👋 Welcome to this Sunday’s recap of healthcare news. This week, I found myself fascinated by the differing narratives around two emergency department disputes in the Pacific Northwest. Also, Cell and Gene Therapies were top of mind after a conversation about how state Medicaid agencies are thinking about adopting them. They seem poised to be a massive topic here over the next decade. Other quick hits: OpenEvidence announced an interesting new content partnership, Klomp spoke at the Better Medicare Alliance Policy Summit, and Hims was up 40% Friday night after a rumored new deal with Novo. Wait, what?!
- Kevin
MUSING
Startups and states preparing for the coming “tsunami” of pharma innovation
A couple of years ago, I recall seeing the slide below in Cigna’s 2024 Investor Presentation, highlighting the massive opportunity they saw in pharmacological innovation over the coming decade. It takes a lot for me to highlight a chart with no y-axis, but this one stuck with me. Check out how much they’re signaling total cost of care to increase between 2024 and 2034, driven by the increase in Rx spending across GLP-1s and Cell and Gene Therapies (CGTs):
Source: Cigna 2024 Investor Presentation
The slide nicely tees up the business context for the decade ahead — we’re going to be discussing pharma innovation, and specifically Cell and Gene Therapies, a lot. A big part of this is because of the astronomical cost — CGTs on the market today cost between $1 and $4 million per treatment.
But more importantly than the business impact, the potential positive impact on lives here is incredible. The 60 Minutes story from December 2025 does a great job of showing the personal impact this wave of drugs is already having. I find it hard to watch that video without ending up in tears — these treatments can quite literally be life-saving for kids. It’s also worth noting this isn’t all sunshine and roses. There’s a lot of nuance to these types of stories that is worth contemplating.
The 60 Minutes episode highlights the tensions in all of this well. The CEO of Mosaic Life Care, a 5,000-employee not-for-profit health system in Missouri, denied coverage for an employee’s twins who needed CGT treatment because of the cost impact to the self-insured plan, $4.2 million. The employee went public with the denial, and the CEO began receiving death threats. The CEO appealed to the State Medicaid agency, which covered the treatment costs. There is so much to unpack.
The wild part about this is these are the stories already out there today, when we have only a handful of these life-saving treatments on the market. The pipeline of these drugs is crazy — while 30 are FDA-approved today, there are 4,000 gene therapies in development. As Obamacare architect Jonathan Gruber noted in the 60 Minutes clip: “I liken it to a coming tsunami, which is basically going to overwhelm the employer-sponsored healthcare system”.
With all of that as a backdrop, I was fascinated to see this Health Affairs article discussing how State Medicaid agencies are approaching the challenges inherent in rolling out CGT. Not surprisingly, it is a complicated process, from the operational infrastructure, to the payer dynamics, to the clinical expertise to deliver these drugs, to the real-world outcomes tracking. I asked the authors to chat about it, and Bruce Greenstein (the Secretary of Louisiana’s Department of Health) and Will Shrank (the CEO of Aradigm) joined me earlier this week for the convo below:
I found it quite helpful to learn about how states like Louisiana are forging ahead here to prepare for the coming wave of these treatments and the challenging tradeoffs at hand, and I didn’t fully appreciate just how much infrastructure change will be required here to roll out these treatments. Given resource constraints, it seems like a logical place for public-private partnerships to flourish, and it will be interesting to watch how the space evolves here over the coming years. Shrank’s startup, Aradigm, is working on a carve-out model to navigate the various financing and care-delivery dynamics involved in delivering CGTs. And just this week, we saw another startup, NexCure, announce funding to build a network of clinics to deliver CAR-T therapy. NexCure’s press release notes that only 3% of hospitals in the US today are equipped to administer CAR-T therapy — 200 out of 6,100 — underscoring the infrastructure build needed ahead.
Stepping back from the CGT market, the implications of this pharma boom are fascinating to ponder. We’re already seeing a glimpse of what this could look like in the oncology market, where the clinical outcomes and cost of care are driven by pharma. If Cigna and others are right, this will become the norm, with broad implications for the accessibility, quality, and affordability of healthcare in this country. Don’t mind me, just slipping in another iron triangle reference at the end there while I ponder how this plays out.
QUOTE OF THE WEEK
The CMS perspective on AI’s deflationary potential
CMS leaders Chris Klomp and John Brooks took a break from reading the ~47,000 comments on the MA Advance Notice to speak to the industry at the Better Medicare Alliance Executive Policy Summit on Tuesday. The most fascinating commentary came in terms of how CMS is thinking about leveraging AI so that healthcare doesn’t take “a phenomenally powerful disruptive technology and pile drive it in the ground and get exactly zero value from it.”
