
• 7:33
  Anika: So the access problem is still there, but the employer calculus is also changing.
• 7:40
  Anika: When we pulled the room, about two thirds agreed with this provocation.
• 7:43
  Anika: That benefit design and referral control will matter more than provider ownership, but that other third have principled reasons for disagreeing.
• 7:53
  Anika: Here's a takeaway If you're tracking pay buyer activity in your market.
• 7:56
  Anika: Acquisition announcements are an obvious thing to watch, but changes to benefit design shifts and referral patterns, new requirements and value-based contracts.
• 8:06
  Anika: That's also gonna tell you about where pressure is gonna show up in your service lines.
• 8:12
  Anika: Next we go to private equity.
• 8:15
  The takeaway for private equity is not that PE is leaving healthcare, but that care delivery is becoming a less attractive place for their capital.
• 8:25
  So last year, only 5% of PE investment was in the care delivery space.
• 8:30
  And we expect this trend to continue higher rates, reputational, risk, pressure, operational complexity are driving this shift.
• 8:39
  So the deals on this slide that we pulled to highlight show how private equities care delivery thesis is being unwound.
• 8:46
  As for exits, perhaps the most buzzy last year was Ascension's acquisition of AmSurg, but Genesis Care's Sale of Radiation Oncology assets after bankruptcy highlights how capital intensive oncology platforms have struggled to deliver durable returns for pe.
• 9:03
  In contrast, PE-backed activity in home health reflects continued interest in service lines with steadier cash flow and lower reputational risk.
• 9:11
  Service lines like GI, and Home Health are experiencing ownership churn rather than sustained consolidation.
• 9:18
  So the important aspect of these deals is timing.
• 9:21
  They create brief windows for health systems to potentially.
• 9:26
  Acquire assets or acquire assets outright that directly affect referral control and site of care.
• 9:33
  The strategic question our members should be considering is whether acquisition or reacquisition restores leverage, or reabsorbs or absorbs operational risk.
• 9:44
  The answer to that is gonna vary by system, service line and asset.
• 9:49
  So our prediction for PE in 2026 is that they've mostly finished investing in care delivery, and I keep emphasizing delivery and are moving to other categories of deals, health tech and health services, revenue cycle, utilization management, and the like.
• 10:06
  Our provocation, is that trying to outbid PE for physicians may be a losing strategy if PE is not really in this.
• 10:14
  For long-term ownership, health systems, we would say may need to outlast rather than outbid PE as the best long-term home for physicians.
• 10:24
  PE will come and go as they play for profit, but you're in it for the long haul.
• 10:28
  Anika: This one got more agreement than the payvider provocation, but the discussion surfaced Other a tensions.
• 10:35
  Anika: One strategy executive on the line drew a historical parallel.
• 10:38
  Anika: They'd seen the cycle before in the nineties.
• 10:41
  Anika: PE rolls up, physician practices, hits the operational reality eventually unwinds, and we may be on that part of the rollercoaster now, they said.
• 10:54
  Anika: Health systems, especially not-for-profits, need to think in 10, 20, or 50 year horizons.
• 11:00
  Anika: Whereas PE thinks in seven year exit timelines and that mismatch can be a bit of an opportunity for health systems.
• 11:11
  Anika: The executive also named the tension that if your strategy is to wait out PE for a few years until the assets come back to market at better terms, what happens to your community in the meantime?
• 11:24
  Anika: If you need a certain specialty access, can you really tell your patients to wait a few years while you play the long game with pe?
• 11:33
  Anika: For a not-for-profit, with a mission to serve the community, that starts to feel like a compromise of values.
• 11:41
  Anika: another executive offered a middle path.
• 11:43
  Anika: You can't match PE dollar for dollar they acknowledged, but you can compete by being an alternative.
• 11:49
  Anika: Not everyone who joins a PE-backed group is happy there.
• 11:53
  Anika: Some physicians become disillusioned with a model and they want out.
• 11:58
  Anika: You've maintained relationships and kept resources allocated.
• 12:00
  Anika: You can be the landing spot for those doctors who are ready to come back.
• 12:04
  Anika: You're not necessarily out bidding pe, but you're positioning yourself to catch what PE drops.
• 12:10
  Anika: So basically there's a strategic window.
• 12:12
  Anika: PE is under pressure to exit.
• 12:14
  Anika: and health systems with capital and patients have opportunities to acquire assets or reacquire assets on better terms.
• 12:23
  Anika: The timing is obviously important.
