Healthcare Financial Management

#Nationwide Employer Healthcare Strategy. Self-Funded nationwide employers are facing employee health plan budget problems. Healthcare costs are running unexpectedly high. These high healthcare costs are being driven by High Cost Claimants... the 5% of health plan members with high costs that drive 50% of overall health plan spending. Here are 5 #Strategies for Employers to Lower High Claimant Healthcare Costs: 1) #Network: Switch carriers to the only 1 out of the 4 major insurance carriers that has decent contracts with major hospital systems. 2) #ClaimsData: Get your claims data including allowed amount (and preferably Billed Charges, Provider NPI number and Provider Tax ID Number). Put your carrier out for RFP if necessary and include this data requirement in your RFP. 3) Engage #HighCost Claimants: Use the claims data to identify and assist existing high cost claimants and predict and prevent the most probable future high cost claimants. Use age greater than 50 as an initial screen for these potential high cost claimants. 4) Address Fraud, Waste and Abuse (#FWA): Use your claims data to identify fraudulent claims and prevent future payments to that same provider equal to the amount of the fraud. 5) #PBM: Carve-out your PBM to a transparent, pass-through PBM that DOES NOT require you to fill your specialty pharmacy medications through the mail order specialty pharmacy that they own. #EmployeeBenefits #HealthInsurance #Healthcare

Two Dallas hospitals sit 3 miles apart. Medicare pays one of them 4.77x more for the same hip replacement. --- For DRG 470 (Major Hip and Knee Joint Replacement), here is what CMS FY2026 IPPS actually pays each of them: 🏥 Baylor University Medical Center: $19,395 🏥 Parkland Health (Dallas County Hospital District): $92,451 Both are 500+ bed teaching hospitals. Both sit in the same CBSA. Both operate under the exact same wage index of 0.9721. So where does a $73,056 difference come from? --- It isn't the base DRG rate. Here is the full CMS FY2026 payment breakdown for DRG 470, line by line: 💵 Operating Federal Base DRG ↳ Baylor: $12,800 ↳ Parkland: $12,800 ↳ Gap: $0 (uniform within the CBSA) 💵 IME (Indirect Medical Education) ↳ Baylor: $1,425 ↳ Parkland: $5,317 ↳ Gap: +$3,892 💵 DSH (Disproportionate Share) ↳ Baylor: $510 ↳ Parkland: $1,789 ↳ Gap: +$1,279 💵 Uncompensated Care Payment ↳ Baylor: $3,564 ↳ Parkland: $71,888 ↳ Gap: +$68,324 💵 Capital PPS ↳ Baylor: $1,124 ↳ Parkland: $1,480 ↳ Gap: +$356 TOTAL ↳ Baylor: $19,395 ↳ Parkland: $92,451 ↳ Gap: $73,056 (4.77x) --- The "Operating Federal Base DRG Payment", the number most people mentally label "the Medicare rate", is literally identical at both hospitals. Every dollar of the $73,056 gap comes from four hospital-specific add-ons, and 94% of the gap is driven by a single line: Uncompensated Care Payment. ↳ These are policy-driven subsidies, not market prices ↳ And they quietly get embedded into every downstream benchmark that uses "Medicare" as a denominator --- This matters if you benchmark hospital prices to drive patients to lower cost facilities. Because when the Medicare number can swing 4.77x between two hospitals across town from each other, "% of Medicare" stops being a useful comparison tool, even though it's still the default metric almost everywhere. Over the next 4 posts in this series, I will show you exactly why, and how to benchmark around it. --- 📊 Source: CMS FY2026 IPPS Pricer | https://lnkd.in/ewvaY-Yu ♻️ Repost for healthcare finance professionals still using "% of Medicare" as a primary benchmark 🔔 Follow me for more on CMS pricing, hospital benchmarking, and price transparency (Brian Cotter, Bright Spot Insights)

