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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: SpaceX IPO'd last week, Kevin.
Did youâ¦
Were you, were you
tracking, tracking this?
Kevin: A little bit.
I can't say, I can't say it was
top of my list of things to track
last week given, given everything
going on in the healthcare world,
but tell me about it, Martin.
Martin: Well, Matt Levine likes to say
that a 20% IPO pop is the perfect IPO.
Mm.
And so I just wanna give a, a big
shout-out to, to Goldman Sachs
and the other bankers here on-
Kevin: They nailed it?
Martin: They nailed it.
Um-
Kevin: Why is 20% the perfect
IPO in Levine's world?
Martin: Yeah.
So if it's, uh- ⦠if it's, goes
up, if it pops more than 20%, then
you've left money- You left too much
on the table.
Yeah.
Kevin: Yep.
Martin: Yeah.
If it goes up less than 20%, the IPO
investors didn't get the, didn't get
the pop that they were hoping for.
And so- Right ⦠20% is, is ideal
and, you know, like, a prettyâ¦
Hard to do much better than 19.22%.
Kevin: They got it right on the dot.
Do youâ¦
What is their market cap right now?
Do you know?
Martin: It's above 2 trillion, so.
Kevin: That's, that's impressive.
I've seen the picture going around
social media that the differenceâ¦
If your, if your net worth is $1, your net
worth is closer to the number two person
than the number two is to Elon right now.
Martin: Yeah.
Yeah.
Kevin: Good for Elon.
Martin: Pretty crazy.
Pretty crazy.
I was gonna ask you if it, if you
thought this had any indications
on any, any healthcare IPOs.
I feel like no.
I feel like SpaceX, Anthropic,
OpenAI, there's no good comp that is
getting ready to go public from that
list, like, that, that, that, that
makes sense with those, those lists.
Anthropic or OpenAI I think is the
closest thing to a healthcare IPO
that we're gonna get this summer.
Kevin: Yeah.
I, I, I don't know that I can think of,
like, what the specific read-through is.
I'd be curious what the bankers are
hearing on the public markets, you know?
But I, I can imagine, if anything, it'sâ¦
This has taken up all the oxygen, so
there's not much time for other convos.
Martin: Yeah.
Kevin: But it'll be fun to keep an eye on.
Martin: Well, we're gonna kick off
the, uh, grand round-up this morning.
We have a packed show for you today.
Super excited.
We have some last-minute
breaking news from Matt Holt.
He's making a move on a different
rev cycle company than, than
he was a few months ago.
We're gonna talk a little bit Hawaii,
and man, what a, what an interesting
jumping-off point to fee-for-service
versus value-based care, integrated
care delivery, provider consolidation,
struggling regional blues, which I saw
you were posting about this morning.
I mean, really, this story has
everything a healthcare nerd would want.
Kevin: Mm-hmm.
Martin: There's the PWC story.
Uh, so 9%, looking at 9% medical
trend increase for, for 2027,
and a comeback- Maybe it's
comeback season for managed care.
And then we have two great guests.
We've got John Kao, chairman
and CEO of Alignment Healthcare,
always a, a good interview.
I'm hoping for some classic
vintage John Kao quotes today.
Uh, and then Hashem Zikry
from Counsel Health.
But before that, we've got to
give a shout-out to our sponsor.
Over to you, Kevin.
Kevin: Today's show is brought to
you by our sponsor, Ursa Health.
Ursa is analytics company behind
value-based care providers and
enablers across pi- primary
and specialty care, including
Cityblock, Gentiva, and Wellvana.
Next week, we're gonna be hosting
Ursa and Atlas Oncology Partners to
dive into specialty value-based care
and how their model works there.
I've had the chance to look
through some of the slides.
I think it's gonna be
an awesome conversation.
So join us live if you can.
If you can't make it live,
you should register anyways.
We'll share out recording summary
write-up with, um, everyone who signs up.
Learn more, register at
luma.com/htn-ursa-atlas.
Martin: It's gonna be great.
I am so fascinated at how these specialty
value-based care contracts work, and it's
gonna be interesting to hear from, from
the, uh, Atlas Oncology folks on that.
Kevin: As we're gonna get into with
the Hawaii conversation, as you're
already teeing up, there is a lot
to making these conversations work
well, be a win-win, work over time.
So yes, it'll be, it'll be awesome convo.
Looking forward to that.
Martin: So we had some, some
breaking news this morning right
before we got started, and that
was Matt Holt is back in the news.
Ensemble Healthcare Partners, the,
the, the Axios and Bloombergs of
the world are reporting they are,
uh, zeroing in on a acquisition
deal, $12 billion for Ensemble.
I think it'd be helpful to
get a bit of a rewind, Kevin.
What, uh, who's Matt Holt and, and
what's he doing poking around Ensemble?
Kevin: Matt Holt, formerly New Mountain
Capital, um, was known for playbook in
the space, acquiring platform asset,
rolling that up with four or five
other entities, growing that business,
doing relatively well by doing so.
Kind of a, a n- new, fresh approach
to private equity in, in healthcare.
There's some interesting conversations
out there, um, about that approach
and how it's been different from kind
of traditional private or private
equity approaches in healthcare,
how it's involved more investment
in these companies and, and grown
them seemingly successfully.
He left, what was it, fall?
It was leading into JP Morgan, um, so
late last year, uh, to essentially mount
a, a bid that would spin out a handful of
new mor- New Mountain Capital's portfolio
companies into this new entity, Thro,
that he was creating It was a really
interesting idea to see play out, right?
Thoreau, though, ultimately-- And it
became public as New Mountain Capital
shared a letter with its shareholders that
they were right on the door of a deal.
Um, Thoreau had to secure, um, debt
financing to get it done, and it
seems like the credit markets over
that period of time where they were
trying to do that didn't materialize.
New Mountain Capital came out this
spring and said: "Hey, uh, we're,
we're moving on from this transaction.
We gotta have our businesses
focus on their day-to-day."
Uh, because it was such a big deal,
it became a bit of a distraction,
uh, within the, the broader industry.
So Thoreau, um, went quiet
after that for a bit.
I-- If you look at Matt Holt's LinkedIn
profile, he is currently listed as
the president of The Paris Review.
Uh, so I-I-I was sitting here
thinking Thoreau is dead.
It took a left turn, and Matt Holt's now
off doing, um, something else and not
trying to rethink healthcare platforms.
But alas, they were at work in the
background, um, and announcedâ¦
I, I, I saw one report said that they
signed the deal over the weekend.
I saw a couple other reports
that they're nearing the deal.
Either way, I think my general
takeaway is it's happening most likely.
Um, Apollo, I think, is backing
Thoreau with the capital behind
the deal, so it seems like they've
secured the financing for it.
And Ensemble's been on an interesting
trajectory of its own, right?
Bon Secours Mercy, um, has been
a key partner in launching,
uh, Ensemble back, what?
I think like a decade ago, 2014-ish.
Um, private equity got involved,
and then Warburg and, um Berkshire,
uh, I think are the two private
equity-backed groups that are selling
to Thoreau as part of this deal now.
They tried taking
Ensemble public back inâ¦
Well, this was pre-them.
They invested in Ensemble in 2022
at around a $5 billion valuation.
So getting out, um, whatever amount
they get out at a $12 billion valuation
seems like a nice win for them.
They were trying to go public or M&A, do
a dual path process in 2025 at 13 billion.
Um, and they tried going
public once before in 2021.
Ensemble had fi- filed an
S1 at that point in time.
Uh, I'll probably be spending
this afternoon going back reading
through that, 'cause it's always
interesting to see the context of
how these businesses change over time
and the narrative they're telling.
I had the chance to sit with
their, um, listen in on their J.P.
Morgan presentation in January from
their CEO, and it does seem like the
business has grown really nicely.
If you go back to the S1 in 2021, they
were talking about having, I think it
was 21 billion of net patient revenue
under management for health systems.
That's up to 50 billion today,
which gives some indication of,
of how much they've grown and why
the valuation has grown as it has.
To me, I put this in our Slack
this morning, uh, as I was thinking
through the deal and going back to
that January conversation that the
CEO had, uh, with investors at J.P.
Morgan, the tone of that conversation was
very much a, "AI is challenging, and it's
resulting in a lot of bot versus bot wars,
and our solution at Ensemble is actually
a very human-centric, boots on the ground,
we are helping our health systems with
humans to figure out this RCM problem."
And he had this quote of he,
he thinks a lot of systems are
implementing AI point solutions.
They think they're saving two cents
on the dollar, but what they don't
realize is they're actually losing 98
cents on the dollar because they're
not focused on the overall picture.
And I was likeâ¦
I, I actually really appreciated
hearing that story, 'cause we hear so
much about the AI pitch and how it's
gonna save money and, and cure all ills
facing healthcare administrative issues.
So it's fascinating to me to see
now Thoreau, which was like the very
AI-centric play, acquiring Ensemble
as the kind of platform asset,
which it presumably is gonna bolt
on a whole bunch of AI tools to to,
to grow that thing moving forward.
So it'll be interesting to watch
how this, how this plays out.
I would expect we're gonna see a whole
bunch more acquisitions that are tucked
into, uh, Ensemble moving forward.
But big news this morning.
What was your take after that monologue
I just went on for a few minutes?
Martin: I think the, uh, the
original Thoreau deal, it was
Datavant, Swoop, Machinify, Smarter
Technologies, and OfficeAlly.
Yes.
And I think it was about
30-some, maybe $32 billion.
Kevin: Yep.
Martin: This is, this is 12.
Um, if you assume that he's, you know,
the ambitions are similar, um, and
this is just the, you know, anchor
tenant for, for Thoreau, um, that's
a lot of room to go out and, and
make some interesting acquisitions.
And yeah, I think I, as you were just
talking, I, I thought back to the
Long Humans investor manifesto, I
guess you would have to call it, um-
Kevin: The one that Thrive did last week?
Martin: Yeah.
Kevin: Yeah.
Yep.
Martin: And thinking about, you know,
this, this narrative, which they're
applying to accounting, uh, but it feels
obvious to me that you could apply it to
healthcare, and to rev cycle, and to all
of these other things, which is that,
yeah, there's gonna be humans in the mix.
