Healthcare Financial Management

I've spent my career helping both sides of a $217 billion argument. I have to admit, I've gone through a bit of a mid-life crisis lately. I've helped health systems maximize billing and lower denial rates. Then I've gone to the payer side and stood up cost containment strategies. I'm proud of my career, but it feels like pushing a boulder one way, then walking to the other side and pushing it back. So much of the healthcare spending problem is adversarial: $𝟳𝟬.𝟳𝗕 𝘁𝗼 𝗮𝗿𝗴𝘂𝗲 𝗮𝗯𝗼𝘂𝘁 𝗯𝗶𝗹𝗹𝘀 Providers hire appeals teams to get claims paid. Payers hire review teams to push them back. Between them, $70.7B annually goes to one question: should this bill be paid? $𝟲𝟬𝗕 𝘁𝗼 𝗲𝘅𝗽𝗹𝗮𝗶𝗻 𝘄𝗵𝗮𝘁 𝘆𝗼𝘂 𝗼𝘄𝗲 Health systems spend $40B helping you understand your bill. Insurers spend $20B on call centers to explain your EOB. You call one, they tell you to call the other. $𝟱𝟱𝗕 𝘁𝗼 𝗮𝘀𝗸 𝗮𝗻𝗱 𝗴𝗶𝘃𝗲 𝗽𝗲𝗿𝗺𝗶𝘀𝘀𝗶𝗼𝗻 Your doctor says you need a procedure, and the payer asks for proof. Providers spend $35B requesting authorization, payers spend $20B reviewing those requests - and 93% get approved anyway. $𝟮𝟬𝗕 𝗯𝗲𝗰𝗮𝘂𝘀𝗲 𝗻𝗲𝗶𝘁𝗵𝗲𝗿 𝘀𝗶𝗱𝗲 𝘁𝗿𝘂𝘀𝘁𝘀 𝘁𝗵𝗲 𝗼𝘁𝗵𝗲𝗿 Providers spend $8B proving they're not cheating. Payers spend $12B checking. $𝟭𝟭.𝟯𝗕 𝘁𝗼 𝗺𝗮𝗶𝗻𝘁𝗮𝗶𝗻 𝗹𝗶𝘀𝘁𝘀 𝘁𝗵𝗮𝘁 𝗮𝗿𝗲 𝘀𝘁𝗶𝗹𝗹 𝘄𝗿𝗼𝗻𝗴 $8.5B in provider credentialing, $2.76B in payer directory maintenance - and the lists are still wrong half the time. Add up the adversarial spending across healthcare, and you get $217 billion - roughly $650 for every person in America, spent not on care, but on providers and payers fighting each other. Other industries don't face this problem. In retail, Walmart and P&G negotiate hard, but both want products on shelves. In manufacturing, Toyota and its suppliers fight over price, but both want parts delivered. The transaction is the goal. In healthcare, one side's core function is often to prevent the transaction the other side is trying to complete. Payers benefit when they pay less. Providers benefit when they get paid more. So both sides hire armies of administrators - a growing arms race, even as every other industry sees transaction costs fall with scale and technology. The most prominent thing on this chart is actually hidden: the patient. They spend zero dollars on this fight, but they pay for every dollar of it - in premiums, in bills, and in hours on hold being told to call the other number.

The US healthcare marketplace has no idea how to  value behavioral health interventions. And it's costing us everything. Here's what insurers are missing: ↳ Veterans getting mental health care show 40%   lower late-stage cancer rates ↳ Depression treatment cuts heart failure   rehospitalizations by 35% ↳ Anxiety therapy reduces all-cause mortality   in cardiac patients The math is staggering: 1/ Every $100 invested in behavioral health  ↳ Returns $190 in reduced medical claims ↳ Prevents costly emergency escalations ↳ Cuts inpatient hospitalization rates 2/ Mental health treatment for seniors ↳ Reduces dementia diagnosis rates significantly ↳ Particularly effective for vascular dementia ↳ Saves decades of long-term care costs 3/ Employer programs prove the ROI ↳ Telepsychiatry shows comparable total costs ↳ Outpatient interventions prevent crises ↳ Early screening stops illness progression Yet insurers still treat mental health as  "nice to have" instead of "must have." This isn't just about parity laws. It's about basic healthcare economics. When we underpay for behavioral health, we  overpay for everything else. Mental health treatment doesn't just save minds. It saves lives, money, and entire healthcare systems. ------------------------------------------- ⁉️ How much longer can we afford to ignore  the $190 return on every $100 invested? ♻️ Share if you believe behavioral healthcare is mispriced. 👉 Follow me for more (Eric Arzubi, MD).

