Insights

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• This week’s edition offers four predictions about payer mix headwinds, 340B rebates, cybersecurity, and clinical AI.

  • Prediction #1: The ACA Exchange-driven payer-mix hit will keep deepening through H2 2026, and the for-profits' full-year guidance marks the trajectory the rest of the sector is on.

    • Our Call: The H2 2026 self-pay and bad-debt hit could land harder than mid-year budgets assume. The question is whether it's in your FY2027 budget or discovered against it.

  • Prediction #2: By the end of 2026, more drug manufacturers will tie 340B pricing to their own claims-data mandates and enforce by withholding discounts. HRSA will not force a reversal of those policies.

    • Our Call: Health systems betting on a federal rescue from manufacturers’ claims-data mandates are likely to be disappointed. Regardless of whether it’s a drug manufacturer-led process or federal program, hospitals will end up submitting claims data to access discounts they are statutorily owed.

  • Prediction #3: The debate over the HIPAA Security Rule is a distraction from a more urgent reality: AI is about to enable vulnerability discovery and cyberattacks at a scale that health systems simply aren't ready for.

    • Our Call: New AI tools are creating a radically new cybersecurity world. Vulnerability discovery is scaling rapidly, while healthcare remains constrained by its ability to deploy fixes across complex clinical environments. By year-end, the board's cybersecurity question will be, "Of the vulnerabilities we've identified, how quickly can we remediate them? What is the plan for the ones we can't?"

  • Prediction #4: OpenEvidence will add 3+ health system deployments by year-end while staying ad-supported and selective about which terms it agrees to.

    • Our Call: Clinicians aren't waiting for those deals. The individual-clinician Business Associate Agreements leave the system holding the liability while the vendor keeps the ad revenue. Every health system should make a deliberate choice: pursue enterprise integration, stand up a governed alternative (e.g., UpToDate, Doximity), or establish formal guardrails for continued use.

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In this episode of The Strategy Catalyst Dispatch, Shoeb Sitafalwalla, Senior Executive Vice President and Chief Strategy Officer at Advocate Health, walks us through care model engineering, Advocate's approach to designing care models with a product lens across one of the largest health systems in the country. We cover how a post-merger discovery process led his team to rethink what a health system's core product actually is, what it looks like to run care models through a product pipeline with stage gates and a 100,000-patient pilot minimum, and how the reusable architecture they've built took them from a 10-month first product to launching every three to four weeks.

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• This week’s Key Market Dive explores Amazon’s evolving strategy for One Medical and its referral partnerships with health systems.

  • While One Medical’s finances haven’t been publicly reported since the Amazon acquisition, health system partnerships accounted for 25% of the primary care chain’s revenue in 2022.

  • After a slow start in some markets, One Medical is now generating a growing volume of referrals for its health system partners.

  • One Medical is exploring deeper integrations with its health system partners, such as a new clinic located inside one of Montefiore Health System’s largest outpatient facilities.

    • The co-located clinic could facilitate joint and same-day appointments across specialties and might help Montefiore lock in its referral partnership with One Medical.

  • While One Medical has slowed expansion into new markets, Amazon is using the primary care business as a platform for a growing suite of pharmacy, AI, and telehealth offerings.

• This week’s featured graphic showcases a recent survey by Medscape exploring which medical specialties are the happiest and most sustainable.

  • Doctors in specialties with predictable schedules (like dermatology) are happier than doctors in fields with unpredictable schedules and higher acuity (like emergency medicine).

  • To improve retention, health systems need to rethink how work is structured and how tools like AI can be used to reduce tedious administrative work.

• HHS is delaying a proposed update to the HIPAA Security Rule that would tighten cybersecurity requirements.

  • The agency received nearly 5,000 comments—including many from health systems and provider advocates calling for the rule to be withdrawn, citing compliance burdens and unreasonable timelines.

  • The delay gives providers until July 2027 to prepare, but HHS is unlikely to abandon the rule altogether.

  • Health systems are caught between two competing priorities for HIPAA reform: making health information more shareable and accessible, and protecting it from cyberattacks.

Listen to the episode on a streaming platform by clicking one of the links below:

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• In its annual update to the OPPS payment rule, CMS is proposing a significant reimbursement cut for 340B-acquired drugs. Because the changes are budget neutral, for-profit health systems and hospitals with low 340B uptake could see a boost to their payments.

  • Unlike a similar effort in 2018, this proposed cut might survive legal challenges because the Trump administration recently undertook a survey of hospital drug acquisition costs.

  • The proposed rule also includes site-neutral reform for imaging services.

• Sen. Bill Cassidy unveiled draft legislation that would reform the 340B drug discount program by letting drug manufacturers choose whether they want to offer providers upfront discounts or rebates. Providers can opt for a different payment mechanism if they voluntarily pass all 340B savings on to patients.