There's gonna be AI in the mix.
There's gonna be a lot of complexity,
and we're going to have AI tackle
AI shape problems, ingesting lots of
information, and humans tackling the
sort of more human shape problems.
And it, it seems like a
pretty compelling pitch to me.
Um, so that's exciting.
I think it will be interesting to watch.
It'll be interesting to watch how
that narrative changes, and it'll
be interesting, um, you know-
I'll, I'll keep my fingers crossed
that the credit markets, uh, stay,
stay open and quiet for, for Matt.
Um, but yeah, I'm, I'm looking
forward to watching this one.
Kevin: The one other really interesting
data point to me that it ties to, as
you know, I went out to Abridge's, uh,
keynote session on Thursday, and they were
talking a lot about the payer-provider
partnership, kind of hinting at this
real-time claims adjudication state
they, they seem to be moving towards.
We've heard that from
Optum with Optum Real.
Everybody, you know, if you, if
you get transac- if you own the
transaction layer, apply AI to it, you
should be able to make magic happen,
and poof, all the issues go away.
And Ensemble's CEO gave a really,
uh, good anecdote at the JP Morgan
presentation, which was he was
talking about, um, sepsis diagnoses.
And he's like, historically,
uh, you didn't require a
culture for sepsis diagnosis.
It's not part of the clinical
requirements that I, as I understand
the guidelines, which is very
little, as he was articulating
them, um, is not usually required.
A payer has started requiring
that, and Ensemble has noticed
that in the RCM workflow.
And so providers who didn't used to
do that now have to get that test
done in order to diagnose for sepsis
to bill for that from the payer.
Sepsis as, as, as we've seen in
some articles, has been one of
these areas where AI documentation
has seemingly increased, uh,
uh, billing associated with it.
His point was AI can do a really
good job of predicting cases that
might get audited by, by payers
that have, might have issues,
challenges that payers might provide.
What it can't do is anticipate
that a payer is all of a, a sudden
gonna say, "Hey, we now require a
culture to do a diagnosis of sepsis,"
because it, it, it, it's unable to
predict that moving forward, right?
And his point was that's where AI
falls flat and where we actually need
to do the human work to make sure that
we are building these relationships
between payers and providers and, and
working through those friction points.
And to me, it's a, it's a perfect
example of Where technology can
only go so far in this space, right?
I heard it at Abridge's session on
Thursday too, where you get these
payers and providers up on, up on
stage, and they're talking about this
kind of frictionless flow of data,
which yes, that is a helpful step.
But then they also talk about,
well, this then allows us to
define the rules of engagement so
that we can work with each other.
And historically, we haven't trusted
each other, and that's the issue.
And it's like, yeah, that is the issue.
Defining the rules of engagement
is the challenge, right?
Who gets to define whether or not a
culture is needed to diagnose sepsis?
If the providers don't think it is, but
the payer does, that's an issue, right?
And, and I don't know how real-time
data flows solve that problem.
Uh, they don't, right?
They are, they areâ¦
You need to go upstream to the
actual relationship between the two.
So anyways, I, I think it's fascinating
to think about that example in the
context of if you're, uh, Matt Holt
thinking about what you do with Ensemble
and the assets that you roll into it,
what problem are you trying to solve in
building this transaction layer, and how
do you effectively bring those assets
together to solve what, in my estimation,
isn't actually a data problem, it's a
negotiation issue and a lack of trust
between two counterparties that are
fighting over the same pot of money?
Martin: I always get a little
perplexed when I hear this pitch
about how we're gonna get payers
and providers singing kumbaya and
getting along in perfect harmony.
That is, like, not what we
want in the healthcare system.
We want an adversarial relationship
between those two groups because
that's what, that's what allows the
private market to function, right?
Like, the, the administrative cost
is the cost of doing business for a
adversarial negotiation-driven process.
If there isn't one, thenâ¦
And the payers are just saying,
"Well, here are the rules, and here
we'll, we'll do the payments," th-
there's sort of very little reason
for them to exist at that point.
Like, I, I, I understand
the instinct because theâ¦
You know, when I've heard Matt Holt
talk about the opportunity here in
the past, he talks about all of this
administrative spend that- Mm-hmm ⦠AI
should be able to, to vanish.
I, I, I think that there is,
uh, there, there's a, the, like
a, a philosophy of, it's called
Chesterton, Chesterton's Fence.
It's like before you get rid of a fence,
you should, um, know for certain why
the fence was put up in the first place.
Yeah.
And a reason why we have these sort
of administrative systems is that for
years we've been going back and forth
in this, in this battle between payers
and providers, and there's some social
utility to that, that we've decided on.
Now, you can, you can take
that in a different direction.
You can do all payer rate setting.
Um, a lot of countries do that,
but that's a new set of rules.
And so I, I, I am long
humans, like, thrive on this.
I think that the complexity and
administrative costs is good.
Um, and I think that you're gonna
need people and AI to, to help
administer these sort of what
are, what are these fundamental
disagreements for a very long time.
Should we talk about Hawaii?
Kevin: Let's do it.
Similar conversation, very
different lens to it, right?
Martin: I think that it's about
time for us to do some on-the-ground
journalism here in Hawaii, Kevin.
I think it's time.
I was
Kevin: gonna, uh, say the same thing.
Let's check out some primary
care clinics in, uh, in Honolulu.
Doesn't sound terrible to me.
Martin: You talked about this at
length in the Sunday newsletter, and
I thought reading it yesterday, what
a perfect encapsulation of so many
themes that we just keep on going back
to, uh, again and again and again.
We've got a regional blue nonprofit
who's financially struggling.
We've got this really promising, like if
someone was pitching me on the capitated
payments to primary care providers, it'd
be like, oh yeah, that's, that's cool.
That's gonna like change the game.
And, a- and, and how that actually
played out in terms of utilization
of, of emergency and urgent care.
And then we've got a proposed
payvider integration, which is,
you know, very of-the-moment right
now, uh, very much talked about.
Sure.
And so what caught your
eye about this story?
Kevin: So I'm gonna go back in time
a little bit c- so HMSA, which I
told Martin before this, I'm gonna
butcher every time I try to say it.
HMSA.
Uh, a decade ago, so 2016,
they embarked on this three PC
capitated model for primary care.
At this time I was working on Harken,
which was new primary care model with
Iora in, um, in ACA exchange coverage,
and it was one of these examples of a
market where a blues plan was moving
to value-based care, and how cool
is that, that they are actually able
to get this up and off the ground
and move along in that direction?
And so going back in time, it was, it
was one of these hallmark examples of
what value-based care can and should be.
They got industry experts.
Zeke Emanuel is part of the paper
that, um, they helped design the
program at, at UPenn, I think.
Um, so you had the best and brightest
designing this model working on it.
Fast forward, I had lost track of
what the results of the model was.
They had issued a paper in 2019 saying,
you know, early data, but, um, not
seeing, not seeing a ton of meaningful
success from the program, but I
hadn't checked in on it in a while.
So it was fascinating to see HMSA
in the news for the, over the past
couple weeks for moving away from
this value-based care model towards
a fee-for-service payment model.
It, it got me digging.
So I went back, and you can start to see
in 2017, 2018, provider pushback in Hawaii
against the value-based care model, right?
And there's this one article I link to
in the newsletter that they essentially
said, "This is gonna make access worse.
It's gonna drive up ED utilization and
urgent care utilization because you're not
paying us enough under this value-based
care model to make it worth our time.
Docs are gonna go into concierge care.
It's gonna be a bad outcome."
That's essentially what
seems like it's happened.
Like HMSA came out and said, "We're
going back to fee for service because
access hasn't improved, ED utilization
is up, and urgent care utilization is
up, despite the fact that we think we
are investing more in primary care."
Which to me is an interesting dynamic
in all of this because the practices
have, have shifted their tone a little
bit from that pushback of the VBC
model in 2017 to, uh, a, "Hey, if
we move back to fee for service from
value-based care, this is gonna be
a financial hit to our practices."
There's a quote from one practice
talking about how it's gonna be a 50K
loss for their practice moving from
value-based care back to fee for service.
Which it's kind of crazy to me how
both sides of the argument have done a
complete 180 over the last decade, right?
You've got providers who
hated it, now wanna keep it.
You've got the, the payer who
was championing it, who's now
like, "We need to go back."
So I find that fascinating, and
that's even before we get into the
pa- payvider dynamic, you know?
Martin: Well, I, I wanna, I wanna pause
here on the fee for service VBC front.
I don't know if I've shared with
you my sort of, uh, Buddhist
theory of, of healthcare, which
is that like everyone is unhappy.
Human suffering is universal, and
there is not a, a payment model
that, that fixes people's unhappiness
with the allocation of scarce
resources in a healthcare system.
It's just like-
I, I, I will bracket a quick anecdote
in here and say when I was a teacher,
we loved making new seating charts,
and we, we would spend hours making
new seating charts, and we were
like, "This is the seating chart.
We're gonna put this kid next to this
kid, and this is the seating chart that
is gonna solve all of our problems."
And it never worked, right?
Mm-hmm.
Like, 'cause you, you were like,
it's not about the seating chart, and
it's not about the financing model.
Like, the financing model does push
you towards certain outcomes, but the-
Yep ⦠sort of root thing is that
people are unhappy with the scarce
allocation of healthcare dollars.
The PCPs are unhappy because they're
getting the short end of the stick.
The patients are unhappy
because they're notâ¦
You know, they're paying more, and
they're, they're getting less value.
And like e- everyone's unhappy about it.
And whether it's a capitated payment
or a fee-for-service payment,
it doesn't change the sort of,
the nature of that unhappiness.
I think that, uh
The, the in-- the argument from the
PCPs about it, it, it actually just
needed to be more is one of those
things that I would love to test.
Like- Mm-hmm ⦠I, if, if I was running
an experiment, if I was, you know, an
advisor to Abe over at CMMI, I would
say like, what is the actual payment
amount that can get a PCP to, um, you
know, sort of get them to, to play
this role where they're keeping people
from urgent and, and ER utilization?
That's the thing that costs money.
Like, that is- Mm-hmm ⦠the thing
we are trying to design around.
