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In the News
What happened in healthcare recently—and what we think about it.
- Trump administration releases proposed 2026 budget. The Trump administration sent its 2026 discretionary funding budget recommendations to Congress last Friday. The budget decreases non-defense discretionary spending by 23% compared with 2025 funding levels. The discretionary funding cuts at the Department of Health and Human Services (HHS) are greater, cutting discretionary spending by 26% compared with Within HHS, the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention (CDC) faced some of the steepest discretionary spending cuts, $18 billion and $3.6 billion respectively. The only HHS discretionary funding increase in the blueprint is for “Make America Healthy Again” initiatives.
- The Gist: This wish list reflects yet another setback for the NIH and CDC. CDC’s potential $3.6 billion cut is nearly half of its 2025 budget. The budget blueprint only holds as much weight as Congress decides to give it, but the Republican majority will likely consider this document when discussing 2026 funding. Significant cuts to these institutions as well as to American universities could begin a “reverse brain drain”; European countries are already trying to attract U.S.-based researchers.
- President Trump seeks to bolster domestic drug manufacturing. On Monday, President Trump signed an executive order to encourage drug manufacturing in the United States. The order directs the Food and Drug Administration (FDA) to speed up the process of approving domestic pharmaceutical manufacturing plants and directs the FDA to increase fees for and inspections of manufacturing sites abroad. It also calls for the Environmental Protection Agency “to accelerate the construction of facilities” used for various parts of the pharmaceutical manufacturing process. President Trump also said he plans to announce pharmaceutical-specific tariffs within the next two weeks.
- The Gist: The order appears to be a part of a broader strategy of hastening the transition to domestic pharmaceutical manufacturing. But there will be effects in the meantime. In the short term, the pharmaceutical supply chain cannot be transformed overnight, as President Trump’s order acknowledges. The executive order, coupled with potential tariffs, could prove consequential to healthcare providers. As the pandemic revealed, reshoring parts of the medical supply chain could bring long-term benefits. The economy is already reacting to the looming threat of tariffs. The economy contracted for the first time since 2022, largely due to a surge in imports; these were particularly high from Ireland, a pharmaceutical manufacturing hub. Additionally, the rise in imports does not capture how manufacturers may have reacted in April to President Trump’s “reciprocal tariffs” (which were more consequential than many expected), the subsequent 90-day pause and mutual reprisal tariff increases on Chinese imports. Depending on the administration’s commitment to this multifaceted strategy and what tariffs ultimately are, manufacturers may try to leverage tariffs during future contract negotiations.
- Rite Aid declares bankruptcy again. Rite Aid announced plans on Monday to file for Chapter 11 bankruptcy as the company seeks a buyer. Rite Aid will continue to provide pharmacy services during the proceedings. CEO Matt Schroeder said that “we are encouraged by meaningful interest from a number of potential national and regional strategic acquirors.” An auction for its pharmacy assets is scheduled for May 14 and another on June 20 for its other assets. This is Rite Aid’s second bankruptcy filing in less than 2 years; the company exited bankruptcy 8 months ago following its October 2023 filing.
- The Gist: As one of the larger retail pharmacy chains in the United States, Rite Aid’s financial troubles further highlight the challenges retail pharmacies face. Despite significant investments in care delivery, retail pharmacies have struggled to overcome falling reimbursement rates and lower retail sales. The company’s statement begs the question of who is looking to buy Rite Aid’s assets amid this bleak environment. CVS and Walgreens, the 2 largest retail pharmacy chains, are not seeking to expand their retail footprints.
Plus—what we’ve been reading.
- At VA, an unforeseen consequence of return-to-office. Published in The New York Times, this piece shows a collateral effect of President Trump’s return-to-office mandate: mental health clinicians at the Department of Veterans Affairs (VA) are concerned that there is inadequate space for private conversations with patients. Staff report conducting sensitive mental health assessments in hallways, shared rooms and open-plan offices, raising concerns about patient confidentiality and compliance with privacy laws. Clinicians describe a chaotic rollout, with cramped, makeshift space, disrupted care and growing patient discomfort during sessions. Some mental health clinicians are choosing to retire or resign rather than compromise care or endure long commutes to conduct virtual visits in suboptimal environments.
- The Gist: The impact of telehealth services has been well-documented in behavioral healthcare. VA has a long history of successful mental telehealth programs. Veterans have outsized needs for mental healthcare; advocates fear that an exodus of clinicians will exacerbate the mental and physical health challenges that veterans face. With the supply of mental health professionals dwindling and hurdles veterans face accessing care outside of the VA, veterans’ mental healthcare options may be narrowing. This could increase demand in other settings; or, conversely, some veterans may forgo mental healthcare altogether, with potentially serious consequences. VA officials claim that space is adequate and care is uncompromised, but many frontline providers say the conditions are damaging quality of care and, with it, trust in the system.
Graphic of the Week
A key insight illustrated in infographic form.
Epic increases lead in EHR market
This week’s graphic illustrates how Epic has continued to expand its lead in the electronic health record (EHR) market over its rival Oracle Health, which acquired Cerner in 2022. From 2018 to 2024, Epic increased its acute care hospital market share from 28% to 42%; meanwhile, Oracle’s share has contracted from 26% to 23%. Meditech, the next closest competitor by market share in the EHR market, also saw its market share drop between 2018 and 2024. Epic controls 55% of the acute hospital care market by bed count, more than double that of Oracle, underscoring Epic’s popularity with larger organizations. Oracle and smaller competitors have been unable to curb Epic’s rise, as Epic was the only EHR vendor to gain hospitals in 2024. In 2024, Epic brought 176 hospitals and more than 29,000 beds under its platform, while Oracle lost 74 hospitals and more than 17,000 beds. In a bid to potentially reverse this trend, Oracle launched a new AI-forward EHR in 2025. With Epic also integrating AI into its EHR software, it will be interesting to see which company leverages the technology more effectively to fuel growth.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
When it comes to scale, bigger can indeed be better—but only when health system leaders develop and refine a realistic point of view about how to secure and retain a durable, long-term market presence.
In a new Strategy Spotlight blog, Scott Christensen and Webster Macomber look at the various strategies high-performing organizations are pursuing to achieve “smart scale.” There are multiple pathways that health systems can pursue, but developing a point of view on what smart scale means given each health system’s unique market context—and how that scale can best be achieved—should be a top priority for health system leaders.
On Our Podcast
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As a quick programming note, the Gist Weekly will be off next week. We look forward to delivering the latest industry insights on May 23. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
