Hello and welcome back to TrustWorks On Call—here’s our healthcare business and strategy 411 for the week. As we continue to grow our subscribers, we greatly appreciate those of you who shared last week’s edition with a colleague and encourage more of you to do the same this week. If you’re one of our new readers, don’t forget to subscribe! Or send us your thoughts directly, just by replying to this email.
This week’s edition offers you our experiences with the physician shortage, a graphic on the uncertain state of the US economy, and some musings on what’s next for private equity and physician practices. But first, the news:
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Behind the Headlines
Unpacking the forces driving healthcare's biggest stories
1. Congress passes spending bill to avert government shutdown.
- On Friday, the Senate voted 54-46 in favor of a bill, drafted and passed by the House earlier last week, to fund the government on a continuing resolution through September 30, 2025.
- The legislation extends Medicare’s telehealth flexibilities and hospital-at-home waivers through September 30, 2025, delays Medicaid disproportionate share hospital (DSH) cuts, but does not reverse the 2.83 percent Medicare physician pay cuts that went into effect in January.
- Ten Senators in the Democratic caucus voted for cloture to end a filibuster; those willing to trigger a government shutdown expressed concerns over language granting the executive branch more flexibility to cut costs around existing appropriations.
TrustWorks Take: While this bill postponed some healthcare cuts and affirmed others, its passage is only a prelude to a fight over more significant spending reductions attached to the renewal of Trump’s first-term tax cuts. Republicans are debating how best to cut Medicaid funding, an inevitable target given Congress’s $880B savings goal for healthcare, such as by adding work requirements or reducing the federal matching rate to pre-ACA levels. If just the latter were implemented, providers could see an $80B decrease in healthcare spending and a $19B increase in uncompensated care in 2026 alone. Much of the gains from Medicaid expansion—in expansion states, safety-net hospitals saw a two-point margin improvement—could be unwound with the removal of enhanced federal Medicaid matching funds.
2. Texas measles outbreak approaching 300 cases.
- At least 259 people in Texas and 35 people in New Mexico are confirmed to have contracted measles, leading to two linked deaths so far.
- With cases reported in 15 states, 2025 has already passed 2024’s total number of measles infections nationwide.
- Unvaccinated children comprise a majority of cases, as two doses of the MMR vaccine has been shown to be 97% effective at preventing infection.
TrustWorks Take: Vaccine exemptions for kindergartners in a Texas county at the center of the outbreak rose from 7.5% in 2013 to 17.5% a decade later, exemplifying how measles has resurged after the disease was eliminated from the US in 2000. (Herd immunity for measles requires a vaccination rate of at least 95 percent.) Vaccine skepticism has found a home in the Trump administration, even as Dave Weldon’s nomination to lead the Centers for Disease Control and Prevention was withdrawn over concerns from Republican Senators about his views on vaccines. This outbreak is not a result of the administration’s policies as much as a reflection of the coalition that helped elevate someone like Robert F. Kennedy Jr. to become Secretary of Health and Human Services. However, his agency is now tasked with coordinating the response, which so far has favored treating cases with vitamin A and cod liver oil supplements rather than encouraging vaccination. In the long term, the undermining of vaccine confidence will make viral outbreaks like this one increasingly common.
3. Dr. Oz’s Senate hearing focuses on Medicare Advantage scrutiny.
- At his confirmation hearing before the Senate Finance Committee on Friday, Dr. Mehmet Oz, nominee for Administrator of the Centers for Medicare and Medicaid Services (CMS), called out the Medicare Advantage (MA) program for the proliferation of upcoding and prior authorizations, noting it costs more per enrollee than traditional Medicare.
- Dr. Oz avoided making specific commitments on Medicaid funding, while saying he was open to Medicaid work requirements or alternative qualifiers, and echoed the Trump administration line on eliminating waste, fraud, and abuse.
- The Senate Finance Committee still needs to schedule a vote to send his nomination to the full Senate, where he is expected to be confirmed.
