"We're All Going to Die"
June 3, 2025
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Hello and welcome back to TrustWorks On Call—here’s our healthcare business and strategy 411 for the week. If you enjoy our work, please consider forwarding it along to a friend and encouraging them to subscribe!
We hope you missed us last week, as healthcare news continues even through the holidays. One story to watch, although we’re not covering it below, is Hinge Health's successful initial public offering (IPO). The digital physical therapy company’s promising stock-market debut could spell the end of a health tech IPO drought, but one case doesn’t make for a trend yet. And there’s another story we had to mention but are not covering in full—after a constituent at a town hall in Des Moines predicted Medicaid cuts would cause unnecessary deaths, Senator Joni Ernst (R-IA) responded, “Well, we are all going to die.” Truly, an inspiring political message for our times.
Instead, in this edition we go Beyond the Whiteboard on what’s driving HCA and Tenet’s recent success, plus we’re Dialing In on strategies to transform physician practice economics. But first, the news:
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Behind the Headlines
Unpacking the forces driving healthcare's biggest stories.
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1. FDA, CDC limit access to COVID vaccines.
- The Food and Drug Administration (FDA) approved Moderna’s new, lower-dose COVID vaccine last weekend, but only for adults 65 and older and people ages 12-64 with at least one underlying risk factor for COVID.
- Late last month, Secretary of Health & Human Services (HHS) Robert F. Kennedy, Jr. announced in a video with National Institutes of Health (NIH) Director Dr. Jay Bhattacharya and FDA Commissioner Dr. Marty Makary that the Centers for Disease Control and Prevention (CDC) would no longer be recommending any COVID vaccines for healthy children or pregnant women.
- Instead, updated language on the CDC website recommends "shared clinical decision-making” between parents and providers over whether to vaccinate their children, while the CDC’s adult immunization schedule has “no guidance” for pregnant people interested in a COVID vaccination.
- Both the American College of Obstetricians and Gynecologists (ACOG) and American Academy of Pediatrics (AAP) issued statements strongly condemning the restrictions for pregnant people and children, given that COVID is associated with various risks during pregnancy, including double the rate of miscarriages.
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TrustWorks Take: This is a case of scientific-sounding reasoning being used as cover for the accomplishment of political goals—namely, the appeasement of anti-vaccine activists. According to Dr. Makary in a piece he co-authored for the New England Journal of Medicine (NEJM), “the benefit of repeat dosing [of COVID vaccines] … is uncertain” because COVID boosters are tested like flu shots rather than de novo vaccines. (For an ironic and alarming aside, Kennedy recently said on a podcast he wants to ban government-funded scientists from publishing in journals like NEJM, which would be a disaster for global science.) As a result, healthy people under 65 who want to stay updated on COVID vaccinations will no longer be able to do so, at least until drugmakers undergo full, placebo-controlled clinical trials to prove the vaccines are as low-risk as all the available data to date suggests they are. The government here is preventing people from making their own healthcare decisions and inserting a massive amount of red tape into a well-functioning regulatory process, both of which run counter to the espoused values (though not necessarily the acting principles) of the Trump coalition. The debate is less about the science, and more about who pays, who gets protected, and how trust is maintained as our historic standard of universal vaccination lapses into more care fragmentation. |
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2. Senate deliberates on healthcare cuts in budget bill.
- After a version of the One Big Beautiful Bill Act of 2025 passed the House late last month, the Senate this week is tasked with amending and voting on its version of the bill, before it returns to the House for a final vote.
- At least four Senate Republicans have expressed concerns over the severity of the Medicaid cuts, while two others believe the bill doesn’t cut spending enough; Senate Republicans have only a three votes to spare within their caucus.
- An analysis published by the left-leaning Urban Institute found that, under its current construction, the bill would decrease provider revenues by over $1T and increase uncompensated care costs by $278B over the next decade, driven by restrictions to Medicaid and Marketplace enrollment.