This morning, I wrote about the rising cost of health coverage for employers -- surveys and benefits consultants are predicting increases of 9% or more for next year, the largest jumps in at least 15 years. And that would come on top of rapid growth over the last two years. The spike is driven by rising healthcare costs, with factors including higher prices for hospital services, more use of care by a population with rising incidence of conditions including cancer, and pricey drugs including the GLP-1s. One thing that struck me in the benefits consultant surveys, and in my interviews with employers, was their increased willingness to look at more-radical changes. That could include new types of plan designs that could incorporate restrictions on access to some healthcare providers, eyeing smaller vendors that compete with the big insurer/PBM companies, or, in the case of one company I interviewed, the possibility of moving to another country where healthcare is backed by the government, not private employers. As one source said, there seemed to be a mix of emotions from employers, from freaked-out, to resigned, to deeply frustrated that the cost of health coverage was rising so much faster than the prices they could charge for their own goods and services. However, I've been covering this beat for many years, and I've always found that employers tend to be pretty cautious and reluctant to make huge changes -- for good reason, since healthcare is so important to many workers, and disrupting access often draws enormous backlash. So when employers do make changes, it's often a slightly different flavor of what they were already doing. What do you think? Are significant numbers of employers ready to try something different? And, if so, what would that be?

A patient told me last month he'd dropped his family's health insurance to make rent. Then he asked if we could push his colonoscopy another year. He's not an outlier. Bloomberg just reported that younger, healthier workers are walking away from employer plans because the premiums feel impossible. One nurse was paying $585 every two weeks for family coverage. That's not a benefit. That's a second mortgage with a deductible. Here's what I see in clinic every week. Screening colonoscopies pushed out two more years. PPIs split in half to stretch the bottle. Fatty liver that becomes cirrhosis because the follow-up kept getting deferred. By the time we actually engage, the cost is ten times what early intervention would have been. That's the real driver of healthcare spend. Not that people are sick. That we built a system that waits until people are expensive before it shows up for them. Prevention still gets treated as optional. Metabolic risk still lives somewhere in the indefinite future. Gut health, liver, glucose, weight, sleep, inflammation, cancer screening: patients experience all of this as one body, while the system carves it into silos with separate copays and separate prior auths. If you want to lower spend, you have to stop the major illness before it shows up on the claims report. Catch the adenoma at 45, not the Stage III at 52. Reverse the prediabetes, not manage the insulin. Treat the fatty liver, not the transplant workup. The employers who lean into this earlier, more personalized, more biologically informed will be the ones whose people actually stay healthy. And whose costs actually come down. https://lnkd.in/eDUCF24s

18-20% annual increase - that's the rate at which healthcare costs are rising. It's a number that should make every business leader pause and think. This surge in healthcare expenses isn't making headlines, yet it's a critical issue that's slowly eroding the value of our employee health insurance plans. If we're not increasing our Group Health Insurance (GHI) coverage every three years, we're effectively reducing our employees' health protection. Here's why: ➤ Technological Leap: The medical field is transforming. We've moved from X-rays to MRIs in what feels like a blink, and each leap brings better care but at a premium. ➤ Facility Upgrades: Even smaller hospitals now feature cutting-edge equipment, driving up expenses. ➤ Pharmaceutical Costs: New, life-saving drugs enter the market at high prices due to extensive R&D investments. ➤ Operational Expenses: Rising real estate costs for medical facilities and competitive salaries for healthcare professionals contribute to overall cost increases. The math is simple. Over three years, we're looking at a 50-60% increase in healthcare costs. Our GHI plans need to keep pace, or we're shortchanging our teams. I've seen the consequences firsthand: Employees facing crippling medical debts. Delayed treatments due to coverage gaps. Stress that impacts not just health, but productivity and loyalty. The solution isn't complex, but it requires commitment: ➤ Audit your GHI plans annually. ➤ Increase coverage limits every three years, aiming for at least a 50% bump. ➤ Educate your team on their coverage – awareness is half the battle. ➤ Partner with insurers who understand this new landscape. As leaders, we don't just manage businesses – we safeguard our people. In this era of skyrocketing healthcare costs, that means taking a hard look at our GHI plans and making sure they're not just good on paper, but good in practice. It's about that woman in operations who beat cancer without bankrupting her family, or the guy in IT whose child got the specialty care they needed. The companies that act now will set the standard for employee care in the years to come. The question is: Will you be one of them? #PolicybazaarforBusiness #HealthcareCrisis #Employeebenefit #grouphealthinsurance

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?