  • The draft is intended to solicit industry feedback and is not immediately headed through the committee markup process. The proposal’s chances to pass this year are somewhat limited with slim congressional majorities in a midterm election year.

  • Restrictions on eligible prescriptions, contract pharmacies, and out-of-pocket costs would reduce the savings that health systems realize under 340B, and new data reporting requirements could increase scrutiny by the media and policymakers.

• Optum is negotiating with several New York health systems to sell orthopedic, general surgery, and urology practices attached to Optum Medical Care and Crystal Run Healthcare.

  • Optum is effectively unbundling Crystal Run, not retreating from the market entirely.

  • Optum is keeping control of the primary care panels, and UnitedHealthcare controls benefit design above them. Once these specialty practices leave that ecosystem, United might steer these volumes to lower-priced providers.

• This week’s featured graphic comes from a new JAMA study showing that patient messages to providers have steadily continued to increase since the pandemic.

  • Female patients, patients between the ages of 40 to 64, and patients in affluent neighborhoods were the most likely to send messages to providers.

  • The trend is worth watching because inbox fatigue is a major driver of burnout and turnover among physicians.

The Executive Insights Hub is THMA's dedicated research and data center, built to keep industry teams current on healthcare market trends and health system CXO priorities. In this orientation, we walk through everything your membership unlocks — the specific deliverables, tools, and services at your disposal — so you and your team can get the most out of your access.

Logged-in members have access to the full orientation and can start exploring everything their membership unlocks.

Federal Medicaid cuts under H.R.1 and expiring ACA subsidies are expected to add $278 billion in uncompensated care over the next decade, and rural hospitals will absorb a disproportionate share of it. Although Congress introduced $50 billion in Rural Health Transformation Program (RHTP) funding to offset these impacts, estimates show that this money will do little to close that gap. With an uptick in rural hospital closures looming closer, health systems have a window of opportunity to support rural care ecosystems before access challenges compound.

A recent virtual workshop co-hosted by Philips and the Health Impact Alliance brought together 16 health system leaders and 5 industry leaders to discuss one unanswered question: What is actually required to drive sustainable rural health transformation? Workshop participants heard from Madeline Cree, MPH (Associate Director, The Academy Advisors), Dr. Bill Beninati, MD, FCCM (Chief Medical Officer, Virtual Hospital, Intermountain Health), and Mike Lemnitzer (VP, State Government Healthcare, Philips) to explore Rural Health Transformation Program (RHTP) implementation and case studies highlighting Intermountain’s non-extractive “hub-and-spoke” model and Philips’ rural-focused health system partnerships addressing barriers to healthcare access.

Health systems increasingly say they're rationalizing their service line portfolios to balance financial performance with access, quality, and mission, yet execution often tells a different story: financial signals quietly override stated priorities, service lines rarely get cut due to mission commitements, and ambulatory strategies frequently lag behind stated intent. The challenge isn't a lack of consensus on what matters—it's the gap between what leaders say drives their decisions and what actually does.

This webinar shares findings from the 2026 Strategy Catalyst Service Line Portfolio Strategy Survey, which sampled 40 Chief Strategy Officers, Chief Operating Officers, EVPs/VPs of Strategy and Operations, and service line executives across U.S. health systems with over $500M in annual net patient revenue. The survey investigated how health systems balance financial performance with access, quality, and mission as they optimize their service line portfolios.

Strategy Catalyst leaders are joined by executives from Ohio State University Wexner Medical Center and Baptist Health Care, who share how these tensions play out inside their own organizations. Together, they examine which service lines are sustained as core pillars for strategic or mission-critical reasons, the factors actually shaping portfolio decisions, and how service line strategy is evolving in practice.

Read the full report findings here

Member Speakers:

• Hannah King Boyles, Advisor, Strategy Capacity-Building, Ohio State University Wexner Medical Center

• Krystle Fernandez, Executive Director of Strategy, Planning & Performance, Baptist Health Care

• Ashley Hodge, Executive Director, Strategic Outreach & Provider Development, Baptist Health Care

Physical therapy has long been treated as a downstream service within the health system— a place patients land after the surgical decision is made. But in a market where well-capitalized competitors are intercepting orthopedic patients before they ever reach a health system, that framing is no longer financially neutral. It represents a measurable leak in volume, market share, and margin.

For executives navigating capital constraints and aggressive ambulatory competition, outpatient PT is an underleveraged strategic asset. When positioned as a consumer-facing access point — in retail corridors, community-dense locations, and high-traffic settings — PT captures patients earlier in the care journey, shapes clinical pathways before a competitor does, and drives referral flow back into high-margin orthopedic services. The build vs. partner calculus, the governance structures that make the model work, and the return on ambulatory access investment are the questions this session is designed to answer.