• 12:25
  Anika: If you move to early, you might overpay wait too long, and there's other trade offs.
• 12:31
  Anika: In the meantime, you're making judgment calls about how much access your community can afford to lose while you wait.
• 12:37
  Anika: There's not a clean answer here, but if you're in a service line where PE has been active, gi, cardiology, orthopedics, this is a year to have a clear point of view on which assets you'd want back and what you'd be willing to pay for them.
• 12:53
  Anika: Now for the disruptor, that seemed to be the most surprising in this conversation.
• 12:57
  Anika: Distributors, the big drug wholesalers, McKesson, Cardinal Health, Kora.
• 13:04
  Anika: When we asked the room at the end of the session, which disruptor worried the most distributors came in last, but when we asked whether distributors might be the single biggest threat to service lines this year, the room split right down the middle.
• 13:18
  Anika: I think that makes distributors worth paying attention to.
• 13:21
  Anika: Here's Liz explaining the thesis.
• 13:23
  so distributors we think represent the fastest evolving, but often leads to visible disruptor rather than buying providers outright.
• 13:32
  They're interested in integrating purchasing, distribution, and care platforms, and this allows them to shape site of care, margins and growth.
• 13:41
  Unsurprisingly, probably to most buy and bill economics make control of the drug channel a really powerful lever.
• 13:48
  Oncology anchors this trend, but we think once that's established and the blueprint is made there, it can become very portable as we're starting to see in GI urology and ophthalmology.
• 13:59
  distributor owned platforms use drug purchasing as the foundation for care delivery influence.
• 14:04
  By acquiring or partnering with oncology practices, distributors gain control over buy and bill volumes, which then directly shapes margins inside of care decisions.
• 14:13
  At the end of 2025, of course, the major news was that Kora acquired a majority stake in one oncology.
• 14:19
  but we're also seeing expansion into these other service lines by the same three key distributors, McKesson, Cardinal Health, and Kora.
• 14:28
  So given what we know about distributors, especially compared to pe, our prediction for 2026 is that physicians might be more likely to be willing to work with distributor owned platforms.
• 14:41
  There's not quite so much maybe taboo.
• 14:43
  We believe this will tend to make distributors and even larger threat to outpatient assets.
• 14:48
  And for our provocation, We would argue or could argue that distributors are likely to be the single biggest disruptive threat to health system service lines this year.
• 14:58
  Anika: So after we presented this, there was a bit of a pause in the room, and then one of the strategists in the session said that they hadn't thought about this before and now they were spending a lot of time thinking about it.
• 15:12
  Anika: They were kind of processing out loud.
• 15:14
  Anika: They could see the logic, especially in oncology where the drug economics are enormous.
• 15:20
  Anika: but then they started extending it to other specialties.
• 15:23
  Anika: Anywhere these buy and bill economics can create a lever.
• 15:27
  Anika: Another strategy executive pushed back.
• 15:30
  Anika: This.
• 15:30
  Anika: Executive wanted to know why distributors think that this is a good idea.
• 15:35
  Anika: They don't necessarily need to own the doctors to get doctors to prescribe their drugs.
• 15:41
  Anika: the executive said that this felt like the latest big middleman industry with cash to burn, trying to get into the business of buying physicians, and that we've seen how that plays out in the past.
• 15:51
  Anika: They also raised the regulatory question after high profile, PE driven hospital failures, policymakers, at least at the state level, are getting more skeptical of for-profit players inserting themselves into care delivery without a clear public benefit.
• 16:06
  Anika: And would distributors face the same scrutiny?
• 16:11
  Anika: The executive pointed out that for most health systems with cancer programs they already own or are tightly aligned with their medical oncologists.
• 16:19
  Anika: If a distributor buys a practice, those doctors are still performing oncology services tied to the health system.
• 16:25
  Anika: So what's actually changed?
• 16:27
  Anika: one strategist, acknowledged that the current regulatory environment, especially at the federal level, isn't protective of health systems.
• 16:36
  Anika: That this administration has signaled it wants disruption, new entrants, new models, and if you're a distributor with an expensive oncology drug portfolio and payers are creating barriers to prescribing, owning the physicians, even at a loss on the care delivery side might be worth it if you went on the drug margin.
• 16:54
  Anika: So I spent some time after the session digging into the question that webinar attendee just raised, Why do distributors think this is a good idea?
• 17:03
  Anika: Adam?
• 17:04
  Anika: Fine at Drug Channels Institute Whose analysis on wholesaler economics is regularly cited by the Wall Street Journal and industry publications has been tracking this trend closely.
