In the News
What happened in healthcare recently—and what we think about it.
- Fitch, S&P bolster outlook for hospitals. Two major credit rating agencies have offered a note of optimism for U.S. not-for-profit hospitals in new reports on FY2024 medians issued this month. S&P Global’s sector outlook remains stable, with median operating income improving from 0% to 1.1% and debt service coverage strengthening. Liquidity also improved, with cash-to-debt rising from 179% to 197%. Operating cash flow margins increased from 5.3% to 6.0%, while days cash on hand grew slightly but remained below 200. S&P’s findings are based on 367 systems. Similarly, Fitch Ratings, which upgraded its 2025 sector outlook for not-for-profit hospitals from “deteriorating” to “neutral” at the end of last year, reported median operating income rising from 0.4% in fiscal 2023 to 1.1% in fiscal 2024. Debt service coverage improved as liquidity strengthened and labor pressures eased. Average days cash on hand increased from 211 to 215, while operating cash flow margins improved from 5.4% to 6.2%. The Fitch 2025 Median Ratios report is based on audited 2024 data from 228 health systems, up from 217 last year.
- The Gist: After three years of disappointing headlines, these results mark meaningful, if modest, progress. Hospitals are showing they can rebuild margins, improve liquidity and resume capital investment, even under persistent labor and inflation pressures. But the recovery is incomplete, with performance still trailing pre-pandemic levels. And headwinds loom: Changes in Medicaid eligibility and financing, cuts in Medicaid state-directed payments and an increase in the number of uninsured are coming, likely shrinking revenue. The expiration of enhanced ACA premium tax credits could further erode coverage. Hospitals should treat this period as a window to reinforce balance sheets, tighten expense controls and plan for leaner public reimbursement, because today’s stability may prove temporary.
- AI takes center stage. Two separate announcements this week point to the same reality: artificial intelligence (AI) is ready for its closeup. Pittsburgh-based Highmark Health announced Tuesday it is partnering with Abridge to move prior authorization into real time, using an ambient-AI scribe that listens during patient visits, flags when all payer requirements are met and auto-submits requests on the spot. The tool will initially launch across Allegheny Health Network’s outpatient clinics before eventually touching every part of the system. And on Wednesday, Oracle Health unveiled a voice-first, AI-powered electronic health record (EHR) designed to surface labs, medications and documentation instantly, with embedded AI agents to guide clinical workflows. The new EHR was designed from the ground up and was not built on top of existing Cerner infrastructure.
- The Gist: Together, these announcements signal an acceleration toward hands-free, AI-driven clinical assistants that could upend how hospitals and clinicians interact with payers and patient records. It portends a significant shift in the way everyday tasks will be performed. Real-time prior authorization could compress a contentious process and reduce care delays, but only if clinical teams are trained to capture the right data in the moment. It’s apparent that the race to deploy AI-enabled applications is under way; hospitals will have to keep up, because insurers are moving quickly. Meanwhile, voice-enabled EHRs promise to lighten documentation burdens, which could ease administrative strains on a burned-out clinical workforce; yet they require investment in infrastructure and change management to realize their potential. Hospitals that move early to integrate these or similar capabilities will set the standard for speed and efficiency, and possibly lighten their clinical workers’ load, while those that wait risk being locked into slower, more costly processes.
- VA hospitals suffer staffing shortages: audit. The nation’s largest integrated health system is running critically low on the people it needs to function, according to a new report. The report, published Tuesday by the Department of Veterans Affairs’ (VA) Office of Inspector General, found all 139 Veterans Health Administration medical centers face “severe occupational staffing shortages,” with the number of shortages up about 50% from last year. Medical officers, including physicians, are in shortest supply, followed closely by nurses, psychologists and police. Meanwhile, a ProPublica investigation published last week revealed nearly 40% of VA physician job offers were rejected in early 2025 as candidates balk at instability, morale issues and large-scale workforce cuts. The rejections were four times last year’s rate.
