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Employers that exclude GLP-1s point staff to a website and a pretax account

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By JOHN SAMARAS

Most employers still won’t cover GLP-1s for weight loss, and some of them now tell the employee where to buy them without the plan. The International Foundation of Employee Benefit Plans’ 2026 survey, published in July, found that 60 percent of employers cover the drugs for diabetes only and 36 percent for both diabetes and weight loss. Among the employers that exclude weight loss, 27 percent steer employees to a direct-to-consumer platform and 21 percent to their FSA, HSA or integrated HRA.

The same survey shows why. For its respondents, GLP-1s went from 6.9 percent of annual claims in 2023 to 11.4 percent in 2026. In a Business Group on Health survey reported by Reuters in June, 10 percent of large employers that cover them plan to drop them in 2027. Cigna stopped covering them for its own employees in July.

What the employee walks into

I record the published cash price of every US GLP-1 telehealth program every Monday, and this is the market those employees are sent to. At the maintenance dose, Novo Nordisk sells its Wegovy pen direct for $349 a month and its Wegovy pill for $299. The pill’s $149 price covers only the starter doses. The cheapest month on my chart, checked September 28, 2026, is $149 with auto-refill for compounded semaglutide, a pharmacy-made version that is not FDA-approved and is not Wegovy or Ozempic.

The tax treatment is one sentence in IRS Publication 502: you can include “amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease).” Prescribed drugs qualify. The 2026 limit on a health FSA is $3,400.

Run through an FSA, a $149 month costs an employee in the 22 percent bracket about $105, because the dollars skip federal income tax and the 7.65 percent payroll tax. The employer skips its own 7.65 percent on the same dollars. The federal government gives up that revenue on a drug the plan declined to cover.

The tax break has no formulary

A covered drug passes through a formulary, a prior authorization and a pharmacy network. The cash benefit passes through none of them. Publication 502 turns on whether a drug was prescribed, and a compounded product qualifies on the same terms as a branded pen.

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Health and Democracy on the Ballot: A Conversation with Dr. Atul Gawande

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I’m inviting you to a virtual Movement Voter Project event with Dr. Atul Gawande on Thursday, October 22, 8PM ET • 7 PM CT • 6 PM MT • 5 PM PT Register here

This virtual event is a Movement Voter PAC (MVPAC) fundraiser to help Movement Voter Project (MVP) provide critical funds and resources to grassroots organizations in red and purple states.  Right now, MVP partners are organizing voters in every winnable Senate race, in every contested House race. Funds donated now can fuel critical early voting and mail-in campaigns, integrate voter protection and election safety, and prepare rapid responses to threats and interference. This is a moment when our generous giving can make a crucial difference–Matthew Holt

My shoulder — The Inciteful Med, Claude & HealthX update

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I had shoulder surgery on Monday and today I’m getting information about what happened delivered into the big LLMs. Follow along with me as I figure out how to get the information in there and what it tells me. — Matthew Holt

Wall Street in the ER: How Private Equity Is Squeezing Local Hospitals

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By ADAM LEE

Reflecting on a Private Equity (PE) internship in New York City reveals a major takeaway: financial engineering can be incredibly empowering, but applying it to public infrastructure often catches vulnerable communities in the crossfire.

The PE industry typically views the world through balance sheets, debt structures, cash flow optimization, and lucrative acquisitions. While these principles generate immense profit on paper, applying them to local healthcare—specifically safety-net hospitals—creates severe real-world tradeoffs.

Here are the major takeaways regarding the intersection of healthcare and business.

1. How Hospitals Get Saddled with an LBO

In the PE world, a Leveraged Buyout (LBO) is the primary acquisition method. An LBO pushes the debt onto the acquired asset, similar to convincing a bank that a newly purchased home will pay off its own mortgage.

For hospitals, this process typically follows a specific pattern:

  • The PE firm borrows huge sums to purchase a hospital and its infrastructure.
  • That borrowed debt lands directly on the hospital’s balance sheet.
  • The firm sells the hospital’s land and buildings to a real estate company for quick cash.
  • The hospital is left paying rent (with built-in escalators) just to operate inside its own building via a sale-leaseback arrangement.

The clearest example is Steward Health Care.

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Healthcare Is Fighting the Wrong AI War

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By KIM BELLARD

The Blue Cross Blue Shield Association is crying wolf about AI. Its new analysis claims that “hospital systems are increasingly billing patient hospital stays as more medically complex,” and that these upcodings cost BCBS plans almost $1b from 2023 to 2025. That’s just claims from hospital systems, just to BCBS plans, so the total number could be much higher.

