This is a preview of the October 30 edition of Access Health—Tap here to get this newsletter delivered straight to your inbox.
Good morning. Halloween is tomorrow, and I still don’t have a costume. I might just don a suit and tie and say I work in private equity. Boo!
Tricks aside, PE investments are a polarizing topic in the health care industry. Research has consistently condemned PE firms for buying up hospitals and sucking staff and patients dry. Acquisitions often result in more hospital-acquired infections, patient falls and diminished overall care quality, according to studies published in JAMA (here’s one from 2023, and another from this year). They’re also associated with rising care costs.
The evidence doesn’t look good, but some proponents of PE acquisitions argue that they’re better than the alternatives. Hundreds of U.S. hospitals are at risk of closure. Without a quick cash infusion, many American communities could lose access to care.
Love them or hate them, we have to talk about them. Fourteen states now have pre-transaction review laws for health care deals, five are specifically regulating private equity investment in the industry, and a handful of other states are considering similar legislation to increase oversight.
Some states with existing laws are tightening the reins. On January 1, California’s Office of Health Care Affordability (OHCA) will start reviewing health care transactions involving PE firms and hedge funds. That heightened scrutiny will impact acquisitions in the nation’s most populous state—and will serve as an interesting case study for others that consider following suit.
This week, I spoke with Sean Sullivan, a partner in the health care group at the law firm Alston & Bird, about the forthcoming changes in California. He counsels both providers and investors as they navigate the changing regulatory landscape.
State regulations like California’s sprout from the longstanding “corporate practice of medicine doctrine,” Sullivan told me. Essentially, he said, they’re aimed at “ensuring that there’s not improper profit influence or corporate influence over the professional practice of medicine.”
But governments, both state and federal, are under mounting pressure to keep PE firms in line. For the past 20 years or so, there have been increasing news reports around corporate investors’ profit motivations putting patients at risk, according to Sullivan.
“From my perspective as a health care attorney that works for a lot of those providers and works for a lot of those investors, that’s not what they’re doing,” he said. “They’re really trying to drive efficiencies and make patient care better, and provide better access to communities across the country.”
Regardless of either parties’ intention, the “scary and depressing” stories coming out of PE-acquired hospitals and nursing homes have driven some skepticism, Sullivan said.
After January 1, he expects that health care deals in California will take longer to close. Any health care entity undergoing a material change transaction will need to provide 90 days’ notice to the state, which will have to be built into the acquisition timeline. The parties may also consider building extra time in, just in case the deal is implicated.
This could also attract unwanted publicity for unfinished deals, leading to even longer delays as organizations push off their state filing date, Sullivan said.
“We’re going to have to provide this notice to the state of California, which is then made public on California’s website,” he said. “A lot of entities don’t necessarily want their deals to be made public, especially before they close.”
While Sullivan doesn’t expect this to halt transactions in California, he does anticipate seeing fewer of them after January 1.
“I do think that it is going to result in a bit of a cooling off,” he said. “I think that a lot of investors are going to think twice before doing a deal in California, or maybe if they’re doing a deal that involves facilities or practices in a lot of different states, they may think twice about whether or not they want the California operations to be included in the deal.”
“They may just carve California out because this notice provision is too much of a hassle to deal with.”
What are your thoughts on PE activity in the health care industry? Email me at a.kayser@newsweek.com and let me know.
In Other News
Major health care headlines from the week
- Microsoft AI included a few health features in its Copilot Fall Release. The popular large language model (LLM) will now offer credible sourcing for health-related questions through a partnership with Harvard Health Publishing. It also has updated care navigation features, providing more accurate search results when users ask about providers in their area.
- I spoke with Dr. Dominic King, vice president of health at Microsoft AI, about this new version of Copilot: “We’re seeing about 50 million health sessions a day on Microsoft’s consumer services, Copilot and Bing, and we feel a heavy responsibility to do a very good job there,” he said.
- Get the full scoop at Newsweek.