And I think that if you, if you look
at concierge medicine doctors, you
know, so some of them I think are
getting like 200, 400, 500 at the,
at the lower end of the spectrum.
Would thatâ¦
Like, 20 to 40 bucks, okay, maybe that's
not enough, and with a 2,000-person
panel, y- uh, you could very easily
imagine working all day and all
night getting, fielding inbound calls
of like, "Hey, I got this cough,"
or like, you know, like faceâ¦
A FaceTime with like, "Uh,
does this look infected?"
Uh, what is the, the right payment model?
I, I, I, I, I, I think that for all of
its sins, like fee for service probably
in, in a money-constrained environment,
fee for service is probably pretty, pretty
darn good technology for, for allocating
those resources, even if no one likes
Kevin: it.
Yeah.
I, I mean, we're seeing various
versions of this conversation
play out in real time, right?
Look at the maternity space where
they're going from a bundled
payment back to fee for service.
Like, uh, there's, there clearly
is an argument here, um, in this
direction that we're seeing from a
payer who was leading the charge on,
on VBC models a decade ago, you know?
I, I don't think it negates the
premise of VBC, but yeah, Iâ¦
Some of the articles in Hawaii are
pointing out how, and this is not
surprising to anybody who follows
these conversations, some of the PCPs
Have part of why there's an access
issue is because some PCPs have moved
into concierge practice already.
Their patient panel shrinks
significantly, but they're making
300 bucks on average a patient.
So, uh, those PCPs generally seem to
be happier, um, uh, in that model.
But from a systems perspective,
that seems challenging to, um, to
navigate when we're dealing with
shortages of primary care providers.
Um, uh, perhaps NPs are an answer to that.
Perhaps AI is an answer to that.
Who knows, Martin?
We could, we could-
Martin: It's a very controversial
and brave take- Yes ⦠to,
to announce publicly, Kevin.
You heard it here first, everyone.
Kevin thinksâ¦
Just kidding.
Not going to finish that sentence.
Yeah.
I, I, I think there's, there's
a, a big component to that.
Another sort of thread, w- we're gonna
chat with the investors from Evidenced
in a couple weeks, um, their, their VCs.
One of the investors lives in
France, and we were catching up.
He was in DC the other day.
We were catching up, and he's like, "How
come fee for service works just fine
in France and it doesn't in the US?"
And I made, like, a dumb joke about
how the French love taking vacations.
I do think, though, that there is,
there is something to that, right?
Like, I think American doctors wanna
make more money, and there's likeâ¦
We live in a, a, a society that,
that handsomely re- rewards that-
Kevin: Mm-hmm
⦠Martin: making more money.
And so if you were making $20 per
patient per month, and you can go and
make 300 per patient per month- Mm-hmm
like, you're probably gonna do that.
Kevin: For sure.
Hashem: Yep.
Kevin: I, um, I don't have too much
to add on motivations in France, but
I might go to the, the, the payvider
angle of this narrative- Yes ⦠'cause
I think that is another fascinating
element of this, that part of the
reason why this move from HMSA got on my
radar is because the governor in Hawaii
started pushing back on this change.
They had to delay the implementation
of V- VBC to fee for service because
they are embarking on this merger,
uh, with Hawaii Pacific Health, which
the entire premise of the merger
is savings from value-based care.
They talk about how they're gonna
drive $2 billion of savings by moving
towards more global cap models, moving
it from just PCPs to specialists.
Like, you can envision the theory
of, of where those savings are being
derived from in a payvider model.
That was announced at the
beginning of the year.
It's gotten a lot of pushback locally,
apparently, over the opacity of the deal.
Not a lot of the terms are, are public.
Um, and there's some questions aroundâ¦
Well, there were questions even before
HMSA moved from VBC to fee for service
around what that actually means, how it's
gonna drive cost savings, what it's gonna
look like for folks, um, in the region.
And it's really befuddling to, in
the context of that, to see HMSA move
from primary care value-based care
payments back to fee-for-service.
Like, it just doesn't compute to me.
Beyond HMSA is struggling
with their financials.
As you mentioned, I put in Slack
this morning, there's a Modern
Healthcare article out, I think it
was today, looking at finances for
the 29-ish Blue Cross entities.
HMSA, only seven of them generated
a positive operating margin in 2025.
Uh, HMSA was not one of those seven.
It wasn't one of the worst performing
Blues plans, but it was not profitable on
an, on an operating basis in 2025 or 2024.
It seems those issues, um, along with
issues on Hawaii Pacific Health's side,
brought these two parties together
trying to work together to figure it out.
I actually think that that is a, a
relatively good path forward of all of
the potential paths forward, because I
was also looking this weekend at it's Blue
Cross Blue Shield of Alabama is engaged
in a PR battle with a hospital that is
closing, uh, because they are saying Blue
Cross of Alabama isn't paying them enough.
And Blue Cross of Alabama
is like, "Listen, w- we're
only 20% of revenue for them.
What do you expect us to do?
Like, this is, this is management
issues inside this health system."
But it's, it's again back to this
adversarial relationship between
these two entities and a pot of
money that I, I just, I, I think we
are seeing different flavors of this
conversation over and over again.
It's just not big enough right now
for, for both of them, and we're seeing
all of these kind of confusing actions
that are taken on a one-off basis that
results in stuff like this happening.
And I don't know how we solve
that, but it's, it's happening
across the board, you know?
Martin: Yeah.
I mean, this would be the gentle pushback
that I would give to Zeke a week later
when we were saying maybe the system
needs more money, and he said, "No."
It's that like, yeah, like this
hospital's going out of business.
The, this plan and this, this
hospital in Hawaii are going and
rushing into each other's arms.
Kevin, I'm a little bit confused
about how we're supposed to feel
about integrated payviters recently.
Are they evil and the root cause of all
of the American healthcare problems?
Or are they a obvious alignment
of incentives and actually good?
Kevin: It depends.
I, like personally, I, if, if, if
you look at these situations and you
think about yourselves in the shoes
of an HMSA leader, I think it is a,
a very logical direction to head a
model like this, a model like Kaiser.
Devoted gets a lot of credit
for what it's trying to build.
Yes, if you look at the other side
of, it, it from the other side of
the equation, you can, um, you know,
there's acts in DC being written
right now about breaking this up.
Those acts are more targeted towards
the larger conglomerates at the
moment, but the theory of the case
underlying it is, is the same.
It's just a question of
how, at what scale, right?
And I, I don't know.
I personally, this seems like a better
path forward than, you know, the Alabama
example I gave of you're watching one
of these entities shut down because
they can't keep their finances afloat,
because if they do shut down and you
start playing out the ripple effects of
what happens after that, I don't think
anybody likes that scenario either.
And so it's, it's just a
challenging environment.
One of the most interesting pieces of
this that is a, comes across as a minor
detail, I wrote about it towards the
tail end of my note in the newsletter.
Um, HMSA noted that part of what is, is
driving the move to go back to fee for
service payments is that Hawaii, um, as a
state is trying to make sure it gets its
fair share of federal dollars, and that
in order to do so, it needs more, uh,
uh, higher fidelity claims data, which
is easier to get in a fee for service
system when you are documenting everything
because you are billing for that, versus
in a value-based care system where it
becomes a little bit more unclear, like
what's actually underlying this data.
And Iâ¦
If that's the case, it's a,
it's a headwind that I had not
fully thought through yet for
value-based care writ large.
When the federal government is
saying, "Hey, we are paying less,"
they have more scrutiny on states to
justify how much they are spending.
And because you've gone into
value-based care arrangements where
you're not necessarily documenting
everything the exact same way you
have historically, which by the way,
is one of the perks of these sorts of
arrangements or going into concierge
medicine or whatever it may be, right?
Like you don't have to document as much.
But when you're trying to claw every
dollar you can out of the federal
government, you need that documentation
when the fedg- federal government's
like, "We, we want it," you know?
So I thought that was a- They
Martin: wanna know, yeah, they
wanna know what they're paying for.
Right.
It is a real tension, and theâ¦
It, it is interesting.
I was having a conversation with, with
someone recently about how similar to how
the billing and financing system doesn't,
like, magically solve all of the problems,
the, the fraud is, like, another one of
these sort of universal human constants.
And, like, the fraud, the vector of fraud
looks different in a fee for service
and a value-based care environment.
Like, there is not, uh, magically no
fraud if you do fee for service and you
can have, you know, m- more billing data.
It just becomes billing fraud instead
of, you know, other flavors of fraud.
Mm-hmm.
I don't know.
That, that's one to watch, though.
That is one to watch on whether there
is a, uh, a sort of change in, in
how people like to, to approach these
things based on the, the pos- fraud
posture of the federal government.
Kevin: Yep.
I, i- in general, I think this Hawaii
scenario on the whole is if you are, if
you are trying to pick up a case study
on, on what's happening in American
healthcare, I don't know that there's
a better case study than this to, like,
go back over the last 10 years, think
about what led to the value-based care
conversation as it was at the time,
think about what has transpired in the
period in between, think about where
HMSA is today and the financial issues
it has and why it has those, what is
leading to this proposed tie-up between
it and Hawaii Pacific Health, and
think about how it plays out from here.
I can't imagine that, uh, given all of
this uncertainty in the market, that it's
a, it's a particularly high likelihood
that the payvider tie-up happens.
Maybe it still does.
I'm not close enough on the
ground to know how that happens.
But, like, does VBC still
play a key role in that?
How are they playing
primary care providers?
All of these questions are, are worth
thinking through how it plays out and,
and what happens in Hawaii moving forward.
And yes- Right ⦠maybe we'll have to do
an on-site visit this, this fall to see,
uh, get an update on what's going on.
Martin: Sounds like a plan to me.
Well, the other piece of
thing, the other piece-
of news that was making the
rounds was medical cost trend.
So PwC, uh, the good folks at PwC
did some analysis of, um, you know,
surveyed some payers, and we are
looking at the largest single year
medical trend increase in the Affordable
Care Act era, uh, going into 2027.
So, so we got that to hang our hats on.
Kevin: Can we appreciate the irony
for a second of how we jump from a
conversation about how payers and
providers can't stay afloat at the moment
to, okay, we are now jumping to the
highest medical cost trend environment?