48.86% of United Healthcare Premiums went to Optum... A few days ago, I came across an insightful post by Chris Deacon about the concept of eliminations in healthcare. Her explanation struck a chord with me: "At its core, eliminations reflect transactions between UnitedHealth’s insurance arm (United Healthcare Group) and its health services arm (Optum - which includes physician groups, OptumRx, Change Healthcare, etc). Technically speaking, eliminations are accounting adjustments made to remove internal transactions from consolidated financial statements to avoid double-counting revenue and expenses. In a highly vertically integrated healthcare organization like UnitedHealth Group, this technicality becomes a powerful tool to obscure how internal transactions inflate profits, consolidate market power, and ultimately drive up costs for patients and employers." Inspired by her post, I dug deeper into the 10-K SEC filings for FY 2023 from several major healthcare companies. Federal law mandates that health insurance companies spend 80%-85% of premiums on healthcare costs. However, based on conversations with insurance regulators, once funds are shown on paper as a cost of care and are no longer held by the insurer, they fall outside the jurisdiction of insurance oversight. Here’s the key finding: UnitedHealthcare’s insurance division reported over $279 billion in premiums for 2023. Of this, a staggering 48% was funneled to its own subsidiaries under Optum, including their PBM (Pharmacy Benefit Manager) and physician groups. This effectively shifts money from one pocket to another within the same organization, sidestepping regulatory scrutiny. The same pattern is evident at Aetna/CVS, another vertically integrated giant. Both of these organizations have a significant presence across Group, Medicare, Medicaid, and Individual markets, which means their practices directly shape the cost and quality of care for millions of Americans. It raises an important question: How do we ensure that regulatory frameworks evolve to address these complexities and protect patients and employers from the rising costs associated with this vertical integration? Let’s discuss. What are your thoughts?

🎉 Pleased to share our paper published in Nature Portfolio digital medicine. 🥳 We’ve developed a comprehensive framework called CREOLA (short for Clinical Review Of Large Language Models (LLMs) and AI). This framework is pioneered at TORTUS, taking a safety-first, science approach to LLMs in healthcare. 🔹 Key Components of the CREOLA Framework -Error Taxonomy -Clinical Safety Assessment -Iterative Experimental Structure 🔹 Error Taxonomy Hallucinations: instances of text in clinical documents unsupported by the transcript of the clinical encounter Omissions: Clinically important text in the encounter that was not included in the clinical documentation 🔹 Clinical Safety Assessment: Our innovation incorporates accepted clinical hazard identification principles (based on NHS DCB0129 standards) to evaluate the potential harm of errors: We categorise errors as either ‘major’ or ‘minor’, where major errors can have downstream impact on the diagnosis or the management of the patient if left uncorrected.  This is further assessed as a risk matrix comprising of: Risk severity (1 (minor) to 5 (catastrophic)) compared with Likelihood assessment (very low to very high) 🔹 Iterative Experimental Structure We share a methodical approach to compare different prompts, models, and workflows. Label errors, consolidate review, evaluate clinical safety (and then make further adjustments and re-evaluate if necessary). ----------Method-------------- To demonstrate how to apply CREOLA to any LLM / AVT, we used GPT-4 (early 2024) as a case study here. 🔹 We conduct one of the largest manual evaluations of LLM-generated clinical notes to date, analyzing 49,590 transcript sentences and 12,999 clinical note sentences across 18 experimental configurations. 🔹 Transcripts-clinical note pairs are broken down to a sentence level and annotated for errors by clinicians. ----------Results-------------- 🔹 Of 12,999 sentences in 450 clinical notes, 191 sentences had hallucinations (1.47%), of which 84 sentences (44%) were major. Of the 49,590 sentences from our consultation transcripts, 1712 sentences were omitted (3.45%), of which 286 (16.7%) of which were classified as major and 1426 (83.3%) as minor. 🔹 Hallucination types Fabrication (43%) - completely invented information Negation (30%) - contradicting clinical facts Contextual (17%) - mixing unrelated topics Causality (10%) - speculating on causes without evidence 🔹 Hallucinations, while less common than omissions, carry significantly more clinical risk. Negation hallucinations were the most concerning 🔹 we CAN reduce or even abolish hallucinations and omissions by making prompt or model changes. In one experiment with GPT4 - We reduced incidence of major hallucinations by 75%, major omissions by 58%, and minor omissions by 35% through prompt iteration Links in comments Ellie Asgari Nina Montaña Brown Magda Dubois Saleh Khalil Jasmine Balloch Dr Dom Pimenta M.D.