Quite the visual. Klomp outlined three things that need to be true to avoid that fate, with the third being a deflationary payment mechanism:
We need a deflationary payment mechanism. Right now most of healthcare is still indexed off of frankly original Medicare fee schedules and benchmarks. These are time based constructs, used relative value units. We multiply them by conversion factor. That's what we pay.
I had an entrepreneur come up to me at a conference last year. They built this really interesting AI technology in radiology and said, hey, we think we're going to bill through this CPT code. And I just wanted you to weigh in. It's billed in 15 increments. Do you think we could bill two units of time? To which I responded, I will go out of my way to destroy that code if that's what you decide to do, because that's the exact opposite of what we want. AI thinks in cycles. It uses tokens. We don't think about it in time. That’s what our colleagues at CMMI are tackling.
It’s worth listening to the whole talk, but that point in particular stood out to me. Seems like there’s a lot you can extrapolate from it about how CMS leadership is thinking about payment rates and profit pools at the moment.
The tension between that position and supporting innovation and competition is obvious — as Kintsugi’s recent post-mortem highlighted, regulatory capital requirements are high, while venture investors in AI technologies expect OpenEvidence-like revenue growth charts. CMS leadership seems well aware of the challenges inherent in solving that riddle, and I’m curious to see how they continue to tackle it.
A NUMBER TO PONDER
$6 billion
The market cap that Elevance lost this week because CMS finally got fed up with Elevance mailing USB drives with risk adjustment data. Whoops.
CMS issued Elevance a sanction letter freezing enrollment across its 45 contracts as of 3/31/2026. This move drove Elevance stock down ~8% on the week, erasing roughly $6 billion in market cap. This issue apparently dates back to 2018, and CMS suggests it has continued as recently as October 2025, while Elevance said in an 8-K that it changed its practices in 2023. I’m not sure if the discrepancy there helps or hurts Elevance’s case here, but either way, it’ll at least have time to hopefully fix the issue before the 2027 enrollment season.
CHART OF THE WEEK
Blue’s view into AI-driven upcoding coding intensity increases
Source: Blue Health Intelligence Analysis
Blue Health Intelligence analyzed BCBS commercial inpatient claims to assess AI-driven coding intensity in hospitals. The chart above shows that an increase in coding intensity was driven primarily by 10% of hospitals. That 10% of hospitals, depicted in the light blue line above, saw the % of complex admissions grow from 46.8% to 59.8% between Q2 2022 and Q1 2025, while the remaining 90% of hospitals were relatively flat.
NEWS
The drama of emergency departments in the Pacific Northwest
In Eugene, Oregon, Peace Health recently attempted to move its emergency department services contract from a local group to ApolloMD. ApolloMD apparently won a competitive RFP process over multiple other parties, including the local group. This has caused an uproar in the local community, which does not like that PeaceHealth is moving from a local group to a national firm that is perceived as PE-backed, even though ApolloMD’s website states it is physician-owned and has no outside capital.
Local PeaceHealth providers recently voted no confidence in leadership due to the contract change. This all comes as the ED was seeing an influx of volume after another local ED recently closed. PeaceHealth has been hemorrhaging cash in recent years, indicative of the challenges facing the local market there. It seems like a no-win situation for anyone there.
Roughly 500 miles to the Northeast, in Post Falls, Idaho, a very different story is playing out in the emergency room, as the state legislature considers new legislation to prevent an emergency room operated by Nutex Health from abusing the No Surprises Act IDR process. BCBS Idaho flagged Nutex Health last year for flooding the IDR process with claims. Of the ~40 EDs in Idaho, BCBS apparently receives 280 IDR claims per month from the single ER operated by Nutex, while the other 39 ERs collectively submit 14 claims per month. As an example, BCBS says Nutex was seeking to be paid $8,588 at its ER for a sprained knee, while the market price is $,700.
Nutex Health, a public micro-hospital/free-standing ED operator, was the subject of a short-seller report in July 2024 regarding its heavy/sketchy use of the No Surprises Act IDR process. Nutex reported earnings on Thursday, with its stock dropping 40% at one point, as revenue took a huge hit after $55 million in arbitration claims were ruled ineligible. Nonetheless, it does not appear deterred from using the IDR as a key strategic lever, calling its approach a David vs Goliath battle. Nutex views itself as a force for good, fighting the dastardly insurers who are undermining fair competition. This all while Nutex is apparently often seeking to be paid ~1,000% of Medicare rates.