TrustWorks Take: Given that Dr. Oz previously championed “Medicare Advantage for All,” his newly critical tone highlights a contradiction in the GOP plan for Medicare—Project 2025 advocates for making MA the default enrollment option, but MA plans don’t save money per risk-adjusted life compared to traditional Medicare. MA carriers also face credible allegations of prioritizing corporate profits over patient needs, including retaining billions of dollars from questionable risk-adjustment practices. Further expanding the MA program without additional guardrails would lead to increased costs for taxpayers while limiting patient access to care. Dr. Oz did nothing to discourage fears around impending Medicaid cuts, but his plans for Medicare—whether to speed up its privatization or crack down on its alleged fraud—are harder to predict. Regardless, it's hard to imagine anything other a gradual eroding of traditional Medicare as the default social net for seniors' care that we have known it to be.
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Dialing In
Sharing insights from our work with clients
Confronting the Physician Shortage Firsthand
Spending time at client sites across the country, one thing is clear: the demand for medical care far exceeds the supply of physicians, nurses, and allied providers. With only 1.1M physicians serving a population of over 340M, the imbalance is unsustainable. Early retirements, part-time practice preferences, and lifestyle shifts are further straining an already stretched system. The path to becoming a physician is long and costly—graduates carry an average debt of over $200K, driving them to specialties and leaving primary care more exposed.
This crisis of supply also coincides with a greater demand for care, driven by an aging population and rising rates of cancer, heart disease, and infectious diseases among younger populations. Meanwhile, potential funding cuts and tighter eligibility for paid care threaten access, making a bad situation worse. Wait times will extend well beyond 30 days, emergency department lines will grow, and uncompensated care will surge, leaving more patients without access to care when they need it most.
Every time we step onto a hospital floor, meet with executives, or consult on strategy, the reality is unavoidable: this system isn’t designed to fix itself. Maintaining healthcare access as more than just an ideal will require bold leadership and a willingness to commit to structural changes. Investments in technology, virtual care, in-home care, and remote monitoring can help physicians manage larger patient panels, but these programs are not substitutes for providers and will require capable partnerships and careful planning to be successful.
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Beyond the Whiteboard
Visualizing key trends from the healthcare industry
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The current state of the US economy depends on where you look and whom you ask. Starting with the positive, the Federal Reserve’s policies appear to have stuck the “soft landing”, with February inflation numbers coming in lower than expected, while the unemployment rate has remained relatively stable. However, markets were not given a chance to celebrate this, as President Trump’s escalating trade war has sent stocks tumbling and produced the first market “correction” since 2023. Despite these tariffs impacting a variety of crucial medical products, investor confidence in the largest public healthcare companies has ticked up, in contrast to the American tech sector. Healthcare may not be recession-proof, but as long as people remain employed and can cover the necessities, they will continue to seek healthcare services. However, if the most pessimistic predictions, such as the Atlanta Fed’s 2.4 percent GDP contraction for Q1 2025, come true, the broader economic fallout will surely find its way into healthcare, as consumers will spend less on healthcare, capital will be harder to come by, and public funding will diminish.
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Weighing In
Offering our thoughts on a notable topic
Private Equity in Physician Practices: What’s Next?
Over the past decade, physician practices have seen substantial private equity (PE) investment, with most investor exits occurring through PE-to-PE transactions, known as secondary sales. Initially, PE and commercial debt capital fueled ancillary expansion and acquisitions, along with investments in operational infrastructure. However, many practices and their affiliated platforms or management service organizations have struggled to enhance core operations, care delivery, and financial performance. Now, these secondary sales are facing increasing challenges.
Several factors contribute to this slowdown:
- Stagnant payer relationships and reliance on legacy reimbursement models, often targeting profitable commercially-insured procedures, limit revenue growth.
- Regulatory scrutiny at the state level, rising interest rates, and economic uncertainty make it harder to plan for the future.
- Traditional cost-cutting measures place downward pressure on physician compensation, creating tensions within practices between older partners with equity to cash out and younger physicians with years in the practice ahead of them.
With fewer buyers and longer-than-anticipated exit timelines, many physicians who anticipated financial gains now face cost-containment pressures and limited partnership solutions. As a result, more practices are reevaluating their future and are seeking alternative personal exit strategies from the market.
Rather than relying solely on PE-to-PE sales, practices and their investors should look for more transformative partnerships, such as by aligning with health systems and integrated networks. This model generates value through referrals and care coordination, rather than a pure volume and price strategy, while still offering returns for investors, an exit for older partners, and a positive environment for younger physicians so they stay with the practice.
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