An insurance company told an oncologist that her cancer patient could no longer receive chemotherapy in the cancer center. The patient walked away from treatment entirely.   Banu Symington has practiced hematology-oncology in rural settings for more than 20 years. In May, the field was told three rollout vectors were coming. Within a week, two carriers acted. She appealed and was denied. Her finance manager offered to match the off-site price. The carrier refused to negotiate.   Three rollout vectors every healthcare leader should be tracking in their market right now:   1. Off-site infusion mandates. Chemotherapy is moved out of the hospital cancer center to an independent infusion suite, often staffed only by nurses, with no oncologist on the floor, no ER down the hall, no code team in the building. Infusion reactions can occur at any cycle.   2. White bagging. The carrier ships the drug directly to the hospital pharmacy with no margin retained. The line item that keeps rural cancer centers solvent disappears.   3. Brown bagging. The carrier ships cytotoxic drugs to the patient's home. The patient transports the medication to the infusion suite. Temperature control and chain of custody are no longer guaranteed.   The rollout is rural-first by design. Fewer physicians, fewer patients, less organized resistance. Once it scales rurally, the urban rollout follows. Medicare Advantage, administered by private insurance, is beginning to follow.   The economic mechanism is the part most leaders miss. Cancer centers do not break even on Medicare or Medicaid patients. The margin on privately insured patients subsidizes the operation. Strip that margin and the rural cancer center operates at a net loss and eventually closes. Access collapses by financial design, not by clinical decision.   Search "The Podcast by KevinMD" wherever you listen to podcasts.   If your organization has watched one of these three vectors land in the last year, what did the access cost look like for your patients?   #HealthcareLeadership #PatientAdvocacy #HealthcareReform #PhysicianAdvocacy #ThePodcastbyKevinMD

Only 4 in 10 Medicare Advantage plans were profitable for CY2024. That's down from over 6 in 10 in CY2020 and prior. --- Milliman's latest analysis of 435 #MedicareAdvantage Organizations (MAOs) shows a quick decline in profitability the last two years. Composite underwriting margins turned negative for the second year in a row, down to -0.7%, from +1.1% in 2023. That’s a nearly $3 billion loss on $423 billion in revenue. The news is worse for provider-sponsored plans (PSHPs). Aggregate losses deepened to -4.5%, compared to -2.8% last year. Nearly one in five PSHPs reported losses exceeding 20%. --- Here are the primary drivers covered in the paper: -Medical loss ratio (MLR) hit a 10-year high driven by rising inpatient and outpatient utilization. -CMS benchmark rates have flattened. -#StarRatings dropped, reducing bonus revenue and creating drug benefit volatility. -The Inflation Reduction Act began impacting plans, especially on the #PartD side. Administrative costs remain a challenge, especially for smaller or less efficient plans. The trends were more forgiving for larger plans. 45% of MAOs with over $1B in revenue still posted gains. However, only 40% of all MAOs achieved positive margins, down from ~60% just a few years ago. Some carriers have already exited the market. Others are dialing back benefits or raising member cost-sharing. --- The conclusion is similar to what I've covered in previous posts. There's a shift towards focusing less on growth and more on profitability. Plans will need to rethink growth strategy, pricing, and care management. How is your organization handling this pressure?