• 17:17
  Anika: Back in October before the Kora majority acquisition was even announced, he laid out five strategic reasons why wholesalers are buying into physician practices.
• 17:25
  Anika: When Kora announced the full one oncology deal, two months later, it validated what he predicted.
• 17:33
  Anika: the logic isn't primarily about running great oncology practices.
• 17:37
  Anika: It's about protecting and extending their position in the drug supply chain.
• 17:42
  Anika: It's defensive once Kora owns one oncology.
• 17:46
  Anika: That practice network is locked into San Chorus distribution and GPO services.
• 17:52
  Anika: The relationship is protected.
• 17:54
  Anika: Second, it's about influence.
• 17:56
  Anika: By owning these practices, distributors gain visibility into prescribing patterns, particularly as biosimilars create more choices.
• 18:04
  Anika: In oncology, if you can nudge prescribing toward one biosimilar over another, that's margin.
• 18:12
  Anika: Now, will distributors be good at running physician practices?
• 18:16
  Anika: That's not a given, but Even if you're skeptical, they'll succeed at healthcare delivery.
• 18:21
  Anika: The consolidation itself changes the landscape.
• 18:25
  Anika: The big three have spent over$16 billion committing to these acquisitions.
• 18:29
  Anika: so if you're leading strategy for a health system with significant oncology infusion or specialty pharmacy services, this should be on your watch list, not as a direct competitor coming for your patients tomorrow, but as a shift in the underlying economics that could affect your leverage and your margins over time.
• 18:47
  Anika: After we looked at these three disruptors and our predictions for how they'll move this year, we turn to how health systems can respond to them at the service line level.
• 18:56
  Anika: I'll turn it back over to Liz.
• 18:58
  Health systems fundamentally have four options for how to respond to a given disruption in a given service line.
• 19:05
  Partner compete, acquire, or ignore.
• 19:08
  This includes payviders, pe, and distributors, but we think this can apply broadly across disruptor types.
• 19:14
  The most strategic choice for a given system emerges from different service line, strengths and vulnerabilities, geography, competitors, almost a bit of a SWOT analysis.
• 19:23
  So this framework we think works best when applied service line by service line, not system wide.
• 19:29
  Now, we know this is not rocket science, but sometimes a common sense framework can help us understand and think about.
• 19:37
  How do we respond?
• 19:38
  What is our most likely thing?
• 19:39
  What, where else do we not choose to enter?
• 19:41
  And why don't we do that?
• 19:43
  So first partnership.
• 19:45
  and as we see it, partnership in 2026 reflects acknowledgement of that.
• 19:50
  There's, there could be, and often is structural advantage elsewhere outside of our health system, knowledge, expertise.
• 19:57
  And so we think some areas that are right for partnership, probably even thinking back to our dis distributor, conversation, oncology, gi, ophthalmology, urology.
• 20:07
  This can also often happen because of the scale capital and channel control needed here.
• 20:11
  And In general, we think that partnership can be worthwhile when there's shared influence and or when shared influence is a more strategic option than parallel investment, right?
• 20:20
  How can we partner and not just duplicate?
• 20:23
  Anika: One concrete example came from a strategist who described partnering with McKesson on infusion services.
• 20:29
  Anika: Infusion can swing from highly profitable to deeply negative quickly depending on drug costs and payer reimbursement.
• 20:36
  Anika: McKesson offered a service that tracks that in real time.
• 20:39
  Anika: They also structured a white bagging arrangement where the health system could capture margin.
• 20:44
  Anika: It was a partnership targeted on a specific operational problem, and that's the kind of service line specific thinking that this framework is meant to enable.
• 20:55
  with compete, It can come across as, oh, this feels really strong.
• 21:00
  Or it might be, it can be interpreted a lot of different ways, but I think this works especially where you're thinking about access and where you can defend access against a competitor.
• 21:09
  And if we're thinking about referral leakage or outpatient fragmentation and payer steerage, those are the main threats.
• 21:15
  To this.
• 21:16
  And so two of the key service lines, we think this is most, applicable in our cardiology and MSK.
• 21:22
  Those are common examples where com competition could be a strategic and viable choice.
• 21:27
  And so competing tends to be a really rational and strategic choice.
• 21:31
  If you're a destination brand for a given service line, if you control the referral density and not just the employment, or if payers still really need your capacity to meet their access or quality goals.
• 21:42
  Some of the things we've talked about where this could be a losing battle or when to maybe not jump into competing is if you're having volume erosion.
