Over the Thanksgiving holiday, in preparation for my annual healthcare industry predictions, I donned my bedazzled wizardly robes and dusted off my trans-luminescent crystal bowl.
I mean…ball.
Never before has my vision been so clear or so crisp.
Time will tell if these visions are accurate or just mere early Yuletide hallucinations.
What I undeniably see is a year ahead in American healthcare that will be like no other in recent memory:
1) Wellness Will Be Front and Center
The RFK Jr. Effect will be real. People will begin wondering why we normalized overeating processed foods and consuming high volumes of neurotoxic alcohol and marijuana. Heretofore fringe ideas about wellness and disease causation and medications will continue to go mainstream. Traditional allopathic medicine and public health will be on non-stop defense. Doctors, nurse practitioners, and pharmacists will have to do more than ever before to continue to encourage adherence to medicines about which the public will be more skeptical than ever (with the exception, of course, of Ozempic and other GLP1s!). The average member of the American public will increasingly see all parts of traditional healthcare as part of a corrupt medical industrial complex until, of course, they have a genuine healthcare need. Then, and only then, the “corrupt” medical industrial complex will be “heroic” again for an occasional moment or two.
2) Misinformation Will Get (Much) Worse
Coming off the pandemic, a whole swath of American society has de-credentialed the medical profession. And there is no easy pathway back to a place where physicians and other healthcare professionals are fully trusted for their knowledge and, more importantly, their judgment. Logging on to X, the social media site formerly known as Twitter, you get the feeling that everyone is an MD and a PhD these days with the confidence to make claims that once required clinical experience and data and analysis. Rebuilding trust in health institutions will require a grassroots Manhattan project-style effort that engages frontline staff and leaders across sectors—pharma, managed care, medical specialty societies, hospitals, medical groups. They will have to articulate and, more importantly, abide by a set of trust-building principles and behaviors that aim to restore confidence in health science and healthcare professionals. Unfortunately, given all of focus on transition of presidential administrations, I see little chance of that happening in 2025—but I am optimistic about future years.
3) Medicare Advantage Will Make A Roaring Comeback
The last few years have been dark days for Medicare Advantage (disclosure: I lead SCAN Health Plan, a California-headquartered Medicare Advantage Plan with >280,000 members). The new risk model, affectionately referred to as V28, slashed revenues to plans. High STAR ratings—which are tied to bonus payments—have been harder and harder to achieve. And base rates have increased less than expected in an environment where there’s a lot of cost inflation. Not to mention unprecedented scrutiny of utilization management and sales and marketing practices. All of which has added up to a retreat from Medicare Advantage in some parts of the country. Enter the incoming Trump administration and Dr. Mehmet Oz, the likely new administrator of the Centers for Medicare and Medicaid Services (CMS) who has been unabashedly supportive of Medicare Advantage leading up to his appointment. With a Republican House and Senate and Presidency, will they go so far as to push (as Oz has before—and, I have, too, for that matter) for Medicare Advantage for All? Will “repeal and replace” take the form of a broadened Medicare Advantage program? I doubt it. Nonetheless, I expect that they will ease up the regulatory environment surrounding Medicare Advantage and make it an even more attractive alternative to traditional Medicare (which bizarrely still lacks dental, vision, and audiology coverage that is often standard in Medicare Advantage plans) over the next 4 years.
4) Obscure Government Deputies Will Matter More Than Ever
With Robert F. Kennedy, Jr. expected to occupy the role of Secretary of Health and Human Services and Dr. Mehmet Oz the role of CMS Administrator, President-elect Trump has made something clear: he values star power over policy and bureaucratic expertise in the top administration healthcare jobs. This is not to say that Kennedy or Oz won’t drive change in policy. Both have strong, well-known perspectives on health and healthcare that will surely infiltrate US healthcare policy-making. It just means that they will rely on seasoned deputies to wrangle agencies that are large and complex and where unsexy minutiae can drive disproportionate impact on healthcare. And with agency leaders whose natural orientation is external—those deputies (Jim O’Neill at HHS and TBD at CMS) will wield truly unprecedented power over the shape of the divisions of government that strongly shape and defined the contours of US healthcare.