This study could change how every frontline clinic in the world delivers care. Penda Health and OpenAI revealed that an AI tool called AI Consult, embedded into real clinical workflows in Kenya, reduced diagnostic errors by 16% and treatment errors by 13%—across nearly 40,000 live patient visits. This is what it looks like when AI becomes a real partner in care. The clinical error rate went down and clinician confidence went up. 🤨 But this isn’t just about numbers. It’s a rare glimpse into something more profound: what happens when technology meets clinicians where they are—and earns their trust. 🦺 Clinicians described AI Consult not as a replacement, but as a safety net. It didn’t demand attention constantly. It didn’t override judgment. It whispered—quietly highlighting when something was off, offering feedback, improving outcomes. And over time, clinicians adapted. They made fewer mistakes even before AI intervened. 🚦 The tool was designed not just to be intelligent, but to be invisible when appropriate, and loud only when necessary. A red-yellow-green interface kept autonomy in the hands of the clinician, while surfacing insights only when care quality or safety was at risk. 📈 Perhaps most strikingly, the tool seemed to be teaching, not just flagging. As clinicians engaged, they internalized better practices. The "red alert" rate dropped by 10%—not because the AI got quieter, but because the humans got better. 🗣️ This study invites us to reconsider how we define “care transformation.” It's not just about algorithms being smarter than us. It's about designing systems that are humble enough to support us, and wise enough to know when to speak. 🤫 The future of medicine might not be dramatic robot takeovers or AI doctors. It might be this: thousands of quiet, careful nudges. A collective step away from the status quo, toward fewer errors, more reflection, and ultimately, more trust in both our tools and ourselves. #AIinHealthcare #PrimaryCare #CareTransformation #ClinicalDecisionSupport #HealthTech #LLM #DigitalHealth #PendaHealth #OpenAI #PatientSafety

Your HealthTech startup isn’t a tech company. Treating it like one can be fatal. I’ve watched brilliant founders from SaaS, fintech, and AI stumble in healthcare. Not because they lacked skill, but because they assumed healthcare works like every other industry. It doesn’t. Here’s what makes HealthTech a world of its own: 1. You’re selling to institutions, not individuals. Hospitals, insurers, and regulators move carefully, not quickly. Procurement in large systems can take 18+ months, with decisions driven by risk and compliance over hype. Committees replace single decision-makers, and the biggest competitor is often the status quo. 2. Trust is everything. In healthcare, one misstep - clinical, ethical, or regulatory - can destroy credibility overnight. I’ve seen startups lose traction after minor compliance lapses. The rules around AI and digital health evolve constantly, and staying ahead of regulation is now a core competency, not a checkbox. 3. Adoption is the hardest challenge. Clinicians spend roughly 40% of their day on admin tasks. Patients are already overloaded. If your product doesn’t fit seamlessly into existing workflows, it won’t get used... no matter how elegant the tech. True adoption takes empathy, support, and time. 4. Solve a mission-critical problem. In healthcare, survival depends on necessity, not novelty. “Nice-to-have” tools don’t last. Clinical validation through peer-reviewed studies and real-world evidence matters more than hype. Evidence earns trust—and trust drives growth. 5. Investors now expect proof of outcomes. Funding is shifting toward startups that demonstrate measurable clinical impact and sustainable revenue models, especially in high-need areas like maternal health and chronic disease management. Impact now trumps velocity. 6. Partnerships power growth. Strategic collaborations, like those between pharmaceutical companies and AI imaging startups, are shaping healthcare innovation. They help new entrants navigate regulation, gain credibility, and scale responsibly. 7. Play the long game. Healthcare rewards patience, resilience, and humility. Quick hacks and blitz-scaling don’t work here. The founders who listen, learn, and adapt to the system’s realities are the ones who thrive. HealthTech is healthcare. With just enough technology to make it work better, not worse. What would you add?