Just when the v28 risk adjustment model is fully phased in for 2026, CMS goes and does this….   CMS is considering blending in a risk adjustment model calibrated on MA encounter data for 2027.   This makes sense because MA has overtaken FFS Medicare enrollment and is now the most popular Medicare option. 𝐒𝐨, 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐢𝐦𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬?   A condition in FFS may not have the same cost relativity as the same condition in an MA population.   For example, if the average FFS cost was $10,000 and the average diabetic FFS cost was $15,000, in a simplified regression model, the diabetic beneficiary would get a 1.5x coefficient to adjust for having diabetes.   Now let's consider a scenario using the MA data. Now the average cost is $9,000 and the average diabetic is $12,000. In a simplified model, the diabetic member would get a 1.33x coefficient to adjust for having diabetes.   So the provider could be paid less for a diabetic? Why would a diabetic cost less in MA?   -- MA could be managing the care of diabetics better. -- MA could be coding more diabetics. Let's say the prevalence for diabetes is 35% in FFS and 50% in MA. If these extra 15% of members cost less on average, this will bring down the average cost of diabetes.   So now that the risk adjustment is calibrated on MA encounter data, the diabetic members would get a lower coefficient.   So what happens to the extra money that went to diabetic beneficiaries?   In our simplified model, there were two options: diabetic or not diabetic. So in this case, the non-diabetics' risk score would increase, or the age/gender component of the risk score would increase.   Now in a more complex multi-regression model, other coefficients could go up if diabetes goes down.   𝐋𝐞𝐭'𝐬 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐚𝐧𝐨𝐭𝐡𝐞𝐫 𝐬𝐜𝐞𝐧𝐚𝐫𝐢𝐨:   Currently, MA risk scores are calibrated on FFS data. The normalization factor is estimated so that the national average risk score doesn't increase above 1.0 year over year.   Since MA risk scores aren't currently normalized on MA encounters, the FFS normalization factor is an estimate and is most likely wrong (MedPAC would argue that it's too low - https://shorturl.at/u04GI).   (Yes, there is a 5.9% statutorily mandated coding intensity factor, but that has not been updated.)   If the normalization factor is lower than actual MA raw risk score growth, then MA providers are getting a bonus. A simplified example would be if the normalization was 1.03, but MA risk scores actually increased by 1.04, then there is a 1% bonus.   Now there are always winners and losers with normalization. If your ACO is coding above 3%, you are a winner. If you are coding below 3%, you are a loser.   When calibrated to FFS, all MA providers would get a 1% bonus (in this example), but if calibrated on MA encounters, that subsidy would get eliminated.   If there is another three year phase in, MA could stand on its own risk adjustment by 2029.  

What is HCA Healthcare doing in revenue cycle that’s driving 12% margins in a 2% industry? 📈 HCA - the 2nd largest health system in the country - just reported a 12% operating margin. 📉 Meanwhile - most hospitals are fighting to breakeven. On their latest earnings call, HCA didn’t claim they “solved” denials or removed payer pressures. In fact - they called out elevated denials and underpayments, especially with MA plans. In other words - HCA is not immune to the same pressures everyone else is facing. 👉 So what is HCA doing differently? 👈 🎯 They’ve turned rev cycle into a strategic driver of financial performance. Here’s CFO Mike Marks on their latest earnings call: “As you know, we've been working really hard over the last several years to strengthen our revenue cycle. We've added resources, technologies, and a lot of capabilities around dispute resolution to really go after the root cause of the denials. That work has continued to pay dividends.” I found 5 things HCA is doing, that might also help you increase margins: 1️⃣ Advanced denial management + dispute workflows Not just appealing more - but systematizing how to identify, prioritize, and resolve payer issues at scale 2️⃣ Deeper payer integration/connectivity Reducing manual touchpoints, accelerating issue resolution, and tightening the feedback loop between billing and payers 3️⃣ Advanced analytics on payer performance Using technology to more easily identify underpayment trends, denial patterns, and contract leakage in near real time 4️⃣ Relentless focus on cash realization We all know Cash is King - incentivize teams accordingly 5️⃣ Consistent investment in revenue cycle as a strategic function Not episodic fixes, but meaningful sustained multi-year infrastructure build For CFOs and revenue cycle leaders, the takeaway is clear: Revenue cycle isn’t just about managing downside. It’s one of the few remaining levers to actively defend - and expand - margin. *️⃣ Invest accordingly. *️⃣ What are you doing to protect margins right now: denial prevention, payer strategy, analytics, AI investments?