• 21:49
  If your physicians you sense are pretty.
• 21:51
  Platform agnostic and willing to kind of branch out or have multiple be in multiple places.
• 21:57
  ASCs or virtual first models are absorbing commercial lives.
• 22:00
  That can also be a challenge here.
• 22:03
  third, acquire acquisition today.
• 22:05
  hospitals are very familiar with acquisitions, right?
• 22:08
  But we think that acquisition in 2026 is less about growth, though it could be and more about recovering loss control.
• 22:16
  So timing is the differentiator here, I think especially when we talk about pe.
• 22:20
  So thinking about this being an effective strategy, when you have the timing is right and you have the leverage.
• 22:26
  That's in favor of your system.
• 22:28
  So GI and cardiology are great situations where referral hubs can sit outside the system.
• 22:33
  And so the strategic challenge you have here is, oh, can we move at the right time?
• 22:38
  Not too early or too late.
• 22:39
  So that's some of the considerations we have now for acquisitions.
• 22:44
  So I'm gonna do real quick, ignore here, and I think this is one that can feel ignoring, can be an active principled choice.
• 22:54
  And the constraint here is not.
• 22:57
  Is not capital.
• 22:58
  It's often leadership attention.
• 22:59
  To choose this option strategically, we need to have clear indicators that tell us it's a thoughtful choice and continually revisit the decision to prevent this being like.
• 23:09
  Careless or a default option that we're not taking a strategic move in.
• 23:12
  So I think this is less clear cut sometimes for key service lines, since it will depend a lot on your system.
• 23:19
  But having indicators such as revenue, potential and market mismatch can be particularly relevant.
• 23:25
  And I think some ways this is a hard decision to make or a difficult decision to make in a strategic way rather than, oh, it's the default and we just do it'cause that's what we're doing and we're continuing on as business is normal.
• 23:36
  Because it does require restraint.
• 23:38
  It requires waiting.
• 23:39
  It requires staying the course in what you're doing and having confidence in that.
• 23:44
  But we wanna think together, this year as we continue our research, what is, what makes ignoring strategic
• 23:51
  Anika: The strategy work isn't deciding whether you're a partner or a compete organization.
• 23:57
  Anika: It's about making those calls, specialty by specialty, market by market, disruptor by disruptor, and then about being honest where you have leverage and where you don't.
• 24:09
  Anika: When we pulled the room, partnership was the most common tool in their toolkit, followed by compete, acquire, and ignore or use less frequently.
• 24:17
  Anika: But the point is most systems are using multiple approaches depending on the service line and the disruptor.
• 24:23
  Anika: Some takeaways first on providers watch the benefit design changes, not just acquisition announcements.
• 24:30
  Anika: Second on private equity, the window is opening.
• 24:34
  Anika: PE is under pressure to exit care delivery assets.
• 24:38
  Anika: If there are practices or platforms you'd want to acquire or reacquire, this is the year to have a clear view on which ones and at what price.
• 24:46
  Anika: third, on distributors.
• 24:48
  Anika: Even if you're skeptical that this model works, the upstream consolidation of drug channels is happening for oncology infusion and specialty pharmacy.
• 24:56
  Anika: It's worth understanding how it could affect your leverage, even if you don't think it's an immediate threat.
• 25:02
  Anika: We're gonna keep tracking all three of these as part of our 2026 research on service line strategy.
• 25:07
  Anika: If you wanna go deeper on the Kora One Oncology deal specifically, my colleague Tucker broke that down in a recent edition of our newsletter.
• 25:14
  Anika: The strategist to watch and listen to the full webinar and hear the full discussion Strategy Catalyst members can find that at our website.
• 25:21
  Anika: Hm academy.com.
• 25:23
  Anika: We also recently published a disruptors cheat sheet.
• 25:25
  Anika: You can also find that on the website.
• 25:28
  Anika (2): That wraps up this episode of the Strategy Catalyst Dispatch.
• 25:32
  Anika (2): If you found this episode valuable, please like and subscribe on your podcast platform of choice and leave us a comment.
• 25:38
  Anika (2): If you have other thoughts or questions, we'd love to hear them.
• 25:41
  Anika (2): Email us at Strategy catalyst@hmacademy.com.
• 25:45
  Anika (2): You can also find more of our resources on HM academy.com/strategy-catalyst.
• 25:51
  Anika (2): That's it for this dispatch.
• 25:53
  Anika (2): Thanks for listening.