- Flu season is fast approaching—but the ongoing government shutdown is causing delays in disease tracking, which is typically monitored by the Centers for Disease Control and Prevention (CDC).
- That’s a problem for hospitals and health care providers who rely on the CDC’s dashboards for predictive analyses and resource allocation.
- And if the government doesn’t resume tracking soon, we could find ourselves in a “very destructive cycle” that hinders health planning around the globe, Epidemiologist Dr. W. Ian Lipkin told Newsweek. Click here to read more.
- The Food and Drug Administration (FDA) is taking action to develop biosimilar medications faster and cheaper. Biologics make up 5 percent of prescriptions in the U.S. but account for more than half of the country’s total drug spend, according to a Wednesday news release from the Department of Health and Human Services.
- At a Wednesday press conference, FDA Commissioner Dr. Marty Makary said these changes have the potential to save Medicare and Medicaid “billions of dollars.”
- The FDA released a draft guidance aimed at simplifying biosimilarity studies and “reducing unnecessary clinical testing.” The agency also plans to make it easier for biosimilars to be developed as “interchangeable” with brand-name biologics.
- “We want to see more competition, more choices,” Makary said. “When the first biosimilar came on the market seven years after Humira’s patent expired, prices really didn’t go down. Call it an implied collusion of prices. But it takes, typically, until two or three biosimilars come to market to see the prices really drop.”
- Yale New Haven Health has reached an $18 million settlement in a class action lawsuit over a data breach.
- The breach occurred in March and was one of the largest this year, affecting more than 5 million individuals. Get the full story at Newsweek.
Pulse Check
Executive perspectives on key industry issues
Earlier this month, I sat down for a Pulse Check with Dr. Patrick O’Shaughnessy, president and CEO of Catholic Health: a six hospital, $3.6 billion integrated health system based in Rockville Centre, New York.
In addition to his work at Catholic Health, Dr. O is involved in health care policy at the state and national levels—he previously served as chair at the Greater New York Hospital Association, and is up for election as the chairman of the Healthcare Association of New York State. Plus, he is part of the American Hospital Association’s strategy working group.
I spoke with Dr. O about health care reform, payer-provider tensions and the growing burden of chronic disease. We spoke on October 6, but his remarks feel all the more timely five weeks into the government shutdown; read on for a portion of our interview.
Editor’s Note: Responses have been lightly edited for length and clarity.
I know that bipartisan health care reform is a major priority for you. At the government level, where do you see the most opportunity for both parties to come together and solve industry issues?
I think it’s about how we come together to generate better value, right? When you look at health care’s annual spend relative to GDP, it is not sustainable. So on one side of aisle, we have concerns over escalating costs, and how do we deliver better value, and yet on the other side, equally as important, we see stressing to make sure that those that are most disadvantaged have access to care, and that we protect programs like Medicaid, and certainly make sure we continue to invest in Medicare, which millions and millions of people rely on for health care coverage.
I always say, if we want to bend the cost curve, we need to bend the disease curve, and so we really need to look at how we can delay or better manage chronic disease, since chronic disease is the biggest cost driver. You’d be surprised: it’s not just linearly related to health care services or health care access, but it’s also related to the different programs needed to support our communities, things like making sure folks have access to healthy food, adequate screenings and that their environments and their ecosystems are healthy.
When you look at [government] programs like Healthy People, it’s not just reinventing and reinvigorating the health care system, but a variety of other community based programs that can help get people more centrally involved with their health care and committed to all the things they need to do to stay healthy.
I think [we need to get] people from both sides of the aisle to see the commonality in what we could achieve if we focus on delivering better outcomes and basing payment for services—which should be across the entirety of the landscape, not just the commercial environment, but the governmental payer landscape as well. How do we incent for outcomes and for real value and make sure that we do not have fraud, waste and abuse, but at the same time that we don’t cut key programs that already are very disadvantaged and are upside down, meaning not even needing reimbursement rate lifts to be commensurate with inflationary cost growth?
