TrustWorks On Call: May The Schwartz Be With You

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. Former deputy surgeon general nominated for CDC head.

Last Thursday, President Trump announced Dr. Erica Schwartz, a deputy surgeon general under the first Trump administration, as his nominee for the director of the Centers for Disease Control and Prevention (CDC).
Dr. Schwartz has an established record of supporting vaccines, having overseen the federal drive-through testing program during COVID, and is broadly considered a conventional and qualified candidate to lead the CDC.

TrustWorks Take: No federal agency needs strong and steady leadership more than the CDC right now. Since President Trump’s second term began, its workforce has shrunk by over 25 percent, its Atlanta headquarters were targeted in a shooting, and its permanent director, Dr. Susan Monarez, was fired by Secretary Kennedy only one month after her confirmation, in a dispute over vaccine approvals. Two interim leaders, including National Institutes of Health director Dr. Jay Bhattacharya, have bridged the gap since Monarez’s ousting, but the administration exceeded its 210-day limit on acting agency directors, leaving the agency “officially leaderless” since late March (Dr. Bhattacharya continues to lead the agency unofficially). If confirmed, Dr. Schwartz will have her hands full restoring the morale, confidence, and belief in the CDC’s mission, both for its workers and the nation it serves.

The position likely went unfilled for so long because vaccine policy has emerged as both a source of internal disagreement within the Trump administration and one of the few issues where the Senate is willing to serve as an external check and balance. Dr. Casey Means’ nomination for surgeon general has stalled over her anti-vaccine views, and the original nominee for CDC director, Dr. Dave Weldon, was withdrawn after it became clear he lacked Senate support, in part for his vaccine record. Dr. Schwartz’s nomination suggests that institutionalists, concerned with unifying the party and appeasing independent voters ahead of the midterms, currently hold more sway than the ideologues, who are willing to pursue unpopular policy goals such as undermining vaccine confidence. Once the midterms are over, that balance of power could shift again, putting controversial vaccine policy changes back on the table.

2. One in seven ACA enrollees failed to make first payment.

In the wake of the enhanced subsidies expiring last year, about 14 percent of Affordable Care Act (ACA) exchange plans enrollees did not pay their first month’s premium, which could disenroll them from coverage after a one-to-three month grace period.
Initial enrollment in ACA plans for 2026 declined by one million, or about five percent of last year’s total enrollment, and these non-payments could lead to another three million people losing coverage; analysts project that up to six million people could lose ACA coverage by year’s end, factoring in ongoing attrition.

TrustWorks Take: Insurance markets thrive under stability and predictability. Younger, healthier people are either dropping out or shifting to lower-tier exchange plans (Bronze plan enrollment has increased significantly at Silver’s expense), which worsens the risk pool and contributes to a cycle of adverse selection that will drive premiums even higher. Notably, the Congressional Budget Office projected last fall that “only” two million people would lose health insurance without the enhanced ACA subsidies. Now, the latest analysis suggests losses of at least double that initial estimate, even after factoring in some people switching to other forms of coverage.

These data also serve as a reminder of how Americans experience health policy changes. Although last fall’s government shutdown raised the salience of the ACA subsidy issue, it remained an abstract policy disagreement for many Americans at the time, if they were aware of it at all. Even during open enrollment, Congress was working on a fix that might have insulated enrollees from the premiums they were signing up for. Only now, with Congress having failed to pass a subsidy extension and the full bills coming due for ACA enrollees, does reality set in. The pain from this loss of coverage will only rise throughout the year as a growing number of uninsured patients develop care needs they can no longer afford to treat. Expect their sad testimonials to feature in political ads blanketing television markets in every competitive district this fall, keeping healthcare central to the midterm conversation.

3. AI increasing healthcare administrative costs, report finds.

A report published this month by the Peterson Health Technology Institute concluded that the ways providers and health plans are deploying AI could supercharge their battles over prior authorizations and medical billing without generating efficiencies or reducing costs.
The report acknowledges that, while AI may be reducing administrative costs for individual organizations, achieving system-level savings requires redesigning prior authorization and reimbursement policies with AI capabilities in mind.

TrustWorks Take: The full report is worth the read, but this one line sums it up best: “When applied on top of flawed administrative workflows, data complexity, and incentive structures, AI exacerbates the underlying issues.” AI is very good at speeding up routine processes, but speeding up inefficient processes only produces more inefficiencies and waste. We saw this play out already with electronic health records, which were largely rolled out by hardcoding paper billing practices and old workflows into new technology, resulting in a crisis of busywork and burnout for providers that AI now promises to solve. The most transformative applications of AI will require a coordinated reset between payers and providers that recognizes how AI is changing resource utilization and adjusts reimbursement practices accordingly.

There is also a zero-sum aspect of payers and providers both using AI to get a leg up on the other. In response to providers using AI to increase billing intensity, payers are using AI to downcode more procedures. Assuming these efforts cancel out, no one wins except the AI companies, who are billing both providers and payers for their applications. And if either side has a long-term advantage in the AI billing war, it would seem to be the payers, due to their relative consolidation compared to the regional nature of most provider organizations. Providers who do not adopt AI still stand to lose, however, making AI usage just another cost input to maintain the status quo. Consumers, too, see little benefit from these coding wars, as payers push for faster denials, providers seek higher charges, and no one optimizes for the patient.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Physician Partnerships as Maturing Relationships

Health systems and physician groups form the defining relationships for every market’s healthcare delivery system. Their degree of alignment can be seen as a structural choice that ranges from loose affiliation to full employment, with a discrete menu of options in between. However, this framing misses that this alignment spectrum is really a measure of trust between health systems and physicians, both as individuals and groups. The underlying principles that drive the progression from one model to the next along this spectrum include agreement on why the partnership exists, the balance between physician autonomy and shared identity, embrace of interdependence, and clarity around clinical versus operational ownership. Time and urgency shape the path as well, as more nimble physician groups can resent the slow-moving bureaucracy of some health systems. But relationships benefit from time as well, allowing an organic progression from left to right as certain principles become more developed. Time allows both parties to develop their belief that, by increasing their commitment to this partnership, they will increase the mutual benefits as well.

Dialing In

Sharing insights from our work with clients

Emergency Medicine as a Leadership Incubator
Last week we had a very productive meeting with a group of physician leaders looking to redesign their governance structure. In particular, the health system’s CMO impressed us. His leadership approach married inclusivity with decisiveness, enabling the group of doctors to come to a quick decision while still making sure each individual physician felt heard. As we drove to the airport, we noted that this CMO is an Emergency Department (ED) physician by training, and how frequently we see emergency medicine produce strong physician leaders. A combination of their abilities to make effective and quick decisions (triage is their job), form relationships with every specialty (pretty much all of whom have consulted in the ED), and maintain a culture of humility (the surgeons and specialists upstairs are more likely to take credit for a good outcome) prepare them to be highly effective in executive roles.

We’ve seen this all the way up to the CEO’s office. Some of our favorite health system chief executives started their careers in the ED. Decisiveness and a willingness to share credit for accomplishments sing in the executive suite. Perhaps the ED doc CEO’s Achilles heel is delegation. (If you’re a fan of The Pitt, consider Dr. Robby’s management style, worried that the place might fall apart if he does not know what is going on in every corner.) Regardless of a specialty, it is a reminder that a physician executive’s approach to leadership is influenced by their training and practice. Good to keep in mind when thinking through how someone’s clinical experiences will translate into an executive role.

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May the Schwartz Be With You