EP424: Five Things for Hospital System Execs to Get Real About in 2024, With Peter Hayes

Not all hospital chains are the same, but today's conversation is about the big, rich, consolidated ones with the market and political power to shape entire regional economies. Peter Hayes, the recently retired president and CEO of the Healthcare Purchaser Alliance of Maine, joins Stacey Richter to lay out five things these behemoth health systems need to get real about in 2024 — even while they hold nearly unchecked leverage over the self-insured employers and communities that fund them.

WHAT YOU'LL LEARN

✅ Why the Consolidated Appropriations Act obligates plan sponsors to pay only "fair and reasonable" prices for medical care — and why that legal obligation is becoming one of the real levers moving hospital pricing behavior

✅ Why health systems need to get ruthlessly aggressive about administrative and technology efficiency just to survive shrinking commercial reimbursement, especially as administrative costs have dwarfed growth in what hospitals pay their actual clinical staff

✅ Why the shift from fee-for-service to real downside-risk, outcomes-based reimbursement means moving from maximizing patient revenue to maximizing patient health

✅ Why hospitals need to be transparent and accountable about how they use their tax-exempt status and the estimated $55 billion in net margin they realize from the 340B drug program

✅ Why patient safety can't stay an afterthought: about 46% of US hospitals carry a Leapfrog grade of C or lower, and the chance of a fatal avoidable error is 90% higher at those hospitals than at an A- or B-rated one

WHY THIS MATTERS

None of Peter Hayes's five things individually will topple consolidated hospital systems' market power on its own — but per Peter, tipping points rarely come from one single force. They come from a confluence: new legal obligations under the CAA, employers running out of room to absorb rising costs, transparency tools exposing price variation, and states starting to demand accountability for tax-exempt and 340B dollars. Nearly half of Americans have already delayed or forgone care due to cost, and record insurer and hospital-executive profits sit uneasily next to nurses and hospital staff who themselves rank among the groups most burdened by medical debt. The pressure is mounting from multiple directions at once, which is usually how real change actually arrives.

MENTIONED IN THIS EPISODE

EP390 with Gloria Sachdev, PharmD, and Chris Skisak, PhD: Apple Podcasts | Spotify | Other Apps

EP373 with Cora Opsahl: Apple Podcasts | Spotify | Other Apps

EP415 with Rob Andrews: Apple Podcasts | Spotify | Other Apps

EP394 with Vikas Saini, MD, and Judith Garber, MPP: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

08:04 Why do hospitals need to get real about the implications of the Consolidated Appropriations Act?

10:09 What is considered fair pricing for hospitals?

13:00 EP390 with Gloria Sachdev, PharmD, and Chris Skisak, PhD.

15:59 The medical transparency tool, Billy.

16:34 How does lowering prices become more challenging with consolidated hospital systems?

18:07 What is one of the solutions available to combatting this now?

19:31 Why do hospital systems need to get real about administrative and technology efficiencies?

22:27 EP373 with Cora Opsahl.

26:51 Why do hospitals need to get real about pivoting from fee-for-service reimbursement to episode-based care?

30:16 EP415 with Rob Andrews.

30:53 Why do hospitals need to get real about the 340B program and their tax-exempt status?

35:38 EP394 with Vikas Saini, MD, and Judith Garber, MPP.

38:19 What are the ethical and moral issues that are coming to a head with healthcare costs?

39:03 Why do hospitals need to reexamine their care quality and patient safety?

40:05 "We just need to make sure that the health industry is as accountable as some of our other industries."

42:53 Why does Peter think it's going to take regulation to move the dial?