And note, this is, this is
commercial, a breakout group and
individual now as markets, but it's
commercially oriented analysis.
The highest we've seen in 18 years.
Martin: Yeah.
Kevin: Uh, it's, it'sâ¦
What a wild time to be
in American healthcare.
Martin: I, I thought that the
breakdown was, was really helpful.
I mean, there was a lot of what
you would expect, you know?
Mm-hmm.
Behavioral health, pharma, GLP-1s.
There was some talk about the No
Surprises Act, which is obviously
something we have covered here.
But the top one, the, the thing that
they led with, that PwC led with, was
AI, which- I, I felt like it was sort
of vindication for a narrative that
you and I have been pretty attached
to, which is that providers are really
kicking the butts of payers when
it comes to the bot wars right now.
Kevin: Yeah.
And I, I mean, I, uh, I think
payers are catching up too, right?
But I, yes, Iâ¦
Like, that clearly is what
has driven a lot of this.
And I, I, I think it's entirely
logical that it's played out this way.
Like, going back to the Abridge
session on Thursday, Abridge has, um,
Shiv has made the point in a couple
different interviews publicly that as
a provider in this country, you don't
get paid for the care that you deliver.
You get paid for the
care that you document.
And these tools allow you to document
and understand what payers, uh, require
you to document, by the way, right?
Um, better than you've
ever been able to before.
And if that's the case, I think we should
absolutely expect the first implication
of this to be providers are gonna use
that to document what they were doing
and get paid more for what they're doing.
Back to your the, the France versus
US analogy, like I, I, I don't
think that that should be all that
surprising writ large, you know?
Despite I, I get that there's
the narrative of, you know,
there's so much waste in American
healthcare, and AI can reduce that.
It's like, yeah, I, I understand
that, but also just, like, think
about how this is gonna be implemented
and how systems care delivery works.
You're gonna document what you're doing,
and you're gonna get paid more for that,
and we see that over and over again.
Go back to the Ensemble sepsis story that
I d- that he was telling at JPMorgan.
You can see it, um, in real
time happening, you know?
And it is interesting to see
that PWC is noting this as, as
a key cost driver to your point.
Martin: Yeah.
I, w- when, if you go
back, you can sort ofâ¦
And you describe a LLM, the sort
of obvious first implication of
it is like, man, we are going to
get so good at optimizing billing
practices with this thing, right?
Like, it is going to analyze the rules.
It is going to tell us in this,
you know, sort of text-based
interface, "Here's what you missed.
Here's- Mm-hmm ⦠what you're
allowed to, per the rules, up code."
And like I said, like, we're gonna hit an
equilibrium eventually, but PwC clearly
thinks that that is not happening in 2027.
Yes.
Um, so-
Kevin: And the, the interesting question
in that, going back to this, this
payer-provider tension negotiating
dynamic, is where and how does that settle
out over time, in, in my mind, you know?
Um, 'cause that's the
underlying issue here, right?
Providers have essentially found
an advantage, uh, in capturing
more of the pot of money.
It's driving, um, trend in that direction.
And I, w- we gotta see how
this plays out over time.
We know that payers are starting
to look at this more and trying
to do things to counteract that.
We see companies like Abridge coming
to the table and saying, "Hey, we
can bring all of you together and
solve this in a win-win scenario."
There is an opportunity there that,
that does make sense, um, if payers
and providers could just work more
closely together, which might lead
to payviders being a logical outcome
of all of this, of all things.
No?
Martin: Yeah.
I, I think it's an interestingâ¦
We'll, we'll talk about some
of the levers that payers have.
It feels like a sort of funny moment
because we have medical cost trends,
you know, up 9% predicted next year.
The consensus in Washington is, I
think still, you know, hospitals are
getting their fair share of blame.
Mm-hmm.
But it, it really feels like between
what's going on with Wiser, what is
going on with, you know, recent, like,
commentary from the AMA and other
legislators, is that the consensus
view is that payers shouldn't be using
AI to do things like do utilization
management or prior authorization.
And this strikes me as a, a sort of
interesting asymmetry, where the, theâ¦
It is easy for us to say providers
should be getting every dollar
that they can collect based on
the AI tools that we've got.
But payers, who no one likes and everyone
loves to hate, shouldn't be using AI to
protect your premium dollars and make
sure that you're not being overbilled.
I don't know what to make of that.
I don't know, I don't know what
you make of that, Kevin, but it,
it does seem like an interestingâ¦
It does seem to me like we're
pushing out that equilibrium even
further with, with moves like this.
Kevin: Yep.
Can Iâ¦
I- In my mind, there's a couple
of things to break down in it.
One is
Uh, I think there is a flavor of
corporate versus humans in it, right?
Like, w- when I, when you hear about the
arguments against payers, it is always the
argument ab- against the big, bad, greedy,
national, big payers that are out there.
Um, it's corporate interest in healthcare.
We, we don't want that.
And I think those two
things get lumped together.
That is one element of the argument.
And then to me, the other element of the
argument is, um, denying care is always
a losing proposition to begin with, as
we have seen with the Wisr model and
what folks think of prior auths, um,
in the House Appropriations Committee.
Applying AI to denying care
is, is never going to be a
winning political proposition.
It is going to be the easiest
thing to, uh, say, "Nope, we're,
we're not gonna allow that."
And I think that is going to be
An evergreen statement, you know?
I, we we were just putting in Slack this
morning the NPR article from the weekend
about how digital health companies,
Virta, uh, Vida, and others, because
they're starting to work with employers
and titrate access to GLP-1s, that can
be perceived by employees as denying
them access to the GLP-1 that they want.
Guess who is going to lose the PR battle
when that narrative starts to emerge?
The companies that are denying access
to people the care that they want.
And I, I justâ¦
Applying AI to do that more efficiently
is just, it's a really easyâ¦
I think if you're in, if you're in DC
trying to, uh, lobby, you know, pick,
um, somebody on the Hill, it's a really
easy thing to say, "Hey, like, this,
this is your talking point," you know?
Don't
Martin: let that- I think
that, that is absolutely true.
It does not feel to me like the payer
lobby is, is putting up much of a fight.
Like, from a communications perspective,
the rejoinder to that, that I would say,
again, I don't, you know, have anyâ¦
Besides being someone who pays
premiums and also, you know, um,
like a taxpayer, I don't have like
a, a specific horse in this race.
But I would say that, like, "Hey, uh,
the, these providers are, are using
these tools to optimize figuring out
how much we can raise your premium every
year, or how much we can, we canâ¦
" And like, there does seem to be
a counterpoint that you should
at least try to be making.
Like, I don't, I don't know.
I-
Kevin: Yeah.
The, the, the, it's a, it's a
broader economic counterpoint.
But I, I, I mean, you can
see it in this data, right?
Uh- Yeah ⦠this is, this is
the counterpoint right here.
It's look what's happening
to your premiums.
They're unaffordable not because of us
payers, where we are actually trying
to manage care, but, um, because of
what's happening with things like AI
and GLP-1s and mental health access.
That is what's driving up
costs per this PWC report.
I, I, it, it's gonna
be a hard conversation.
Back to the Zeke conversation
we had last week.
Iâ¦
It is again indicative to me that we are
going to see a major piece of healthcare
legislation in the next couple of election
cycles, because it's, it's just, this
path is not sustainable right now.
Martin: Yeah.
It also makes me grieve a
little bit for the wiser model,
which- was such a good idea.
Like, no one needs skin substitute.
No one needs the volume of skin
substitutes that are currently being
prescribed in, in original Medicare.
Kevin: For sure.
To be, to be fair, we are preemptively
grieving a little bit, right?
Like, it's not, it's
not officially done yet.
Sure.
But as you said, a unanimous
vote in the Appropriations
Committee is not, it's not a good
Martin: sign really.
Not
Kevin: a good sign.
How many people are in the
Appropriations Committee?
Martin: 63.
Kevin: Yeah.
Yeah.
Iâ¦
Getting 63 people to agree unanimously
on something in DC these days
seems pretty, pretty incredible.
That is a feat that Wiser
accomplished, I, I suppose.
Martin: I'm, I'm gonna put on my,
my comms advisory hat again, and,
like, instead of calling it Wiser,
my pitch for CMMI is that they called
it the improve the Medicare Trust
Fund solvency and relieve seniors of
burdensome premium increases model.
Kevin: What does that,
what does that spell out?
Martin: Nothing.
Uh, IRMTF.
Like, that- Not
Kevin: gonna work then, Martin.
I know.
It's gotta, it's gotta
be, it's gotta be punchy.
Martin: But here's my argument.
Like, what if it was less punchy
and no one knew what it was and
it sounded mind-numbingly boring?
Mm.
Do you think it would get a vote
in the House Approps, or do you
think everyone would just say, "Oh,
oh, that sounds neutral to good"?
Kevin: May- maybe.
I think if there are local, lo-
articles in, in Seattle about how it's
denying care for, for folks who need
it for their back pain, it's, it's a
tough, it's a tough one to overcome.
I don't know.
Martin: It's- Should we, should we
talk about the other drivers ofâ¦
So not just the, the AI- Yes ⦠and
not just the, the prior auth of it all.
Hospital services inflation was on the
less, hit a high in, in February 2026.
Boy, not great.
They're talking about provider
consolidation as a driver, and
does not seem like we're, we're
reversing that trend anytime soon.
Kevin: Nope.
I, I am curious though, if, if, if we
look back on this as the beginning of aâ¦
We've talked about this idea of
your, like, industries are either
in bundling or unbundling phases.
If we start to look back at this
as the end of a bundling era in
healthcare, I would think that if
that is true, it is, it is going to be
true because of a piece of legislation
that has not passed yet that, that
makes unbundling more attractive.
But the theory of the case would seem to
be teed up really well that, that that
could get passed, and all of a sudden
what, what once incentivized bundling
in the industry is now incentivizing
an unbundling period, given time and
time again, we see results like this
from this bundling activity, you know?
Martin: Another driver was behavioral
health utilization, and this was
a volume, not unit cost story.
We're hearing this in, you know,
LifeStance, in Talkspace, UHS as
part of their rationale of Talkspace.