Well, you might say, a billion here, a billion there – that’s just healthcare these days. Everything is going up. But BCBSA is less sanguine; it thinks the coding is part of a strategy, and it thinks AI is driving that strategy.

“If patients are truly sicker, we’d expect to see more treatment,” said Luke Chalker, BCBSA’s senior vice president of product and data science. “For example, we’re seeing significantly more anemia diagnoses at these hospitals without a corresponding increase in transfusions. The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients.”

The analysis indicated that most (70%) of the increased costs came from secondary diagnoses that shifted payment into higher reimbursement categories, so the hypothesis is plausible.

The American Hospital Association, of course, is having none of it. An August 2026 ”fact sheet” on AI and coding intensity called claims of AI driving coding intensity “unsubstantiated,” citing numerous factors that drive coding intensity. It blamed insurers for having AI-supported “downcoding programs,” the purpose of which are “to arbitrarily and inappropriately reduce provider reimbursement for medically necessary care that has already been delivered.”

AHA also snarkily but accurately noted how many Medicare Advantage plans have been caught upcoding members to boost their Medicare payments, so it depends on where one is sitting.

It’s also worth noting that this year the Trump Administration rolled out a Medicare program — Wasteful and Inappropriate Service Reduction (WISeR) – to use AI to help identify “fraud, waste and abuse” – a.k.a., deny claims. It has not, to say the least, gone well.

Both sides are using AI, to each other’s detriment. Which is to say, our detriment.

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Time to Stop “Calling it Reimbursement”

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By JEFF GOLDSMITH

Back during the Jurassic period, at the beginning of my consulting career, senior colleagues at Ernst and Whinney took me to lunch to explain to the newby the facts of life in healthcare finance. The biggest takeaway from that long ago conversation: the entire history of hospital finance was built up on the revenue side. Managing costs was simply too challenging for most C-suites, because it inevitably required involvement with medical staffs who, at the time, were independent practitioners and beyond the hospital’s direct control. Therefore, the job of payers-governments and private insurers- was to “reimburse” hospitals for their expenses (that is, so long as the costs were “allowable”). The subtext of using the term “reimbursement” was : “We already spent the money and you owe us!”

In 2026, this mindset miraculously persists. This is despite the fact that Medicare, the largest and most influential payor for hospital services, has not reimbursed hospitals for the cost of inpatient care for more than forty years and for outpatient services in more than twenty! And the rest of the payment system is rebelling against the role as the residual payer for the hospital’s “unreimbursed” expenses.

The result of three generations of managements trained to these expectations is akin to football players who only trained their upper bodies and left the lower bodies to nature. Catching the ball is one thing; blocking and tackling with no lower body leverage is quite another.

Today’s C-suites lack the reflexes, management information and cultural support to respond substantively to the damaging blow that is HR 1, which will both reduce dramatically Medicaid payment and increase the number of uninsured patients by as much as 14 million. Controlling expenses today means engaging clinicians-physicians and nurses-and altering their workflows, staffing and incomes, a political nightmare for many managements.

The “reimbursement” mindset is a huge handicap standing between current leadership and actual control over their operations. For those in an indefensible cost position, it is so much easier to give up ownership, merge with a larger system and let someone else unburdened by local socio-political constraints and perhaps with better management controls clean up their extensive agenda of unfinished business. The reluctance of legacy managements to actually cut costs is a hidden contributor to the industry’s continuing consolidation.

Those who pay for care have had enough. The ability of care system leaders to shift those unmanaged costs onto the dwindling collection of full bore commercial payers is coming to an end. Commercial insurers are no longer willing to fund all the hospitals “unreimbursed” costs. Angry progressive policymakers and academics, egged on by Arnold Ventures, are agitating in state legislatures to cap commercial rates as a percentage of Medicare.

Sooner or later, hospital managements will take ownership of their piece of the healthcare affordability challenge. And they will be getting up early to hit the gym . . . and build the strength, balance and muscle memory to manage their entire business, not just their revenues.

Jeff Goldsmith is a veteran health care futurist, President of Health Futures Inc and regular THCB Contributor. This comes from his personal substack.

The Rural Radiologist Who Already Exists

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By STEVEN GOODMAN

The future of rural healthcare won’t be determined by how much money is invested. It will be determined by how wisely that money is used.

That line gets nodded along to at every rural health conference, then quietly ignored the moment the conversation turns to solutions, because the solutions on offer are almost always capital solutions: build a wing, buy a scanner, recruit a specialist who will not, in fact, be recruited. I spent a career building infrastructure for GE Medical Systems, standing up systems for remote patient monitoring before “telehealth” was a word anyone used. The lesson that career taught me is one rural health policy still hasn’t absorbed: the expertise a small hospital needs is usually not missing. It’s just licensed in the wrong state.

