Medicaid Challenges and Rural Hospital Deal Trends with Alan Condon

- The strategic agenda facing hospital and health system - leaders right now is not a short list. - Growth in a consolidating market, sustainable margins in - a reimbursement environment that rarely moves in your - favor, - a tech investment cycle that demands both urgency - and discipline, - and a workforce story that is still being - written. - Eker's fourteenth annual CEO CFO roundtable brings together - more than 1,500 executive level attendees and nearly - 400 speakers across four days of sessions that - are designed to help c suite leaders benchmark, - pressure test, and sharpen their priorities.

- Not in the abstract, but against the real - decisions they'll face heading into the next year. - It's the kind of event you leave with - a clear sense of where you stand and - what comes next. - So join us November second through the fifth - at the Hyatt Regency in Chicago, and come - ready to do the hard thinking. - Register on our events page at beckershospitalreview.

com - by clicking on the events tab in the - upper right. - This is Scott Becker with the Beckers Health - Care Podcast. - I am thrilled today to be joined by - brilliant journalist and editor in chief, Allan Condon. - And Allan joins us regularly to talk about - stories that he's watching in health care, an - extremely busy time it seems in sort of - business trends in health care, health care systems, - some performing really well, some really struggling, and - a lot more.

- Alon, let me just turn it to you. - What are a few of the key stories - that you're watching to keep an eye on - currently? - Yeah. Absolutely.

I was glad to be on - with you, Scott. So I think - two two key stories I'd love to touch - on today for our listeners and the vector's - audience. - First and foremost, - we saw yesterday, on Monday, June 29, 25 - states and Washington, DC, the Democratic governors and - attorneys general from 25 states and Washington, DC - sued the Trump administration - over - CMS's - interim final rule, which is, of course, implementing - Medicaid - work requirements. - Q2 story here.

I think no doubt this - will play out over the next couple of - months in the court system and whatnot, but - essentially, this lawsuit for for hospital leaders listening - to this call challenges CMS rule, which outlines - how states must implement new community engagement requirements - under, of course, h r one, the one - big deal for bill for the other name - of that bill. - So the law also essentially argues that the - rule illegally - narrows - exemptions for Medicaid - braille Medicaid beneficiaries and creates administrative barriers that - cause eligible people to really lose coverage.

- So we we know we've covered this acknowledging - of Becker's over the last couple of months - that under HR one, - certain Medicaid expansion enrollees must work, - attend school, - volunteer, or participate in other qualifying activities to - maintain that - Medicaid - coverage. So CMS has said that this rule - is designed to prioritize - coverage for Medicaid's most vulnerable population - and promote economic economic - stability, - self sufficiency, - independence, whatnot.

- States, on the other on the other end, - these 25 democratic led states argue that this - rule will, quote unquote, disproportionately - affect older adults that are not yet eligible - for Medicare - and Medicaid and people with serious conditions. - In addition, - plays really further strain on safety net providers, - hospitals, - know that we'll see a big increase in - uncompensated - care, - further strain safety net of rural hospitals, - many of which are already under significant strain - at the moment.

There's a ton more in - this. Those are the key key points of - the pushback from state. - Essentially, - they're arguing that they they would like to - block the challenge provisions that CMS has laid - out here, declare them unlawful, - and ultimately - vacate them. - So huge huge, - news that just broke this week.

- No doubt we'll see this play out at - long, arduous process over the coming months. And - I guess just in terms of where we - currently stand in these Medicaid work requirements, - Georgia - and Nebraska are the only two states that - have actively enforced the Medicaid work requirements under - that recent federal legislation. Legislation. When we looked - ahead to July 1, just in a couple - days, Montana - and Arkansas are gonna kick off their Medicaid - work requirements and many other states, in the - lead up to, - to fully implement these these mandates by 01/01/2027.

- So big, big news there that just broke - this week, - but, certainly, we'll see something play out over - the coming months here as well. - No. Fantastic. And it really does break down - a lot on party lines.

- Very complicated - because there's an old concept that people should - try and work at least to get - welfare, other benefits. - At the same time, that's become directional and - platitude at all versus really administratable, - it seems like. And so you do have - all this political theater that goes on with - this. - How will some of this play out?

What - what do people expect, or is there any - sense of that? - I think very, very early to know how - this will exactly play out in the core. - I know certainly, there were talk, - for some of those democratic led led states - over the last couple of months to certainly - challenge - this rule, which they know they'll have just - done. - Whether that how that actually ultimately plays out - over the current month remains to be seen.