Like, behavioral health utilization is up.
Mm-hmm.
It is a good thing that more
people are getting the sort of
the help that they need, um, and
we are gonna have to pay for it.
And the way that we pay for
that, right, is, is, is through
these insurance premiums.
And so the, the pivot to focus
on payer-covered services for
behavioral health has beenâ¦
You know, that's something that we've
seen across the, the digital virtual
behavioral health models as well as
LifeStance, which is, uh, you know, uh,
in person and as well as, as virtual.
And yeah, we're seeing it in the
data that, like, people are using
their behavioral health services
more, and it's gonna cost us
Yes.
No Surprises Act.
Man, we've, we've, we've, we've talked
about this a lot recently, and yeah, it's
like payers are, are losing, and that
translates to premium dollar increases.
Kevin: I, I was surprised to see
this one make it on a list like PWC.
Like Iâ¦
We've been talking about this for
a bit as something that is just
clearly driving costs, and that may
or may not be an issue depending on
what side of the equation you're on.
Um, clearly to payers it's a major issue.
To providers, it's feels like
getting paid what I think they
feel like they deserve to have been
getting paid all along, potentially.
Either way, the result is
costs are clearly going up.
But I, I wouldn't have expected to see it
be as, as prominently highlighted in a PWC
report like this on overall kind of market
costs and what's driving growth in that.
And I'm, I'm, I'm interested to keep
an eye on w- what happens to NSA
as it gets more and more attention
as one of these key cost drivers.
Like, I don't think it's a program
that's going anywhere at this point,
as we've discussed, given it's got its
own kind of cottage industry that's
now become entrenched around it.
Uh, we're not getting rid
of something like that.
But what does it become moving forward?
How does it change over time?
Is there anything that can be done
to get these costs back in check?
'Cause Iâ¦
The last time we heard an opinion
out of DC on what this thing was
doing, it was like, "Well, it's
working kind of as intended.
No issues here.
Let's move on," right?
I think there was a quote from
Cassidy, like, "Providers are
getting paid what they should.
Like, there's a process
that they're winning."
Okay.
Uh, this is the result, right?
It's now getting highlighted
in an article like this on cost
trends, and I think that's, um
We'll see how it plays out.
Martin: Last point before I, and
I'm gonna tee you up for a question
on whether this is bullish for ICRA
after this, but the last point that
they, they brought up was pharmacy.
Pharmacy trend still
outpacing medical trend.
They obviously talked about
GLP-1s, but there's other, I
think, there's other factors there,
including cell and gene therapies.
We'veâ¦
This has been a theme that you
and I have, have talked about.
We're in an age of miraculous
drugs, GLP-1s included, and those
miraculous drugs, drugs cost money,
and we're seeing it in the, in
the medical and pharmacy trend.
Kevin: Yeah.
I couldn't help but juxtapose hearing,
seeing this, this result and them
talk about GLP-1s with Trillium's
analysis last week of GLP-1s.
And as there are more indications
for GLP-1s, sleep apnea, things like
that, um, they kinda pose the question
of what's that gonna do for cost and
affordability if GLP-1s stay at the
prices that they are with, I, I think
the implied answer being it's gonna
be problematic for affordability.
Uh-
All signs continue to point to
this being an ongoing issue that
has not been resolved yet, right?
As we get these miracle cures
that come down the pipe that more
and more folks are taking, and
pharmaceutical companies expect an
ROI on developing those drugs, it'sâ¦
You can see why this PwC article,
they, they said they expect healthcare
costs to be, was it 9 trillion by 2035?
Was that the n- was that the year?
Martin: Yeah.
Kevin: I mean, that's insane.
Uh, we've got, we've got, I think, a
good portion of the population saying
the 5 trillion we have today needs to go
down, and then you've got a group like
PwC saying, "Well, it's actually gonna
basically double over the next decade."
Isn't that mind-blowing?
Martin: It is.
And, like, what do we expect?
I- i- if we're not gonna say no at
any point, then that is what we get.
And, you know, I go back to my
saying, like, I think maybe we s-
need to spend more because if we
don't, we have to tell people no.
I, yeah.
Kevin: Zeke, help.
Help, Zeke.
Martin: Zeke,
Kevin: Zeke, I need you.
Help us.
We need his policy recommendation on
how to, how to, how to deal with this.
Yeah.
'Cause y- you can see the, the, uh, the
freight train is off the tracks, and
you can, you can see it and stuff like
Martin: this.
Yeah, and it has a lot of momentum.
Mm-hmm.
Uh, without an intervention,
then yeah, prices, prices go up.
It becomes a larger part of our
economy, and, and that's that.
Where I wanna end before we transition
here, one of the points that PwC
made was employers can't sustain
the current level of benefits.
Mm-hmm.
People love making this prediction.
People are always saying we're
right around the corner of
employees, employers not being able
to stomach the cost of benefits.
Hasn't been true, uh-
Mm-hmm ⦠up until this point.
I'm curious if you think that this time
is different, this moment is different.
Is this bullish for ICHRAs?
Kevin: Maybe.
I, I, I, it's hard to say, right?
Like, I, I have a feeling that
we will be having a very similar
conversation 20 years from now.
Employers can't afford
healthcare benefits.
How are they going to figure it out?
Costs are increasing.
This is an issue.
I, I, I feel like that is going to be an
evergreen conversation, no matter what
the spec- specific solution is here.
At the same time, it does seem like ICHRA
will be a part of what happens next in
this country in American healthcare.
Again, we heard Zeke talking on Monday
about this idea of 2032 election
might come with a major, um, policy
proposal that's something like single
risk pool for government-sponsored
insurance and employer risk pool.
And there's gonna be a bifurcation in
that, I would think, of employers that can
afford to continue offering insurance to
their employees and employers that can't.
And something like ICHRA is going to
be playing a key role for somehow,
for those employers that wanna opt
out of offering insurance coverage
given these sorts of dynamics.
And so My general take is it'll evolve.
I do think it is a net tailwind for ICHRA.
I think ICHRA, 20 years from now, is
going to play a big part of coverage for
employers who want something slightly
different than they can offer today.
Maybe it'll be called ICHRA at that point
in time, maybe it'll be something else.
And I would also, uh, guess that
it'll follow a similar trajectory of
we saw of high de- deductible health
plans 20, 30 years ago now, where
they were presented originally as, you
know, consumer-directed healthcare.
It's gonna be this amazing thing that's
gonna change how healthcare is delivered
in this country, and, you know, there
are laws of gravity that prevent that
from happening in the ways that, um, our
best and brightest might want it to writ
large, which is the industry for you.
Martin: It is the way that it goes.
I feel like we've covered
commercial, we've covered individual.
I think it's time to talk a little
bit about Medicare and, and the
managed care sector more broadly.
Uh, what the heck is going
on with Clover, Kevin?
Kevin: Clover, how much was
their stock up this week?
Martin: Uh, well over- The- ⦠in
the last month it's up, like, 37%, so.
Yeah.
Kevin: Yeah.
Uh, they are on a tear.
A big part of it was this week they filed
8-K coming on the heels of that court
case about how CMS is, is calculating,
um, stars, which Clover, um, won, although
CMS I think can still appeal, and so
it's not technically 100% done yet.
But nonetheless, the 8-K suggested
that CMS has told, um, Clover to
refile its PPO bid, um, at four and
a half stars following the court win.
So assuming that win holds, it implies
that Clover's PPO plan, which I think
is, like, 97% of its membership, will
now be at four stars moving forward.
That means that Clover gets a
meaningful financial win, um, and their
stock's up 20% as a result of that.
The Cover- Clover retail community
has taken this as a huge win.
It is all over social media.
I don't know if you follow that much,
Martin, but on X, um, Reddit, they
are, they are very excited about
Clover's prospects and how it is, um,
mirroring the, the SPAC narrative that,
that, uh, came out once upon a time.
Martin: To the moon, one might say.
To theâ¦
Kevin: Yes.
Martin: Yeah.
Iâ¦
So this was, like, a fun, a, a sort
of fun update, 'cause it, it hit all
of the sort of regulatory and public
markets, um, public markets hit points
that we, we sort of love to read about.
It's coming at an interesting time.
It feels like market sentiment
has been a little bit back and
forth on managed care this year.
Obviously, going into the year,
it's been a rough couple of
years for most of the plans.
And it's nice to see
some wins, absolutely.
We, uh, I, I'm gonna flip over to the
alignment, um, the alignment chart.
So up 24% over the last month.
Like, it feels like managed care is, is,
is really making a comeback, at leastâ¦
And, you know, m- maybe it's, it's not,
uh, not, we shouldn't call it a comeback.
It's already been back,
and the, the market is just
finally now appreciating it.
But this seems to me like two, um,
of the r- you know, smaller upstarts.
It's funny to call them smaller
upstarts, like, companies of these sizes.
But really making great
inroads in the, uhâ¦
And, and, and having a great turnaround.
So it's exciting.
Um, I, I, I think it feels like
managed care might be back.
Kevin: Yep.
2026 has been off to a, a, a
hot start, uh, for the industry.
Excited to talk to John about,
about all the various machinations
of how he, how he views the world.
Martin: Yeah.
Well, that's actually the perfect intro.
So, uh, I amâ¦
We're really excited to
welcome John Kao back to HTN.
We're gonna get his insights on
managed care, sentiment shift,
ex California expansion, and what
it's like negotiating with health
systems in this current moment.
How are you today?
John: Good morning.
Doing great.
Martin: Good to see you-
Welcome to the show, John
John: Good to see you again, Kevin.
Good to be with you, Martin.
Martin: Yeah.
Good to meet you.
Kevin, I'll hand it over to
you for the first question.
Kevin: Yeah.
John, I, I'd be curious, uh, we were
just highlighting stock chart changes
and machinations in the public markets.
Itâ¦
The last six months in the industry
seem like a, a uncertain time in a
broader uncertain macro environment.
It seems like the last few years in
general have been a particularly, uh,
interesting time to be running a Medicare
Advantage plan, given all the changes,
uh, the industry has had to digest.
In general, it feels like 2026
is providing firmer footing.
The industry is starting to wrap its
arms around what utilization environment
looks like going forward, V28.