The Equipment Isn’t the Bottleneck

Consider radiology, because it’s the clearest version of the problem. A critical access hospital in rural Wisconsin can afford a CT scanner. What it cannot afford, and cannot realistically recruit, is a subspecialist radiologist sitting in the building waiting to read scans that come in one or two at a time. That expertise exists — in large quantities, at hospitals and reading services in Chicago, Minneapolis, or Milwaukee, often sitting idle overnight.

The technology to connect the two has existed for two decades. A scan can move from a rural imaging suite to a subspecialist’s screen in seconds. What can’t move nearly as fast is the paperwork — and there’s more of it than most people outside a hospital credentialing office realize.

A radiologist licensed to practice in Illinois cannot legally read a scan for a patient in rural Wisconsin without a separate license, a separate credentialing process, and — even after clearing both — a payer-enrollment process that may not be worth the trouble.

Multiply that by every specialty a rural hospital can’t staff, and by every state line a patient’s data has to cross, and you get the actual shape of the rural healthcare gap. It isn’t a hospital-building problem. It’s a jurisdiction problem.

Three Fixes, None of Which Require a Capital Campaign

Fixing licensing and reimbursement rules would do more for rural healthcare than another round of capital funding

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You Say “AI,” I Hear “Organoid”

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By KIM BELLARD

I must admit, ever since I learned about, and wrote about (OI May Be the New AI), “organoid intelligence” over three years ago, I’ve been looking to do a follow-up. I mean, sure, AI is in a very exciting stage, but that stage no longer seems like the future; it seems more like the present, with implementation issues. It’s data centers, hacking, impacts on jobs, open weight versus closed, and so on.  It’s market share, IPOs, and AI’s role in driving the stock market. People should certainly pay attention to it, but AI is not quite the open field that it was just a few years ago.

Organoids, on the other hand, are not quite here yet. They may – or may not – be the future of AI, among other things. I always like to look ahead to the next thing more than the at-hand, so when I saw some cool developments with organoids, I didn’t want to miss my chance.

Making some news last week, researchers at Harvard reported that they’d kept lab grown human brain organoids alive for over five years, three times the previous record. Not only that, but the organoids seem to “retain a memory of the time spent in vitro,” recording the passage of time, as it were.

“We didn’t know how far the development and maturation of human brain tissue could occur outside the context of the normal brain inside the head,” said Paola Arlotta, Golub Family Professor of Stem Cell and Regenerative Biology and senior author of the new paper. “This work showed that it’s actually possible to not just have these organoids survive in culture, but also continue to change, develop, and mature over stretches of time that had never been reached before.”

The team observed the organoid cells over the years, and found that they “faithfully modeled” the ways that human brain cells develop, including DNA methylation, a process in which genes are turned on and off during development, and which serve as a form of “brain clock.” When older and younger organoid cells were combined in a single organoid, the older cells stuck to the developmental stage they had been at, which researchers concluded meant they “recorded the passage of time and retain a memory of the developmental steps already performed.”

“We were a little bit shocked by the results,” Professor Arlotta said. “I like to call this a ‘time warp’ of development — they skip ahead.”

It’s obviously hard, and often unethical, to study actual human brain cells, so the researchers believe the organoids offer opportunities for more insights into brain development, as well as for testing drugs or predicting disease progression.

OK, you might say, that’s all very interesting and some great lab work, but it’s hardly AI, now is it?

Try this: last week The Yong Loo Lin School of Medicine, National University of Singapore (NUS Medicine), DayOne, a Singapore-headquartered global data center developer and operator, and Cortical Labs, a Melbourne-based biological computing startup, announced they were partnering to form a Biological Data Center Prototype. The Center uses Cortical Labs’ CL1 biological computing system to offer “practical, sustainability-aligned alternative to conventional silicon infrastructure in Singapore through wetware-based computing.”

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The Least-Informed Person in the Room

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By DAVID KIRK

My father called me from a hospital bed a few years ago. He had been admitted to a small hospital with an abdominal infection, and his surgeon had offered him an open operation. He wanted my clinical perspective. I knew that in his condition, he was unlikely to survive general anesthesia and the open procedure. I spoke to the surgeon myself and asked why he wouldn’t ask interventional radiology (IR) to drain the infection instead.

The surgeon told me that the hospital lacked the equipment required for IR, and without IR, the open operation was the best option on his menu. After hearing my assessment, he agreed and helped arrange the transfer to a hospital that could drain the infection.