Each year, Alexis, even just in our health system, we see between a three and four percent increase in expenses, and that could be as much as $350 million of expenses. That’s just inflation. So we’re working real hard on how [to] reduce expenses without impacting services. A lot of it looks at how can we be more efficient in level of care, where people go to receive their care within our health system. How do we better manage chronic disease and move care from being episodic to more continuous, and navigating patients effectively and then really engaging people in their health.
Despite all the great work that we’ve done—and I say we as [a] health care [industry]—if a person is not involved in their health care, it’s going to be really hard to move that needle. So much of what we can do today is screenable, it’s modifiable, but if people are not engaged in their care, it’s going to be very hard to change behavior, and then we see, unfortunately, more and more growth of chronic disease at a younger, earlier age, which creates tremendous burden on an already overburdened health care system.
Let’s zero in on that chronic disease piece for a moment. What are you doing at Catholic Health to better care for patients with chronic disease? How about at a broader level, through your work at the New York Hospital Association and the American Hospital Association?
The first part is to identify those that are at risk and to get upstream of the development of the disease. There’s a big difference in total spend if we identify somebody that’s on a pathway to become what we call a “polychronic,” someone that has three or more chronic diseases. That leads to debilitation over time and increased spending and, quite frankly, not a good quality of life for the patient.
So as an example, we’re screening people earlier. Even Medicare has a program called Annual Wellness Visit where it actually will incent providers—and there’s payment tied to this—to query patients Medicare beneficiaries in for at least a once per year annual comprehensive checkup, and then to build an individualized care plan for them. [At that wellness visit,] we have the ability to identify people earlier who may be prediabetic, who may have unrecognized hypertension that is creating risk for them for further chronic disease such as atherosclerosis, and many times, these things are unrecognized for years.
At Catholic Health, we built a lot of these tools into how we screen patients, and not just existing patients, but patients within the community. We offer a lot of community screenings. We have beautiful state of the art mobile clinics that we actually go out into communities, and we screen people, and you’d be amazed at what you find in people that are not even aware that they have [a problem]: as an example, an elevated hemoglobin A1C that is moving them closer to being an adult onset diabetic, or borderline hypertension, or an abnormal lipid profile.
At the end of the day, the two biggest drivers of chronic disease, morbidity and mortality are cardiovascular disease and cancer, and we have the ability to screen for the overarching majority of these ailments early on, even genetically. [Catholic Health is] using different AI-based tools to engage with patients and then have them come in for more proactive blood work, imaging and diagnostic testing to gage what their risk profiles are, and then to create an individualized care plan.
Now that may cost a little bit more upfront, but we believe we have a better ability then to manage disease, catch it earlier, bend that disease trajectory and prevent exacerbations of care. And we’re seeing it already. You look at what an emergency room admission costs, it could be $15,000 to $18,000, but if we can get to somebody before they reach a multiple chronic disease state and decompensate, we can manage them in an outpatient, ambulatory setting for a fraction of that cost. It means better quality of life for the patient, reducing unnecessary hospitalizations. And when you look at the volumes and numbers, that can save the health care system billions of dollars.
Our care has been too fragmented. It’s been too siloed between episodes of care. People fall through the cracks [of the health care industry because] it’s a difficult system to navigate, so we’re building out navigation models and navigation experts that can connect [those episodes of care]. And believe it or not, some of that is going to be digital. It’s going to be bot driven, where we can actually query patients and or potential patients, and get a sense for what their concerns are, and then what tests we should be thinking of for them.
And I think when you cascade that up to the agencies and advocacy groups that are involved with this, it really then ties into, how do we incent around payment mechanisms that align around quality, value and outcomes of care? Unfortunately—and I’ve been doing this a long time—the majority of time being spent now is actually just fighting reimbursement cuts, and more will be coming. We all understand, the cost expense and the growth in expenses, and we’re working hard to reduce those, but at the same time, I think the payment paradigm needs to shift and be more centered around those parameters.