- The Gist: Together, the reports depict a system losing thousands of clinicians and struggling to recruit replacements, raising questions about how VA will meet the needs of millions of veterans who depend on it for care. Reduced clinical capacity means longer waits, fewer mental health resources and gaps in essential services, all of which could roll over to community hospitals. VA’s difficulty in recruiting and retaining clinicians mirrors challenges providers face nationwide, suggesting a broader workforce crisis that is not limited to government-run systems. Hospitals with connections to the VA or with significant veteran patient populations will need to prepare for potential increases in demand, while also addressing their own staffing vulnerabilities. Without coordinated action, capacity will fall short of patient need.
Plus—what we’ve been reading.
- Caring for the caregivers. Published last month by HealthDay, this article outlines findings from the Caregiving in the U.S. 2025 report from AARP and the National Alliance for Caregiving, which shows a 45% increase in family caregivers over the past decade. Today, 63 million Americans—nearly 1 in 4 people in the United States—are caregivers, many supporting loved ones over long durations and with high clinical needs. Nearly half of care recipients are over 75, often with complex, chronic conditions. Seventy percent of caregivers age 18–64 balance care duties with a job, which AARP says can hamper career mobility, particularly among Millennials and Gen Z. Nearly half report financial strain, and most experience emotional or physical stress. Federal efforts like caregiver training reimbursement from the Centers for Medicare & Medicaid Services have begun, but systemic coordination remains limited.
- The Gist: Caregiving has become a defining feature of the U.S. social fabric and a backbone of the healthcare system. Whether it’s performed out of love, obligation or cultural expectation, caregiving is an overlooked and underappreciated foundation of care. As patients are discharged with complex needs, family caregivers are increasingly called upon to coordinate care at home, and the system leans on them heavily. Caregivers serve as care coordinators, medication managers and advocates, with limited training and often while working and managing their own health and families. Only recently has the system begun to lean in to support them. Early “Caring for Caregivers” model testing is under way, and more than 40 states have adopted the CARE Act, requiring hospitals to identify and instruct caregivers at discharge. Incentives align because successful family caregivers can help lower readmissions. As caregiving becomes ubiquitous, hospitals must evolve their support strategies to ensure that patients and their caregivers do not fall through the cracks.
Graphic of the Week
A key insight illustrated in infographic form.
High market concentration for Medicare Advantage insurers
This week’s graphic features data from a new report from KFF highlighting how little competition there is in most markets for Medicare Advantage. KFF’s analysis finds that most Medicare Advantage (MA) markets are dominated by one or two insurers; virtually all counties were considered highly concentrated (79%) or very highly concentrated (18%) in 2024. In 44% of markets comprising 22% of all MA enrollment, a single insurer had at least half of enrollment in 2024. The market concentration was most pronounced in rural markets; 39% of most rural counties were very highly concentrated in 2024 compared with 15% of rural counties that were near urban areas and 6% of urban counties. Higher market concentration in MA insurance markets may lower the incentive for insurers to compete for potential enrollees by making plans more appealing through more comprehensive benefits or lower costs, the authors said.
This Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
Sustained momentum in lab transactions is being driven by national lab operators that are seeking opportunities to build scale and health systems that are considering how divestiture of their inreach/outreach lab business could free up capital to fund core operations.
In a new article, Courtney Midanek, Chris Peltola and Viral Patel describe the factors that are accelerating inreach/outreach lab transactions, including pricing pressures, lower-cost competition, workforce shortages and revenue cycle challenges. They also provide a framework for evaluating potential lab transactions to help ensure that health systems achieve their specific objectives.
On Our Podcast
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Last Monday, we heard the conclusion of host J. Carlisle Larsen’s conversation with Dr. Brian Anderson, CEO of the Coalition for Health AI, in which they explored the challenges and tensions between healthcare and technology stakeholders as they establish best practices for AI in clinical settings.
This coming Monday, a new law in New Hampshire bans surprise billing for ground ambulance rides—and that’s just one of the top stories we’re covering, all in under 10 minutes, on the Gist Healthcare Podcast.
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Thanks for reading! We’ll see you next Friday with a new edition. In the meantime, check out our Gist Weekly archive if you’d like to review past editions. We also have all of our recent Graphics of the Week available here.
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The Gist Weekly team at Kaufman Hall