I still think about how that single phone call may have saved my father’s life. His surgeon wasn’t negligent. He made the best decision based on the information in front of him. However, my father was able to put another option on the table because he knew a physician to call.

Most families don’t have a physician to consult when their doctor makes a recommendation. For generations, patients have only known what the person in the room with them chose to share, bounded by what their equipment and offerings could provide. Today’s patients, however, have artificial intelligence options in their pocket. A patient can now ask their preferred AI model, “Is surgery really my only option?” and get an answer that sounds confident and informed. Hungry for options, patients are asking these questions in enormous numbers.

In many ways, this is a welcome rebalance. It puts information in patients’ hands and allows them to play a more active role in their own healthcare, but it also opens the door to misinformation and distraction, and that can be life-threatening. Researchers at Mass General Brigham found that when given only a patient’s presenting symptoms, general-purpose AI chatbots failed to produce an accurate initial or differential diagnosis 80% of the time. In July, a Florida pastor sued OpenAI after ChatGPT provided him with “extremely dangerous medical recommendations” that delayed his treatment for pulmonary embolism. My primary care colleagues have shared how the presence of an AI-suggested diagnosis has transformed a 10-minute prescription refill into an hour-long conversation about something unrelated to why the patient came in that day.

Patients are also adopting AI much faster than their physicians. The West Health-Gallup Center on Healthcare in America reports that among US adults who use AI for health information or advice, 59% use AI tools to research on their own before visiting a doctor, and 56% use them to research after visiting a doctor. Physicians are using AI too, but for a different job. According to the AMA, more than 80% of physicians now use AI professionally, mostly for administrative work, yet only 13% are using it for diagnosis, the very thing their patients are asking it to do. The reality is that without AI support, most physicians are realistically only able to review 3% of a patient’s chart.

Now that patients have AI to help them advocate and question, the physician is at risk of becoming the least-informed person in the room.

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Thinking of Healthcare Reform as a Movement

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By TOMMY BEVERIDGE

Thought experiment. What if the United States had a vast network of primary care-oriented non-profit health clinics?  Imagine if there were, say, 17,000 locations in the most needed corners of our country? What if these clinics had to see everyone, had to offer a sliding fee scale for their services, and be run by boards comprised of a patient majority?  Just for fun, what if they also provided dental and behavioral health services, worked with local social programs, and helped coordinate with specialists and hospitals? Couldn’t that be a solid cornerstone for primary care-centric health reform?

Stop dreaming, say the skeptics. Stick to reality. It is real. Sometimes called Federally Qualified Health Centers, America’s Community Health Center (CHC) program is the usual source of care for 34 million people, or around 9% of the country. That’s a lot of people, and yet they have a fairly low public profile outside healthcare circles. One reason is that most people who go to a CHC don’t know it’s a CHC. It’s just the local clinic. It’s just their doctor. It’s not another government program to complain about. If you have a problem, you talk to the management, who are also your neighbors.

Of course, it’s also a government program. The federal government gives CHCs annual operating grants, prospective payments for Medicare and Medicaid, subsidized malpractice insurance, physician incentives, and host of other benefits in exchange for following strict program requirements. While the program operates under the standard writhing mass of legislation, regulation, guidance, and program oversight, the patient’s perspective is simply affordable, local health care with minimal complexity.    

Where did all this come from? The Community Health Center Program originated with little fanfare around the same time as Medicare and Medicaid. It fit in neatly and discretely with President Johnson’s War on Poverty; little more than a demonstration project alongside the era’s far more massive reforms. From the beginning, program leadership understood the moral and political imperatives to serve all underserved communities, no matter the demographic. The first two CHCs opened in 1966 in the Mississippi Delta and in a low-income part of Boston. With a sample size of two, they were already urban and rural, black and white, north and south.

By 1980, CHCs served around 1 million people a year. By the end of the Reagan era, they served 5 million. By the end of George W. Bush’s second term, it was 18 million. During the struggles over the Affordable Care Act and COVID, CHCs continued their expansion with funding reauthorizations, even when other programs were cut. At 34 million patients, the program costs the federal government around $6 billion a year, not including reimbursements from insurance plans. There are many more CHC locations than there are McDonald’s.

The CHC program is also a movement. This dual status is the program’s secret to growing despite shifting political winds. CHCs have a deep bench of community advocates. A well-organized network of interested citizens is trained to interact with their state and federal representatives, demonstrating that they are a viable voting bloc not to be trifled with. Today, CHCs have affiliate state associations, more than one independent advocacy group, and an army of concerned citizens ready to show up at the Capitol and statehouses across the land.

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