What role do health systems play in beginning to shift that paradigm?
As a $3.6 [billion] integrated health care delivery system, that’s mission driven to us [at Catholic Health]. We have an obligation to the communities we serve to provide best in class care to everyone, irrespective of their ability to pay.
For us, [we’re] working with our agencies and working with our elected officials, [to] get them to understand the financial stressors and pressures we’re facing, and also to make sure they understand what some of the biggest drivers of expenses are in the health care system. As an example, within our industry (especially coming out of the COVID period), we saw double digit expense-based growth with many of our suppliers and contracted services agencies. How can we work together to leverage opportunities for cost savings and to deliver, again, an overall reduction in expenses that do not impact the bedside? That’s been a big, big opportunity that we’re addressing at the same time, while we’re making the salient and most needed investments to deliver best in class care.
C-Suite Shuffles
Where health care leaders are coming and going
- The Centers for Medicare and Medicaid Services (CMS) tapped Dan Brillman as deputy administrator, directing the Children’s Health Insurance Program (CHIP).
- Brillman is a former U.S. Air Force Reserve pilot, and spent the last 12 years as co-founder and CEO of Unite Us: a tech platform that enables health systems, governments and non-profit organizations to measure social determinants of health and supports care coordination.
- On the heels of the news, Unite Us promoted its other co-founder, Taylor Justice, to the helm.
- Janet Hadar will join the University of Alabama at Birmingham (UAB) Health System as chief operating officer on January 12, 2026.
- Previously, she was the president and CEO of the University of North Carolina (UNC) Hospitals.
- Microsoft AI selected Dr. Matthew Nour to lead behavioral health.
- He currently works at England’s University of Oxford as a senior clinical researcher in computational psychiatry and also serves as a consultant psychiatrist for the Oxford Health NHS Foundation Trust, according to his LinkedIn profile.
Executive Edge
How health care execs are managing their own health
Today’s insights come from an unexpected source: Rob Lowe. Yes, the actor. You may know him from his roles in “The Outsiders,” “Wayne’s World,” “The West Wing” and “Parks and Recreation.”
But he’s taken on a new project, an arguably less-glamorous one. He wants to increase enrollment in clinical trials, and he’s partnered with Eli Lilly to do it.
I spoke with Lowe earlier this week about his advocacy efforts and what they mean to him (you can read the full article here). But while we were chatting, I learned that he was the primary caregiver for his mom during her battle with stage 4 breast cancer. He was in his mid-30s at the time, balancing the demands of his career with the demands of his home life.
Here’s what Lowe told me about walking that tightrope. He’s not a hospital exec, but like many of you, he has a lot of eyes on him. And I heard echoes of previous conversations with health care leaders in our conversation—sometimes it takes a crisis to make high-achievers reevaluate their priorities.
I hope you find his insights valuable; I know they inspired a reality check for me this week.
Editor’s Note: Responses have been lightly edited for length and clarity.
- “It’s funny when you get a diagnosis of cancer, whether it’s you or a family member or someone you love or a friend. Everything changes in an instant. You want to talk about realigning your priorities—that’ll do it. It becomes the most important thing in your life.
- “The more people you have around you who can support you, the more access you have and—I can’t underline it enough—the more questions you ask of your caregivers, the more likely you are to have better results and have a better journey.
- “Like everybody when they get that diagnosis, it became a full function [for me]. And you know, you also have to keep the train running. That’s a real balancing act, for sure.”
CEO Circle
Insights from health care thought leaders around the world
Before you go, learn how university hospitals are sharing their knowledge across Latin America in this thought leadership piece from Dr. Victor Raúl Castillo Mantilla, CEO and president of the Hospital Internacional de Colombia and a member of Newsweek’s CEO Circle.
This is a preview of the October 30 edition of Access Health—Tap here to get this newsletter delivered straight to your inbox.