5) The Health Equity Field (As We Know It) Will End
Following the murder of George Floyd, healthcare organizations announced (some bold, some weak) health equity initiatives and many appointed chief health equity officers. The Biden administration’s signature healthcare initiatives over the last 4 years had health equity at the center. And every CEO in every sector of the industry was armed with talking points about what their companies were doing to reduce healthcare disparities and improve health equity. A few days after the creation of the Department of Government Efficiency was announced, Vivek Ramaswamy signaled that health equity is firmly in the new department crosshairs. He posted on X, “The latest HHS budget request mentions ‘equity’ 829 times, with requests seeking to address “racial equity and environmental justice” at the forefront. An efficient government has no place for DEI bloat. Time to DOGE It.” Health equity efforts are set to take a huge step back or, more optimistically, change form altogether in the new political environment.
6) There Will Be More Turnover at The Top
The year 2024 saw major leadership changes atop some of the healthcare industry’s biggest companies. Bruce Broussard departed Humana and was supplanted by Jim Rechtin. David Joyner replaced Karen Lynch at the helm of CVS. Look for more such changes in 2025 atop other healthcare companies big and small. Several long-tenured CEOs will likely be granted golden parachutes as an odd confluence of multiple industry headwinds are making these top jobs more challenging than ever—and boards will begin to look for fresh faces to solve old problems. This trend will apply to managed care companies, health systems, and startups alike. There may even be some early turnover in top ranks of government. Healthcare search consultants, or course, will have a banner year.
7) Big Transactions Will Return
Almost a decade ago, US healthcare was captivated by Humana-Aetna and Cigna-Anthem mergers. Both of them failed and CVS-Aetna was later completed in the aftermath. Since that time, United Health Group has continued its buying ways (with Change Healthcare and Amedisys the latest examples)—but big game hunting has largely slowed down on account of fears that the transaction would get blocked by the FTC or the Department of Justice. The incoming administration is likely to be far more friendly to the “big transaction”—at least from some industry players—and so I would expect us to see the return of big bold moves of all kinds. Mergers (CigMana anyone?), breakups, and take privates will all be part of the landscape in 2025 in high volume. Look to Kaiser Permanente’s Risant to complete another health system acquisition as well sometime in 2025. Healthcare investment bankers will be busy!
8) The AI Revolution Will Accelerate
Artificial intelligence (AI) is finally ready for prime time. AI scribes are now everywhere and where they don’t presently exist—they soon will. Doctors are saving real time on administrative tasks. AI is now assisting with interpretation of diagnostic tests and providing meaningful decision support to physicians. Mainstream EMR vendors like EPIC and Cerner have major AI integration initiatives. Biopharma companies like Vertex Pharmaceuticals have pathbreaking AI and data science efforts that extend into all aspects of the business. And the price of AI is falling precipitously as competition ramps up. All of which means the AI revolution has begun in earnest. Heck, even the bluest of blue blooded institutions, the New England Journal of Medicine, has its own AI-focused field journal led by Harvard visionary Zak Kohane. There’s no going back and key aspects of patient care—not to mention healthare’s profound administrative bloat—stand to improve quickly.
9) Regulators Will Scrutinize Private Equity’s Role in Healthcare (Even More)
The implosion of Steward—owned by Cerberus Capital—has Republicans and Democrats alike asking whether private equity’s role in healthcare has gone a step too far. It’s one thing to see prices rise and service quality erode as a doctor’s office gets acquired by a profit-oriented healthcare private equity firm. It’s another thing altogether when the local hospital collapses—and threatens access to care for whole geographies. States like Oregon and California have put in place healthcare transaction review boards to regulate the role of private equity and healthcare. Look for these review boards to take an even more activist posture against these transactions with large swaths of the public (more aware than ever of private equity’s presence in healthcare) rooting them on.
10) Digital Health Will Continues to Spin
Lots of digital health companies were valued in the halcyon days of Teladoc-Livongo. In the years since, many companies have tried—and failed—to drive revenues worthy of those frothy valuations. The fundamental problem of digital health has been—and continues to be—its failure to meaningfully connect to the analog healthcare system. Winning companies in 2025 and beyond will be the companies that are able not just to compete with traditional healthcare—and continue to compete, they must—but to seamlessly bridge back to it when needed. A hard trick to pull off, but a few gemswill announce partnerships in 2025 that do just that.
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The crystal ball never fails…until, of course, it does. Then, and only, then do we turn to the dark arts of astrology and tarot.
For now, my healthcare industry predictions are complete…until next year!