At the same time, we're seeing
stock prices go down 10% a
week, up 20% the next week.
We've got lawsuits that are changing
how stars might be calculated
for the industry moving forward.
Like, uncertainty still seems to
be a key theme of the day, but
the tide also starts to feel like
it's coming back in at the moment.
And I'd be curious, as a, as
a plan leader, h-how, how do
those two things feel for you?
How does that tension kind of
between uncertainty, the tide feeling
like it's coming back in, how does
that show up in your day-to-day?
How do you feel like sentiment is in the
space versus where it was six months ago?
Are we moving in the right direction?
I'll, I'll leave that open-ended
question for you to take.
John: Yeah, no, I, I, I've
said this before, never bet
against Medicare Advantage.
Meaning, I've seen this for
the last, you know, 35 years.
It's the same thing, you know.
The last time this happened
was really, I think, in 2010,
2011, uh, where, where the, um,
uh, ACA had, uh, effectively a 15%
reduction to MA rates, and they
referred to that as normalization.
They're gonna phase
that in over five years.
Everybody freaked out.
Um, and it lasted about a year,
uh, and then everything normalized.
And then if you look at, you know, say
Humana's stock price from 2011 to, to
today, I mean, it's just gone straight up.
And I think you have these, you know,
kind of pricing, uh, corrections every
10 years or so, and V28 was, was the,
was the, was the most recent one.
And the plans, you know, getâ¦
They, they, they have to adjust, and
the beauty of the business is you
get to readjust every single year.
You can normalize, you, you wanna
grow, you wanna do margins, et cetera.
And I think the sector's back.
Um, I think MA is going to be I don't
know, 65 maybe I've even heard 70%
of overall market share of seniors,
uh, in the next five, 10 years.
Um, it's just the value proposition
is just too, it's just too high.
And so what, what they did with
V-28 actually was a good thing.
It, it kind of reset, um, uh, the sector.
They brought program integrity back,
which I just applaud this administration
for, uh, y- you know, kind of, uh,
looking at MA guys in, in the lens ofâ¦
I'll share with you.
I think if I'm s- if I'm CMS, I- I'm l-
I'm looking at this from, from a P&L view.
And what I mean by that
is, okay, look at the P&L.
Start at the top of the food chain.
Look at the payers.
What are the payers doing right and wrong?
How are they gamifying the system?
Well, it was coding,
and it was prior auth.
You know, those two things, I think,
um, are, are the two, uh, hammer
points on the plans to make sure the
plans, uh, have program integrity.
Next, they, they zero in on Trump RX.
They're going after the drugs, right?
Kind of normalizing margins there.
Then they're going after all the
fraud, waste, and abuse that you're
reading about in a, in a, you
know, couple of different markets.
And in particular, uh, what, why I
like this particular administration,
it's not just Minneapolis and,
and LA, it's also South Florida.
So it's just like, it's kind of,
it's not a red or blue thing.
It's like, let's just
clean the whole system up.
And I, I think, uh, you know, with what,
two, 3%-ish type margins, maybe four
or five in some, some, uh, companies
in terms of the large MCOs, I, I
think we're still feeling good about
long-term margins five, 6% in the sector.
Um, and I, I think it's, umâ¦
I, I, I think three years is enough
time to be in the barrel, y- which is
what the plans have gone through, and
I think they're gonna come out of it.
Um, some will do better than others,
and, and I think the folks that have
an understanding of care delivery,
uh, clinical-based care for MA are
gonna, are gonna do better than others
Does that help, Kev?
Martin: Oh, yeah One of the things we
hear from you when you're, you know,
on earnings calls and presentations,
is that expansion outside of California
is gonna be easier for you all
because of the IPA infrastructure.
For those of us who are not maybe as
familiar as the California markets
and IPAs, can you give us a sense for
what it's like in California today?
Yeah.
How the IPAs are working-
Yeah ⦠and what that looks
like elsewhere in the country?
John: Yeah, yeah.
I- IPAs in California are
a good thing, r- really.
IPAs are, are, are, um, are, are, are
provider partners of ours and, um, you
know, they, they were organized, I don't
know, 40 years ago really just to, to
help indi- individual, uh, uh, practices,
individual practice association,
IPA, and for contracting purposes.
And, and so they had all these, the,
you know, large payers coming in, and so
they, they kind of aggregated a lot of the
individual docs for contracting purposes.
And they've evolved different kinds of
management service competencies over the
years, or MSO capabilities over the years.
Um, and so, uh, some do better than
others in terms of, uh, star gap closures,
for example, um, risk adjustment gap
closures, uh, working with, uh, the plans
on utilization management, et cetera.
Uh, so on a net-net basis are, areâ¦
we have very good working
relationships with the IPAs.
They deserve a margin for the work they
do, and, you know, everybody's happy for
the benefit of that, of that beneficiary.
Ex California, uh, well, let meâ¦
before I do ex California, and so
what, what we did with a lot of
the IPAs over the past couple of
years is we did something that's
a bit, um, uncommon in California.
So in California, if you have a, a
shared risk or a global cap agreement,
just to throw a couple of acronyms
at you, a division of financial
responsibilities, who does what?
The plan, uh, versus the IPA.
Um, there's something else
called a division of delegated
responsibilities, or a DODR.
And so that means who actually does
what operationally on a delegated basis.
And historically, uh, the IPAs
have, have, have taken some form of
capitation, either professional or
global, but they really want to be
delegated for utilization management.
And some, some, uh, uh, IPAs also want to
pay certainly professional claims, okay?
Which makes sense.
If they're taking downside risk
on the professional, they ought
to have the UM, et cetera.
What didn't make sense to us was
delegating to them the acute management,
the management of the inpatient admission
Um, we didn't think that they had enough
of the data, they didn't have enough of
the care model visibility that we have.
And so over the past year, we
worked with them to de-delegate
them for, uh, the inpatient, um,
uh, admission, the authorization.
And all it really is, is, is just to
determine whether a, a bill that's
coming in from a hospital is, uh, an
auth that's coming in, is it an inpatient
stay supported by medical records, or
it's a two midnight rule admission that's
really paid at an observation rate.
And on average, an inpatient, um, auth,
uh, and claim is, you know, kind of 23-ish
thousand, you know, per, per admission,
um, which is, you know, close to 100%
of Medicare, and then an observation
stay is, you know, about, uh, 3,500.
So obviously a big difference.
Um, and so we worked with them,
we de-delegated them for that.
Theyâ¦
frankly, none of them really cared, but
they started caring now because we're
surplusing more We surplused more, and
so they're like, "Oh, wait a second.
You know, gee, you know, what
else can you guys help us with?"
And so we surplus on these, these acute
risk pools 'cause our admissions areâ¦
management is so good, uh, and
we've been able to do that with
great MPS scores and great stars.
And so each one of them are getting
more bigger and bigger bonus checks.
So the whole point is having an
operational infrastructure that supports
that was important to us because
ex California, we're taking all the
risk, typically, there isn't an IPA.
And the closest thing you have to
an IPA ex California is what I would
call a clinically integrated network-
Hashem: Mm-hmm
⦠John: which is the same concept owned
by the large health systems, right?
The, these big health systems, these
integrated delivery networks, uh,
have, uh, aggregated, uh, both employed
doctors and contracted doctors in the
community under an, an umbrella, uh, for
contracting purposes against the plans.
The problem with the CINs is
they don't have the, um, uh, the
management services infrastructure.
They don't understand it well enough
to optimize closing stars gaps,
risk adjustment gaps, helping with
utilization management, et cetera.
Um, and then oftentimes you have, uh,
health systems that, um, are, are, are
still kind of trying to feed the beast,
if you will, um, in terms of moving
admissions into the, into the hospital.
Um, and, and, and so we've had
to develop our MSO competencies
for all the professional risk,
all of the, um, institutional
risk, and all the inpatient risk.
And, and, and w- what I'm most excited
about is our flexibility to contract
with providers kinda how they want.
Mm-hmm.
And then we can, we can have back-end
operational success irrespective of what
kind of contract methodology we have.
Global cap, we know what to do.
We know how to ingest data.
We know how to do automated reporting.
We have the visâ¦
that gives us the visibility and control.
Shared risk delegated,
we know how to do that.
Shared risk de-delegated,
we know how to do that.
And then all of the set above is
required for you to work with a d-
when you're directly contracting with
individual practitioner, um, y- you
gotta, you gotta support that doctor.
The whole idea of alignment is align with
the doctor so everybody wins, including
the hospital Does that, does that help?
Does that make sense?
Kevin: For sure.
John, my, my last real job before I
started writing a newsletter for a
living was I was working for a health
systems CFO, and so you caught my
attention Q1 earnings when you made
the commentary around, you know,
health systems think they're being
paid at 85, 86 cents on the dollar.
We as an MA plan think we are paying
them everything they, they earn.
And I can, I can see the, the
differing positions on those.
I would be, I'd be interested to hear,
as you're having these conversations
with health systems out in the market,
thinking about their clinically integrated
networks, going to market with those
health systems, how do you, how do
you bridge the gap between those two
positions and, and figure out how to,
how to work jointly together in I- what
I presume is win-win type scenarios
across the system and, and payer?
John: Yeah.
I'll, I'll answer the first, uh,
question first and then get into
the, the, the what we're talking to
with the health systems right now.
Um, what, what I, what I said was that
when I speak with health systems CEOs
and CFOs, literally 100%, and we're
talking maybe a, an N of a dozen, um,
are saying the same thing, that you-
you MA plans are paying us 86% of what
we get in original Medicare, okay?
And so I, I started toâ¦
When, when you hear every single
one say the same thing, it,
it tells me it's a brilliant
PR campaign more so than anything else.
I mean, it's just brilliant.
I mean, it'sâ¦
And blame the plan.
And, you know, there's a few
high-profile plans out there that,
that have high denial rates that are,
are making the rest of this, the,
the, the, the, the, the plans look
a lot worse than they actually are.
But what, what I said was, um, let's look
at the numerators and the denominators.
What's the denominator
that you're talking about?
Well, it's traditional Medicare.
Well, you're basically getting
everything you want when you submit
a bill for traditional Medicare.
There's no editing at all.