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TrustWorks Take: Each week, we’ve tried to find a new angle to describe the dangers of this bill, which is dense enough to justify numerous TrustWorks Takes. The Urban Institute’s report sums it up well—the bill would create millions more uninsured Americans and hundreds of millions in revenue losses for providers. Speaker Mike Johnson can go on talk shows and say, “Those 4.8 million people will not lose their Medicaid unless they choose to do so,” but the entire point of the bill’s changes to Medicaid, whether they be through work requirements or other mechanisms, is to cut government spending by reducing the number of people covered by Medicaid. It’s also interesting what the GOP messaging excludes—no one is talking about trying to “repeal and replace” the Affordable Care Act (ACA) anymore, perhaps due to the ACA reaching a record-high favorability rating this year. However, in addition to Medicaid cuts, the record enrollment in the exchanges could be severely unwound. The enhanced subsidies’ expiration could trigger an adverse selection cycle, where higher premiums price out healthier participants, further degrading the risk pool and driving up premiums even more. |
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Beyond the Whiteboard
Visualizing key trends from the healthcare industry
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How For-Profit Health Systems Earned Their Huge Margins
As we discussed in our last edition of TrustWorks On Call, the two largest for-profit health systems, HCA Healthcare and Tenet, posted double-digit operating margins in 2024, far surpassing the margins of their nonprofit competitors, half of which were in the negative. As their name suggests, for-profit systems possess structural advantages and face different incentives than nonprofit systems, much of which is captured by for-profits being responsive to shareholders versus nonprofits being responsive to community stakeholders. For-profits not only can but must make strategic decisions, such as which markets to operate in and which services to provide, that maximize shareholder returns, whereas the local boards of nonprofits govern with a variety of factors in mind beyond profitability. That being said, the “no margin, no mission” motto means that nonprofits with sufficient scale and unsustainable margins could learn something from the success of HCA and Tenet.
Both HCA and Tenet owe their operating success to effective cost control. In HCA’s case, it is not only the largest health system by hospital count but also uniquely capable at capturing efficiencies from this scale—in part by choosing which markets and services to enter and prioritize. Over the last three years, it has expanded its footprint while reducing its relative labor expenses, cost-to-charge ratios, and average length of stay. HCA serves as the gold-standard example of the hospital subcontractor, content to be neither a platform nor organizer of care and capable of finding a margin from nearly any service and payer. Tenet’s hospital business is slightly less efficient than HCA’s, but that margin is more than made up for by its prolific ambulatory surgery center (ASC) chain, United Surgical Partners International (USPI). In 2024, USPI posted a remarkable EBITDA margin of nearly 40 percent. Despite earning only 22 percent of Tenet’s total revenue, it produced 45 percent of its total margin. Where the outmigration of lucrative orthopedic procedures to lower-revenue settings has spelled trouble for many systems, Tenet’s pivot to maximizing efficiencies and volumes in the ASC setting has become the engine of its success. Other systems have taken notice, as Ascension, which suffered significant operating losses last year, is rumored to be closing in on a purchase of Amsurg, one of the largest ASC chains in the country. Whether Ascension or other nonprofits can emulate the success of Tenet and HCA ultimately depends on their ability to control costs—an evergreen challenge for hospital chains, but something at which for-profit ASC chains like Amsurg have excelled.
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Dialing In
Sharing insights from our work with clients
Three Structural Shifts to Reinvent the Physician Enterprise Economic Model
A recent whiteboarding session with an old friend and physician leader attempted to answer an existential question: what can we do that meaningfully addresses the systemic economic challenges of a medical group. With his independent primary care group’s margins tightening and provider fatigue rising, he recognized that squeezing more visits into the day or chasing elusive payer bonuses wouldn’t add up to transformation. Instead, we fleshed out three strategies that could match the stakes of the moment.
Using AI to Automate Non-Clinical Workflows
Administrative drag continues to eat up time and budget. AI-driven automation can streamline non-clinical operations, particularly in revenue cycle management, improve claims processing, reduce denials, automate prior authorizations, optimize coding, and streamline patient billing and communication workflows. AI solutions and hype abound (my friend had good things to say about Jorie AI), so the challenge has become not whether to use AI, but where, how, and with whom. We also agreed that clinical-decision support applications, generally promising yet less mature, warranted a follow-up conversation.
Augmenting Traditional Reimbursement with Access and Concierge Fees
Many practices are no longer relying solely on what insurers will pay and are finding success by layering modest, transparent access or concierge fees on top of traditional insurance reimbursement. Rather than luxury models, these are hybrid approaches designed to generate recurring, predictable revenue that supports better access, care coordination, and non-billable services without dropping insurance contracts. Practices are offering same- or next-day scheduling, extended telehealth availability, enhanced proactive care coordination, and continuity support for complex patients, all funded through a predictable, monthly or annual fee. The challenge rests in finding the right pricing level and navigating the disruption to existing patient relationships.
Delegating Select Clinical Services to Third-Party Providers.
Perhaps the most strategic and underutilized lever is rethinking who needs to deliver which parts of care and offloading select clinical services to trusted third-party partners. Remote patient monitoring and post-discharge care, women's health services such as birth control management, menopause care, and behavioral health triage can all be delegated without reducing visit volume or reimbursement. These services can be integrated seamlessly into the care pathway, often under physician oversight, and billed appropriately. In return, providers regain time in their templates while preserving or even enhancing reimbursement levels.
Each of these structural moves redefines how care is accessed, how work gets done, and who delivers what. Together, they signal a shift away from fragile volume-dependence and toward a more diversified, resilient, and scalable physician enterprise model. It’s time to stop asking how to do more with less and start rethinking the model altogether.
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