- But - no doubt we're still gonna see states roll - on and continue to kick off these Medicaid - work requirements, - while that federal legislation is still in place. - Certainly, a lot of people political theater and - whatnot, like you said, got playing out over - the coming months, especially, - as we gear up to those midterms, later - on this year as well. - It's fascinating. And so that's one thing.

All - these states suing about the Medicaid work requirements - and, you know, - fascinating on both sides of the table. - No comment. - Tell us what else you're watching currently that's - that's sort of, front and center. - Yeah.

I think, one that was upon a - number of really interesting transactions, - over the last four months. I think, I - had the pleasure of speaking with, Banner Health - president and CEO, - Amy Perry, who is a regular attendee in - our Becker CEO leadership calls every month. - Banner fantastic system operating in multiple states, which - is an interesting deal in terms of where - it's, - planning to offload and sell one of its - critical access possible hospitals - in California.

- I think it's an interesting deal despite banner - selling a deal in California, but also who's - buying that on the other end of the - spectrum. So Coram Health, - again, a for profit system that was spun - out of community health systems many years ago, - has restructured, has gone through bankruptcy. - Now it appears to be on back in - growth mode and acquire, - rural hospitals, critical access hospitals, - in multiple states across the country. - So Quorum, at the moment, operates 11 hospitals - across nine states including one in California.

This - this would obviously double its hospital cost - this would obviously double its hospital footprint in - California - to two. But I think the other - interesting - aspect of Quorum Health, - we had the opportunity to speak to their - CEO, Chris Harrison, formerly their CFO, now their - CEO. - Really interesting deal that they're doing. Obviously, a - for profit system, - but they are working to convert - to a nonprofit - health system, - which which their CEO really thinks would help - position Cornell for long term sustainability, - especially as as rural hospitals face mounting financial, - mounting operational challenges.

- To have seen one system follow a similar - footprint in terms of eHealth in Florida. - I believe last two years ago, successfully transitioned - to a nonprofit private health system. Quorum Health - really, looking to acquire this hospital from Banner - in California - and they essentially grow its rural, footprint across - the country. And then the last last thing - at Coram Health as well here, they're also - looking to stand up a - rural hospital - focused management services organization, - It focuses primarily on the revenue cycle management.

- So we often hear about so much about - revenue cycle management. Big, big challenge across the - board, especially for our folks with limited resources - and, you know, hospital for safety and hospitals - looking for a partner in this space, - especially, in line with the rural health transformation - fund. There's a lot of money on the - table there. Coram helps you the big potential - to help the rural, hospitals who are struggling - in this regard and also, - stand up an MSL in there.

So a - lot to unpack in that deal from Banner - selling that hospital. Well, interesting to see on - who's on the other side of that table - of buying the hospital and what might potentially - happen down the line with Quorum's - potential transition from a for profit system to - a nonprofit system as well. - Fascinating to watch. The history of Quorum is - just fascinating between community health systems back in - the day to where they're at today to - potentially becoming a not for profit here.

The - whole thing is literally fascinating. The the evolution - and change and so forth, literally fascinating. - So, Alan, two big stories there. Quorum, Banner, - and then also 25 states suing the federal - government over Medicaid work requirements and eligibility requirements - and administrative issues.

Fascinating to watch. Alan, anything - else that's top of mind you wanted to - point out real quickly? - Yeah. I think, maybe just to kinda one - quick add on is just to maybe further - explain in terms of Quorum, - that nonprofit potential trans transition.

What they'll essentially - kinda open them up to do and how - it would help them, - for our listeners. So I guess Quorum Health, - again, 11 hospitals in The United States, a - very dispersed - footprint that that yields - little economies of scale and really makes it - difficult to partner with maybe larger operators - while structured as a for profit. So this - is according to CEO Chris Harrison. - He believes that that nonprofit structure would change - the map on their capital.

So essentially, it - would give Quorum health the ability to operate - under a much lower cost of debt and - then also to emerge from that transaction with - a much healthier balance sheet, much healthier credit - rating. - Really interesting just to see - the the the strategy behind that potential deal - and how it might play out down the - line. Like you said, Quorum has fascinating history. - One of the CHS though that has had - its financial challenges, bankruptcy, successfully emerged from it.

- This is the latest in, in in in - a move by its by CEO, Criterion. Well, - last name to watch, I'll certainly keep readers - of the date over the coming months. - Well, Alan, as always, fantastic to visit with - you. Thank you so much for joining us - today on the Becker's Healthcare podcast.

- You're a remarkable, remarkable journalist and leader. Thank - you so much for joining us. My pleasure. - Thanks so much, Scott.