Nutex is a fascinating case study in healthcare innovation. With one set of facts, there’s a really compelling narrative here: a new microhospital model is popping up in small markets and building needed access points to care, with 4.8/5 star patient reviews, all while growing revenue at 82% and reporting an Adj EBITDA margin of 30%. Who wants to invest in a Rule of 40 SaaS business when you can invest in a Rule of 110 microhospital?
At least some legislators in Montana appear to feel that way, too. Check out this quote from a state Senator who voted against the legislation:
“That’s great if that’s what they want to provide in the market, and you have consumers who are willing to pay the price for it,” Lenney said. “I don’t think they’re a bad actor. I heard on the Senate floor that we’re capitalists, but here we are trying to shut this one business down. What are we doing? If somebody wants to get a pregnancy test there, they should knock themselves out.”
I must admit that the view expressed there is… bewildering to me, partiuclarly given the context of what appears to be transpiring here. For starters, I don’t get the impression from that quote that Lenney understands the concept of insurance — I imagine if someone asked him if he should be paying more for healthcare because someone else wants that pregnancy test at Nutex, he might answer differently.
Don’t get me wrong, I am all for capitalism, but I also think it is important to have competent politicians who can put in place effective regulatory frameworks that discourage bad behavior. Despite Lenney’s objection, the proposed legislation passed the committee and will move for a full vote.
From The Public Markets
Hims stock jumped 40% after market close on Friday after Bloomberg reported that Hims will announce a partnership with Novo Nordisk to sell Novo’s branded weight-loss drugs as soon as Monday. This is up there as one of the most unexpected news items I’ve ever written about, as it comes after Novo filed a lawsuit against Hims earlier this year, and last year accused it of deceptive marketing, all after walking away from an earlier partnership. The fact that Novo keeps coming back to the table here seems to be indicative of the bull case for Hims.
Omada posted good Q4 results on Thursday after market close, with its stock up ~14% on the week. 2025 revenue was $260 million, up 53% YoY. It turned net income positive in Q4, and generated Adjusted EBITDA of $6 million for the full year. Omada expects revenue to grow 22% in 2026 to ~$317 million, while Adj EBITDA is expected to grow to ~$11 million. Omada noted it now has supported 150,000 members on GLP-1s, up from 50,000 at the end of 2024, and it continues to roll out more GLP-1 offerings. Omada noted that its new GLP-1 offerings are not in its 2026 guidance, which seems to hint at the upside case here.
Ardent Health reported after close on Wednesday, with its stock sliding a few percent as it guided down Adjusted EBITDA expectations for 2026. After hitting $545 million in 2025, which represented ~9% growth YoY, Ardent is guiding down to $485 - $535 million for 2026 before returning to growth in 2027.
Surgery Partners reported on Monday, with its stock dropping ~20% after earnings before rebounding slightly. While it beat revenue estimates for the quarter, Surgery Partners described 2025 as a “tale of two halves” with significant momentum in 1H 2025 giving way to headwinds in 2H 2025 and Q4 margins came in below its outlook, which it had already revised down in Q3.
Astrana reported earnings on Monday, with its stock up 30%. Astrana continues to quietly grow consistently in the MA market, generating $3.2 billion of revenue and $205.4 million of Adjusted EBITDA in 2025, an impressive 6.5% Adj EBITDA margin in 2025 for a company that is mostly in capitated contracts. Astrana is projecting its midpoint guidance at $3.95 billion of revenue and $265 million of Adj EBITDA for 2026. Those are solid results in the midst of a challenging MA environment. Astrana continued the trend from smaller Medicare Advantage players last week, noting that it feels good about where it sits with 2027 Advance Notice even if nothing changes, and it expects to be impacted less than the industry. Again, its worth noting, if all the small players expect to be impacted less than the industry, while all the big players expect a consistent impact across the industry, someone is setting up to be wrong there.
Other Top Headlines
Per Bloomberg, New Mountain Capital has walked away from Thoreau and its planned deal to sell five healthcare AI assets to former New Mountain Capital partner Matt Holt. Bloomberg cites a letter New Mountain sent to its investor base, noting that Holt missed the deadline for the planned offer and instead submitted a lower offer with several uncertainties. New Mountain noted it is also optimistic about the upside in the businesses and viewed the process as an increasing burden on operations. It marks an unfortunate, abrupt end to what could have been one of the more interesting healthcare platforms on the market, and perhaps a signal of the uncertainty in the private markets at the moment.