There's a growing force that's impacting the growth of the workforce this year, and it isn't AI or interest rates. It's the cost of small group healthcare premiums, and it's hitting businesses with less than 50 employees extra hard right now. In 2025, the average premium per employee was ~$18,000/year, with employers covering ~$12,000 and employees covering ~$6,000 through payroll deductions. Now it's getting worse. The median proposed premium increase for small group health insurance in 2026 is 11% across 318 insurers in all 50 states and the District of Columbia. But that’s just the median. About 10% of insurers are requesting premium increases of 20% or more. For a 20-person company contributing ~$12,000 per employee annually that's $240,000 spent on providing health insurance. An 11% increase means an additional $26,400 in health insurance costs. A 20% increase? That’s $48,000 more per year, money that could have helped to fund an additional hire. On the employee side, their ~$6,000/year contribution would jump $660-$1,200/year in the same circumstances. Welcome to the 2026 small group health insurance renewal crisis. If you find yourself sweating these costs as a leader, there's a couple of common options to consider if you haven't already. Option 1: Use a PEO (Professional Employer Organizations) PEOs aggregate multiple small businesses into large pools, giving you access to enterprise-level rates and plan options. How PEOs handle renewals differently: PEOs spread risk over a large number of employees among many clients and can offer better health insurance plans at lower costs compared to options available in the open market. They also provide higher levels of predictability and flatten the renewal curve. Option 2: Individual Coverage Health Reimbursement Arrangements (ICHRA) Instead of offering traditional group coverage, you provide employees with a tax-advantaged stipend to purchase individual marketplace plans. Why this is gaining traction in 2026: ACA premiums in some regions now closely mirror employer-sponsored plan costs. While the overall coverage is typically stronger with a PEO, the ICHRA model is useful for businesses who want a fixed costs that won't fluctuate with the market, and for employees who want more flexibility to suit their individual situation. How it works: - The employer sets a monthly allowance per employee (e.g., $500/month) - Employees shop for individual marketplace plans - You reimburse employees tax-free for their premiums - The employee can choose to put any underutilization of the monthly allowance towards other health and wellness costs. Through a bunch of conversations with leaders on this topic lately, I've found that there's a significant disparity in knowledge in this area, and it's not surprising. For a lot of leaders focused on growth, these details have been an afterthought beyond the traditional "we need to offer good benefits" conversation. I think that's starting to change.

I attended the release of Mandala's "Restoring affordable access to specialist care in Australia" report at Parliament House. Timely, affordable access to specialist doctors is critical for our mixed public-private health system to manage demand. But an affordability crisis is getting worse and needs to be addressed. The report found:   🔹 One in three Australians have delayed or cancelled specialist care due to cost in the last three years. This rises to one in two families with multiple children with ongoing health issues 🔹 One in two people did not know the fee for their specialist appointment before attending 🔹 38% received a bill they weren't expecting 🔹 29% were charged potentially illegal administration or booking fees not visible through Medicare 🔹 Specialist fees for in-hospital care have jumped 22% since 2022. If we don't slow this problem down, more Australians will forego care and people will get sicker. Our mixed public-private health system will face more problems with reduced demand for private hospital care, meaning more pressure on our busy public hospitals.    At PHA, we support reforms to ease this burden, including: - Stronger consumer protections to prevent surprise billing - Referral tools to help GPs show patients local specialist fees - Improving regional supply of specialist doctors - Allowing nurses, midwives and nurse-practitioners to do more so we can use our medical workforce more efficiently.    Read our full release here, and more findings from the report: https://lnkd.in/gy-D-aUC RedBridge Group Australia