And in fact, you know, CMS wanted to
pilot something called the Wiser program,
and that got such political pushback.
It was unbelievable.
And all it was was saying, "Look, you
know, let's make sure that the codes
that you're submitting are in fact
accurate and that you're not up coding."
Gee, does that sound familiar?
I mean, so, so, so, and then, and,
and so then I start asking these
guys, I go, "Well, wait a second.
You, you know, like, what
percentage of your auths and
claims do you submit to the plans?
What, what would you guess the
proportion of those auths are inpatient
admissions auths versus an observation
stay to midnight rule admission?"
Well, it's like 100%
is an inpatient, right?
I mean, so the plans now through their UM,
they're not denying care, they're justâ¦
They're, they're determined, making
a determination based on medical
records, is it an observation
stay or an, or an inpatient stay?
It's kind of that simple.
And, um, when, when you kind of
do the math, it's about 85, 86%.
See, in other words, the plans are
actually paying the hospitals what
they deserve to be contractually paid.
They may not like it because they
want 100% of all their admissions,
whether they're observations or not.
And the way you get around that
is basically you have to deal with
them upfront in the contracting,
just have some predefined rates,
you know, that, that makes everybody
happy around an observation stay.
Um, having said that, um, the
plans are still talking to
us, um, because there's aâ¦
There, there's a couple plans they really
just don't like, a lot of the big guys.
They just don't like dealing with them
because of a lot of these claim edit
issues and, and frankly, denial issues.
And so they want alternatives, and
what they notice about us, particularly
the ones that are approaching us,
are the ones that are over capacity.
So they're like at 120% of
their, their acute beds Yes.
Right?
And so they're coming to us and they're
saying, "Look, you guys are pretty good
at managing admissions per thousand."
Right?
And so, like, last year we, we were
at 142 acute admissions per thousand.
And, uh, you know, CMS, uh, would
say, y- you know, a, um, a original
Medicare member is, is close to 250.
So we're, like, r- doing really well.
And so they go, "Well, if you can reduce
the percentage of our admissions for
seniors down, because of your care
model, that allows us to free up more
capacity for our commercial members
that we're getting paid a lot more."
Yeah.
And, and so we go, "Yeah, no,
that, that makes total sense."
And then you, you work out a contract
where they also gain both short-term
and long-term with that strategy.
In other words, you're moving
market share into their system.
Their system now is, you know, typically
in their geographies, you know,
50 to 60% of all healthcare spent.
It's just the acute hospital, all
the ambulatory, and then all theâ¦
They have the professional specialty.
Like, it's 50 to 60%, if not even a
little bit more, of, of, of all spend.
Um, and there, as, as you guys
pointed out on, on the last call,
it's kind of their turn in the barrel.
You know, the, the, like, the,
the plans got, you know, last two
and a half years was, was, you
know, under a lot of scrutiny.
Um, and, uh, pharma under
PBMs are a lot of scrutiny.
Post-acute, fraud, waste, and abuse.
I think they're going down that P&L
And looking at, well, where's the
real trend and where's the real money?
And so as the, as the health
systems are feeling that pressure,
they're looking for alternatives
to manage their cost structure.
And one of the ways is to,
you know, lower the amount of
admissions for seniors per se.
And, and of course, if, if senior
needs to go to the hospital,
they're going to the hospital.
That's not the point.
It's just if you can manage the
patients at home and, and drive down
admissions and make the hospital win
financially with a contract, and then
allow them to have more capacity on
the commercial side, everybody wins.
And it's clinically driven.
And, and I think that's what the
hospitals are seeing with us.
And the degree of engagement we have
had, uh, with their clinical leadership,
the doctors are the key, the doctors
are the key to everything, uh, has
been different in the last year and
a half than I've seen in the past.
You know?
Y- y- they justâ¦
And, and I think it's 'cause the hospitals
realize, you know, they've got ACA
pressure, they've got Medicaid pressure.
Um, and, and, and so they need different
ways to, to, to, to think about y- you
know, kind of, uh, a population health
approach to managing their, their mem-
their members and their, their patients.
Martin: John, I feel like it's
never enough time with you.
We're at time.
Thank you so much for your insights
today, and we're already looking
forward to having you back.
John: All right, guys.
Take care.
Thanks for having me on.
Kevin: Appreciate you, John.
Good seeing you.
John: Take care, guys.
Martin: The idea that a hospital would
go and say, "Hey, like help us, help us
get more commercial," I mean, it's such
a y- uh, it's such a unique insight.
And I feel like every time I am
there, oh, it's like a really
good job of aligning incentives.
I feel like I'm doing like a
promo for Alignment Health.
It's like align.
But- Yeah ⦠that's what it is, right?
Like the hospital would like to see
more commercial folks and less MA folks.
So like if we could do
that, that would be great.
Kevin: Yep.
Every time I hear John tell the story,
like, uh, it, it, you see why they traded
a premium compared to MA writ large.
Um, and I, it's gonna be fun to watch
the, this kind of, this growth outside
of California, what these clinically
integrated partnerships look like.
'Cause yeah, the, the theory of
the case is, um, seems spot on.
And everything we hear from CMS leadership
and what they're talking about, I, I,
I It does seem like the path forward,
particularly the care, uh, delivery
centric capabilities and whatnot.
Um, so it'll be fun to
keep an eye on that.
I, I wanna have him back on to talk
through the PPO/HMO dynamics that
came up a little bit on Goldman,
'cause I think that'll be- Yeah
interesting to get his take
on at some point as well.
Martin: Yeah, especially with
Clover, you know, continuing to go
all in- Yeah ⦠on their PPO model.
Kevin: For
Martin: sure.
But before then, we have our next guest.
So the LA Times recently
published an op-ed from Hashem
on regulating clinical AI.
Oura just announced a recent partnership
with Counsel Health, utilizing
their clinical AI for their members.
We're really excited to have him chat
with us about those things and more.
Good morning.
Uh, I believe you're out in LA,
so I think it's still morning.
Hashem: I am out in LA, and it is morning-
Yeah ⦠but I've lost my voice a little
bit because I'm a lifelong Knicks fan.
So that is- Yeah.
Martin: There's a lot of that going
around the HTN office, believe it or not.
Oh, good.
Right.
Um, so we, we absolutely, uh, empathize.
I wanted to start a little
bit with your LA Times piece.
And give us, like, what is your
sort of current view on how we're,
as a country and, you know, 50
states and the District of Columbia,
approaching regulating clinical AI?
And then as a sort of follow-up to
that, what, what should we be doing?
What's your prescription?
Hashem: Yeah.
Um, it's great to see you guys,
and thanks for having me on.
Uh, what is currently happening is
difficult to sum up in the time that
we have- ⦠because it's currently a
pretty patchwork regulatory framework,
where it is, I think over the last
year, every single state has offered
some legislation around AI, and
some states have offered multiple.
And what that legislation looks like
ranges vastly from state to state.
You have bills that have been introduced
in places like New York and Colorado
that would really limit the ability
of AI to be face, patient-facing in
a lot of ways, and you have other
states, uh, like the sandbox experiment
that's going on in Utah, where AI is
fully practicing medicine right now.
Uh, and I think that the federal
government has stepped back from
regulating in a lot of ways currently to
try to see what the states are doing and
what the states have the potential to do,
and they've created a pretty innovative
environment where you have, uh, you know,
a laboratories of democracy approach is
the phrase that I use in that LA Times
piece, where they're really observing
what is happening in each of these states.
Um, I think that we, we believe
the federal government sh- can
set a floor for what the practice
of AI clinical care looks like.
You know, this is the minimum
that every state needs to meet
in order to participate in this.
And then on a state-by-state basis,
that experimentation can and should
continue to happen, because that's
definitional to kind of US law is
the state practice of medicine.
And so in a really big picture sense,
I think it starts with a floor set
by the federal government, and then
states innovating- Either well on
top of that or meeting that floor
of here's what needs to happen
Kevin: Hashem, I'd be curious.
I, uh, that, that, that thought
resonates with me very much.
I, I look at the state of Utah and the
pilot they have ongoing, and I look at
that pilot and I'm like, "I don't even
know if that seems like the floor to
me of where it should be," because like
I, I, I was looking through the, the
state provided an update on how that
pilot's going and how many people are
going through it, and all of it still
seems to be reviewed by a human today.
Like, it's not yet AI doing the,
the refills of prescriptions.
They are seemingly thoughtfully testing
this as they're rolling it out, which
strikes me as a very thoughtful way to
do this and address some of the issues
that are, are coming up in the state,
uh, as I'm sure we've all seen here.
But even like, that seems like one step
in the right direction, but not yet
at the floor for where I'd imagine the
federal government moves over time.
I'd be curious, like, how, how do
you think about how we should be
thinking about what the floor is
and what the conversation is around
how we collectively define that?
Hashem: Great question.
So I agree.
I don't think that in Utah right now we're
at the floor, and I think that in two to
three years we're gonna look back on this
as not being close to the eventual outcome
of where AI can already be helping doctors
and be helping us expand access to care.
Um, I think that there's a common
perception that the federal government
getting involved in any capacity, whether
it's through the FDA, whether it's
through CMS, whether it's through other
entities within the federal government,
would slow down some of this innovation.
And I think actually putting a
stamp to say, "We are going to
allow this when you meet XYZ,"
would allow this to speed up faster.
And I think once the federal government
is able to help set that floor so that
people who participate in Utah, U- U- you
know, for example, this isn't illegal.
I'm not going to go against the FDA
coming out in three months saying,
"No, we're not allowing this."
Once you set that, then I think you can
start to have significantly faster and
iterative intervention for something
like you pointed out, wh- maybe it's
prescription renewals and taking
doctors out of the loop for that.
Or maybe it's something more aggressive
like autonomously managing urinary
tract infections, which essentially
happens in other countries.
Um, once that is set, once you're able to
have some kind of framework for, okay, I
now know the field that I'm playing on,
I know the rules of this game, then I
think that you can look to, uh, use the
Utah framework that they've set out, which
I think is a good one, to study this.
I mean, the idea of progressing from
a doctor in the loop to one click
care, to autonomous care, using data
to do so, having that data be publicly
available, and producing good science
and research off of this, I think that
Utah path is actually a very good path
Martin: It feels to me like you haveâ¦
You're in such a unique position.