OpenEvidence announced a new content partnership with Wiley this week. This is a fascinating deal to me — at JPMorgan OpenEvidence’s CEO Daniel Nadler noted that the key unlock for OpenEvidence is that he views their key innovation to date as being a Spotify in a market full of AI Naspters. Meaning, OpenEvidence is paying the publishers. Wiley is a public company that reported earnings this week, and on its earnings call, it noted that the deal is a five-year, multi-million-dollar contract and that Wiley is receiving an equity stake in OpenEvidence as part of the deal. Wiley seems very bullish on its AI strategy moving forward.
In the employer benefits market, Quantum Health acquired CirrusMD. This is Quantum’s second recent acquisition — it acquired provider data startup Embold Health last year — and will add CirrusMD’s virtual care platform into its broader employer navigation offering. It continues to strike me as an interesting time to be scaling these sorts of offerings in the employer market.
DoseSpot and Arrive Health merge, combining an e-prescribing platform with benefits data to provide real-time transparency on medication costs. The combined company, called Interra Health, is expected to generate $100 million of revenue in 2026 and grow at 40% annually, per Fierce Healthcare. Bain Capital is providing the capital for the merger here and taking a majority position in the business. PSG, Providence, and UPMC Enterprises will be minority investors.
TPG partnered with the SDoH platform FindHelp, investing $250 million in the business from its impact investing fund. invested $250 million in FindHelp. The press release suggests that FindHelp now supports Medicare and Medicaid benefits enrollment verification, which seems like an interesting business model extension here.
The FDA issued warning letters to 30 telehealth companies over illegal marketing of compounded GLP-1s.
Funding Announcements
Grow Therapy, a MSO-esqe platform for therapists, raised $150 million at a $3 billion valuation. TCV and Goldman Sachs Alternatives led the round, with Bloomberg noting that Grow Therapy is now clearing $1 billion in annual revenue. This prompted some interesting dialogue in Slack about the mechanics of revenue in a business like this and what % goes to the providers in Grow’s network versus what stays with Grow. It appears the actual revenue to Grow is probably something <30% of that number.
Sage, a platform for nursing homes / assisted living, raised $65 million. Goldman Sachs Alternatives led the round, with IVP and Goldcrest participating. Per the website, the product includes a nurse call device, fall management sensors, an app, and an analytics platform.
Ease, an AI operating system for behavioral health, raised $41 million. a16z led the round.
KeyCare, a telehealth platform for health systems, raised $27.4 million. Health X Ventures led the round, which included a number of strategic investors, along with Exact Sciences, which was an interesting name to see included.
Greater Good Health, an NP-led care model, raised $20.5 million. Allumia Ventures led the round. Martin did a great deep dive with the Greater Good leadership team here.
NexCure, an outpatient clinic model for CAR-T therapies, raised $19 million. RA Capital incubated NexCure and led the round; Cencora Ventures and Oncology Ventures also participated.
UnityAI, an agentic AI platform for care delivery operations, raised $8.5 million. Third Prime led the round. The press release notes that UnityAI is working with large specialty groups, including Tennessee Oncology and Peregrine Health.
What I’m Reading
Addressing Social Needs Saves Money and Improves Health in Medicaid. Now Scale It. by Mandy Cohen and Melinda Dutton
A good read examining the Accountable Health Communities and Healthy Outcomes Pilots, suggesting that scaling models like these that meet upstream needs is a critical part of supporting Medicaid populations moving forward.
Read more
Virtual Gastrointestinal Care Solutions by PHTI
PHTI digs into the virtual GI landscape, assessing both wraparound solutions (Cylinder and Digbi) and clinician-led solutions (Ayble, Oshi, Salvo). It generally finds positive clinical and economic evidence for the broader adoption of virtual solutions here. Read more
Value-Based Payments Are Catching On, but Rural and Small Practices Lag by Celli Horstman
A quick read in the Commonwealth Fund about the state of value-based payments in primary care based on data from its 2025 survey of PCPs, highlighting how rural practices lag other practice types in adopting VBP. Read more
ACCESS: A Fix For Digital Health Companies, Not Medicare’s Costliest Patients by Morish Shah, Graham Walker, and Sudeep Bansal
A Health Affairs Forefront critique of CMMI’s ACCESS model, suggesting it is a financial lifeline for digital health companies that risks making things worse for complex populations.
Read more
Will The New CMS ACO Model LEAD To Better Care For High-Need Medicare Beneficiaries? by William Roberts and José Figueroa
A Health Affairs Forefront perspective on the challenges CMMI’s LEAD model may face with dual eligible populations, as it removes an explicit equity-based payment adjustment that existed in the REACH model. Read more
More from Health Tech Nerds
Community Brain Trust 3/4/26. Read here.
Guest Post: AI, Equity, and the Workforce That Makes Whole-Person Care Possible. Read here.
Health Tech Nerds Radio
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