Health systems are becoming investment portfolios. Private equity is buying clinics, data platforms are treated as financial assets, and healthcare is being reshaped by the logic of capital. We are witnessing a shift.This shift goes beyond privatisation. Financialisation occurs when the logic of finance — asset ownership, short-term returns, debt leverage, and investor value — begins to shape decisions about how health services are delivered, how data are used, and how value is defined. Hospitals, clinics, insurance schemes, and even patient data are increasingly treated as financial assets — bought, sold, and traded across investment portfolios. The OECD’s latest analysis (Trends in the Financialisation of Outpatient Care across OECD Countries, 2025) shows a striking pattern: • Financial firms now own large shares of outpatient and diagnostic services in many countries. • Private equity investment is rapidly expanding in sectors such as dentistry, radiology, and laboratory services. • These trends are often invisible in national health accounts but have profound effects on system design, equity, and accountability. So, what’s driving this? Fiscal constraints — Governments under pressure to meet rising health costs turn to private capital. Investor demand — Health is viewed as a “safe” sector offering predictable returns. Digital transformation — Data, algorithms, and health platforms create new assets to monetise. Governance gaps — Regulation hasn’t kept pace with complex investment structures. While financialisation can mobilise new resources and spur innovation, it also reshapes incentives — and not always in ways that support Universal Health Coverage (UHC). The dilemma: • When investors prioritise short-term returns, health equity suffers. • When providers are financed through debt or dividend extraction, financial protection weakens. • When ownership becomes opaque, accountability declines. Financialisation can move health systems away from solidarity and toward commodification. That doesn’t mean rejecting private capital — it means governing it differently. We need to: Reassert public stewardship. Require transparency . Protect essential services. Financialisation is happening now and accelerating. The question now is whether countries can harness it for health, rather than allowing health to serve finance. In my latest Substack piece, released on Monday I unpack this transformation. I explore how financialisation affects each dimension of UHC — access, quality, and financial protection — and propose governance approaches that keep systems people-centred and equitable. Read the full article here: https://lnkd.in/e8743R_8 #HealthGovernance #UHC #HealthSystems #PublicPolicy #OECD #DigitalHealth #HealthFinancing #GovernanceInnovation #Stewardship #HealthEquity Views my own.

There's a very worrying trend going on in healthcare right now. When smaller hospitals start laying off staff due to financial and operational challenges, that's a big red flag for their patients. Select Specialty Hospital in Longview, Texas, a 32-bed critical illness recovery facility mentioned here, didn't make it. Now, their patients have to seek healthcare elsewhere. When a person's bleeding out in a car wreck or a child has been pulled out of a pool unconscious, they need appropriate care in their community. Yet many other companies working in healthcare, including some insurance companies, are making astounding profits while those smaller facilities mentioned in this article are struggling. The uneven distribution of resources and the profitability of larger systems and insurance companies have become the norm in this unparalleled healthcare crisis we're experiencing. Living in "the country" has been an attractive option for those tired of the rat race. Still, times have changed, and now some who made that decision are paying the price, sometimes the ultimate price, if their community hospitals can no longer care for them in a medical emergency. What can we do to correct this imbalance affecting those patients and staff? Here are a few key points to consider and potentially advocate for: 1.     Redistribution of Resources: Advocating for a more equal distribution of healthcare resources, including financial support for smaller systems, can help address disparities and prevent layoffs. 2.     Regulation of Profits: Encouraging the regulation of profits within healthcare systems and insurance companies could help ensure that more funds are directed towards patient care and staff support rather than executive bonuses and shareholder dividends. 3.     Policy Advocacy: Engaging in policy advocacy at local, state, and national levels can help drive legislative changes that prioritize the well-being of healthcare providers and ensure sustainable funding for smaller healthcare systems. By addressing these areas, we can work towards a more balanced and fair healthcare system that prioritizes patient care and supports healthcare providers. Time is running out this year for staff and patients at other smaller healthcare facilities that may have to close their doors in 2024. What more can we do to support our community hospitals?