You're a doctor.
Hashem: I am.
Martin: You're also the medical
director, uh, for clinical research
and policy at Counsel Health.
We're seeing some emerging fault
lines, I think, between providers
and the bots, if I'm, if I'm being
a little cute, on, on what should be
allowed, what shouldn't be allowed.
I'm curious if you're feeling any sort of
ambivalence or, or dissonance about this.
And more broadly, like w- what should
we think about as like a fundamentally
doctor job and a fundamentally robot
job, and what's your view on that?
Hashem: Yeah, I mean, that is
the, the ultimate question, right,
that, that a lot of people are
Martin: asking right now.
Just small, you know, just
small morning questions for you
on this, uh, Monday morning.
Hashem: Yeah.
I mean, one thing thatâ¦
I obviously get asked that question
a lot, and one thing that I think
is important to frame that within
is what currently happens, right?
I think a lot of times there's a
comparison against an ideal version, and
then there's a comparison to reality.
So by that same framing,
like I work clinically.
I work clinically at UCLA.
Is it a doctor job to get
a patient a cup of water?
I would vehemently say yes to that.
But is it a doctor job to sit in front
of an EMR constantly going through
medication renewals for people who
weren't able to access care and otherwise
and end up in the emergency department?
Um, I think at Counsel we are
very, you know, physician-driven
and physician-aligned.
Our CEO is a doctor.
We have four or five practicing
clinicians that, that work on the
platform, or all of our doctors that
work on the platform are obviously
practicing clinicians, but they're
in leadership positions at Council.
And we are very much making an
effort to align with the physician
community to make sure that anything
that we're doing is in the service
of making doctors' jobs better.
And I think that a lot of this AI
that's happening can really allow
doctors to, you know, to be cute,
practice at the top of their license
to, when I'm working clinically in the
emergency department, not be spending
my time renewing medications, to really
fundamentally try to combat the supply
and demand mismatch that we're seeing,
that I know a lot of primary care
doctors face as well, really redefining
what that relationship can look like.
And so I personally, and I, we as a
company, don't see much of a split
between, you know, what a job of a bot is
and what a job of a doctor is, because as
a company, we see those as so entwined.
Kevin: One of the things that we've been
paying attention to recently is, um,
uh, the ACCESS model, as part of the
ACCESS model, consumer wearables, and
everything that's going on in that space.
Obviously, Oura is one of the leaders
in that market, and they just announced
a partnership with y'all as part of
their latest product release where,
um, as I understand it, they're
y- they're gonna have access to
council providers in the Oura app.
Could you explain a little bit about,
um, that partnership, what's going on
behind the scenes, how you guys are,
are working with Oura, and how the
experience has come together across both?
Hashem: Yeah, I mean, a lot of work
has gone into the experience and, you
know, to integrate this and to have this
within Oura's amazing patient-facing
app already has taken a ton of work
from a lot of stakeholders on our team.
Um, I think that this is kind of a
revolutionary experiment in healthcare.
I think for a long time we've
been talking about the ability of
wearable data to influence clinical
decision-making, and if it could do so.
And this, as far as I know, is the
first time that we're testing that
hypothesis to see what we can do with it.
Um, I think right now, uh, this
week for the first time, we will be
rolling out to s- w- speak with Oura
patients and we are going to be able
to take the biometric data that they
provide us, ranging from heart rate
variability to looking at, you know,
uh, women's health, looking at menstrual
cycles, looking at, uh, pregnancy or
fertility tracking, and integrate that
into our clinical decision-making.
And I think this is something
that patients have really felt
the need for for a long time.
You know, you hear stories about patients
going to their doctor saying, "I have th-
I have X finding from my sleep last night.
What can we do about that clinically?"
And doctors really not being
able to take action on that.
And on the flip end, you have this,
uh, you know, now what problem of
patients plugging that data into Claude,
plugging that data into Frontier AM- AI
models, and not being able to have any
clinical action that, that follows that.
And I think it's gonna be pretty
exciting to study rigorously
what this can look like.
Martin: I'm curious, so I, I, I've
heard from some folks, we interviewed
Zeke Emanuel last week, and he wrote
a book called Eat Your Ice Cream.
He's sort of famously kinda anti-wearable.
The concern we hear from some folks
is that- Uh, you know, ChatGPT,
Claude, wearables, these are actually
gonna increase demand for healthcare
services, that we're not gonna sort
of achieve any savings from this.
Instead, we're just gonna have a lot
more utilization, perhaps more people
showing up at the emergency room.
I'm curious what your
perspective on that is.
Hashem: Yeah, I mean, I've spent
a lot of time thinking about this
from two different, uh, angles.
Number one, I'm aâ¦
I'm personally a big runner, and I run
without any wearables, without a watch.
I go, I run, you know, an hour
a day without any information.
So I relate to somebody who does not
want to see that information, but I
think that it's becoming a rare breed.
On the other end, I'm a researcher, right?
I'm a health services researcher,
and what I study is unnecessary
emergency department utilization.
So I'm very interested in making
sure that that's not the outcome of
what this looks like, and I thinkâ¦
I think about it in two ways.
Uh, one, new technology allows
us to completely rebrand what the
supply and demand curve looks like
in a way that nothing else has.
So the idea that we now
have patients' data, ifâ¦
In an old world, I agree that
the ability not having any access
with that data does present, you
know, what are you going to do?
You're gonna go to an
emergency department, you're
going to go to urgent care.
You're gonna, you know, hammer your
primary care doctor over MyChart.
But in a world like, you know, where
you have counsel, what you're able
to do is communicate with a doctor
at any point asynchronously in order
to take action on that information.
And so once you're addressing this at
that point of access and you're not just
creating more information, but you're
also creating more points of access, then
I think that allows us to really study
what this can look like and to potentially
impact it because you're, you're changing
what those access points look like.
The second part that I think about is
that in an old world where you did not
have, you know, any kind of AI informing
what the interpretation of that data
looked like, any kind of AI that allowed
a doctor to spend more time face-to-face
with the patient interpreting the
data that they're bringing in, that
data is potentially non-actionable.
But I think we have the ability
to create an entirely new realm
of science . Like, what doesâ¦
I don't think you can just say off
the bat, "Oh, heart rate variability,
um, looking at doesn't mean anything."
We're, we're just gonna say
no to taking in this new data
be- before we even have it.
I think you need to take that data
in, and then using AI, try to create
an entirely new world of science to
say what does interpreting this look
like with an entirely new framework
Kevin: I'd be curious, uh, we've heard
from CMS leadership the, the goal of
implementing AI in a deflationary way.
That's part of the thesis behind ACCESS.
Uh, Martin articulated some of the,
the, the concerns about AI being
used in inflationary ways and, and
driving up costs in the system.
If you were bending the ear of CMI
leadership, CMS leadership on how they
can ensure that AI is, is used differently
in healthcare, it has a deflationary
effect, what would you be thinking about?
How would you be prioritizing the
conversation in, in current environment?
Hashem: I think ACCESS
is set up very well.
I think that they have done a really
strong job setting up ACCESS, and I
think the pushback around prices is
a signal of that . I mean, if you are
getting pushback around prices, then
that probably means that you are doing
a very good job promoting companies that
are trying to do this differently, which
I think is the, the goal of, of ACCESS.
Um, I think that the way that
we think about this internally
is aligning with a lot of the
things that ACCESS already does.
I think taking AI and making sure
that payments that are coming
out of it are outcomes-based
payments, which is obviously part
of the, um, framework of ACCESS.
Another way to think about that
is thinking about it in terms of
time-based payments, so almost
like a subscription model to an AI
service, because the concern is in
a fee-for-service world, you canâ¦
This is endless utilization, right?
And once you take the cost of care
down to the cost of compute, that
could-- You-- Well, any incentives
will align to find somebody, uh,
a way to spend that endlessly.
So another way that we've been thinking
about it internally is more along a
subscription-based model, um, that
aligns with those outcome payments.
So if I were speaking to CMI
leaders, I would applaud them
for what they are currently doing
with ACCESS because I think that
that is, uh, a very strong start.
And then trying to think of ways, uh,
together with companies that are really on
the cutting edge of doing this, like, of
seeing how we can also make it time-based.
Martin: This was super helpful.
I'm really excited to see how all
of this plays out and any more
of your writing that you have.
Really enjoyed the piece in the LA Times.
Uh, if folks are interested in learning
more, where can they follow you for
more writing, more thoughts on, on this
developing space, um, and all of that?
Hashem: Yeah.
Well, our company is Counsel Health,
and that i- we have a website.
And then I am on, uh, LinkedIn, and
I'm trying to, you know, start writing
a little bit more there and, and
posting, and so you can find me there.
Martin: Great.
Well, we will include a link
to that in the show notes.
But thank you so much for your time today.
We really appreciate it.
Hashem: Thank you, guys.
It was great to see you.
Nice chatting with you.
Nice seeing you.
Yep, see you.
Bye.
Martin: I'm, I can read, uh, my appetite
for, in the same way that the demand
for clinical services seems to be u-
somewhat unlimited, my appetite for,
um, thoughtful pieces on how we regulate
this stuff is, is basically unlimited.
I, I'm so fascinated by this, uh, the
tension between what has happened with
every technology in healthcare up to
this point, and the, the prospect of
infinite, um, abundant healthcare.
Kevin: For sure.
I, I mean, it, it- if that vision
materializes, it would be amazing,
and it's a big if, you know?
Yeah.
Given, as you said, the, the history
of how things tend to seem to
play out in American healthcare.
What I do know is it seems like a really
good time to be a consultant advising
organizations on, on how to navigate
those questions and, and change in
this dynamic period in which we live.
Martin: Kevin, it was
right there for you to say.
It was a reallyâ¦
It's a really great time to join Health
Tech Nerds- Mm ⦠and hop in the
Slack and review the daily brief, where
we're talking about all of this stuff.
But it is also, I think, a good time
to be a consultant, and if you are
one of those consultants, subscribe
and join at healthtechnerds.com.
Have a good rest of your day, Kevin.
Kevin: See you, Martin.