047 Healthcare Nation
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Rick Gannotta: [00:00:00] Hey, welcome to the Healthcare Nation. As I've been watching the first 100 days of this administration unfold, it's become increasingly clear that we're standing at an inflection point in US healthcare, and many people don't yet realize how deep these shifts run. In the span of just a few months, we've seen a series of executive orders, agency moves, and market reactions that could, in my opinion, reshape who gets care, how hospitals operate, what kinds of innovation reach patients, and how the US healthcare economy attracts or loses investment.

These changes are not isolated. They're connected. When Medicaid coverage is quietly rolled back, vulnerable, patients lose access, and the hospitals that serve them face new financial pressures. When funding is cut to academic medical centers and research programs, the pipeline of new cancer therapies and next gen treatment slows just when we need more innovation, not less.

And when an ambitious AI moonshot project like Stargate is launched, but without clear regulatory [00:01:00] guardrails, alignment with public health priorities, the future of innovation becomes both exciting but also uncertain. So today we're gonna unpack three of the most consequential trends shaping the future of healthcare.

The risk to Medicaid and the a CA, the crisis in higher education and US medical research and the potential and risks of Project Stargate. But most importantly, we'll see what these shifts do and what they mean for patients and the hospitals and the research that make the Healthcare Nation what it is.

I'm Rick Genta and welcome to the Healthcare Nation.

Welcome to the Healthcare Nation. Joe. It's been a while since I've been in the studio.

I've missed you, buddy. Yeah, welcome back. Glad to be here. We got a lot to cover. I thought, as I said in my preamble. Pick out three really important, three or four important things. [00:02:00] So I'm gonna turn it over to you. And just so our listeners know, we mine a lot of what's out there in the media, but what we listen to is your voices.

So send in your comments. That's where we've got this show really derived from. It's from the comments that have been out there. So Joe, take it away. Set us up. All right,

Joe Woolworth: well, let's jump in. Let's start with Medicaid the a CA and Doge, you've called these a stealth risk in the past to millions of people.

What's really

Rick Gannotta: happening? Yeah, and let me just clarify on the stealth risk piece first I would say this, why do I call it? Because most of it's happening under the radar or it's, it's something that's out there, but I can't pick it up. I can't see it. So what's underneath that, and I'm not gonna get into details of the executive orders, but what I will say is that Doge, which I think is seen its final days now with Elon Musk leaving.

Although many elements of it are gonna continue from the efficiency side, but one of the first actions that were taken was to revoke the prior order that expanded Medicaid and certain [00:03:00] provisions of the Affordable Care Act, right? The outreach side of it. So at the same time, and we've seen this, the Centers for Medicaid and Medicaid Medicare services, right, has seen staffing cuts about 300 positions, about 5% of its entire workforce.

That is a big number. So the concern here is when you add it all up, millions of Americans, particularly as we look at Medicaid expansion states are going to have more barriers to getting coverage. This is a big deal. I've said it before, estimates that are out there, say around 8 million people. So it's gonna impact not only I think those individuals who depend upon that coverage, but there's these externalities as well that I know you're interested in.

Joe Woolworth: Yeah, I mean there's, there's been so much in the news. It's hard to cycle out. It seems like, hey, this is happening. And it's like, oh, we kind of backpedaled and then it's, it's crazy. And then it's not so crazy. And I do know kinda like the overarching numbers, what they set out to cut, they only ended up cutting like two or 3%.

[00:04:00] So, hey. Right.

Rick Gannotta: Absolutely. The one thing I'll tell you, look, I mean I don't want folks to get me wrong or get the show wrong. We're all about efficiency and making sure that you run things in a fiscally responsible way so you can do the right thing for those you serve, in this case, patience and wake up tomorrow and do it all over again.

Yeah. But part of this is also the balance and understanding what you're

Joe Woolworth: cutting. So these cuts, the specifically the ones we're talking about in the executive order here, what's the impact gonna be on patients and hospitals and. Innovations in the market.

Rick Gannotta: Yeah, and we should ask that over and over because I think, at least for us, and what we try to cover is, is you know, not limited to those three things.

But that definitely drives and influences a lot of our topics. I would say this look on patients, on the people, on folks who depend upon this more people. If you take a look at the, the impact of what's happening with Medicaid in particular here. Could have disruptions to their care and certainly financial strain.

I'm not gonna unpack that completely, but you can imagine with work requirements or you know, [00:05:00] dialing back on certain children's programs, snap, et cetera, it could definitely impact care for many. We at least know, again, in the estimates that I said that there's six to 8 million who could lose coverage altogether because of the way things are.

Are now looking with these cuts and how they impact Medicaid at the state level with hospitals a little different. I think safety net hospitals, especially those in rural areas, I think they are going to have growing financial pressures. I say growing 'cause they've already got them. I mean, it just is part and parcel to what you're doing if you're in a safety net or a rural.

Environment. So I think when you can't depend anymore on that Medicaid dollar coming in, covering folks, then you're going to have two things happen. One is a hit to your bottom line just with respect to people who are insured. And the other thing is more folks showing up at the emergency department who don't have insurance, which you're going to have to, you know, deliver care to regardless.

Right. And the third part of your question [00:06:00] on innovation in the markets, look, it's all interconnected. I mean, these topics, there's a thread that runs through them. Whether you look at I think the private markets and their investment see in, in managed Medicaid or those products that are out there. I think a lot of states depend upon that.

But beyond that, I think this type of environment creates, creates uncertainty and innovation and investment and innovation. The market side of things. When you look at, again, folks who are looking at Medicaid payment innovations, that is going to be blunted, and I'm not gonna say it's a complete. Freeze.

But I think things are gonna get chilly with respect to private investment in some of these value-based care models that are tied directly to Medicaid. So we've been talking about Medicaid. How does this affect Medicare? Well, you know, I think when you look at how they're linked and the backend at the federal side, we look at CMSI think that there's a potential because of the staffing cuts at CMS.

It could [00:07:00] absolutely impact and influence how Medicare payment models are going to unfold. The reviews associated with those, I think fraud investigations that were a big part of Doge could be, you know, impacted by this. The oversight functions, potential risks to program integrity, I think, and quality, particularly when you look at Medicare Advantage and there's been scrutiny over that over the last couple of years.

So I think that's probably the way this. Particular area that I'm focused on right now, which is Medicaid, could impact Medicare.

Joe Woolworth: And as we're seeing these, these risks go beyond just insurance. Let's look at what's happening in, in medical research and, and higher ed.

Rick Gannotta: Look, this has been in the news, obviously started with DEI didn't start and stop there because the funding cuts are across the board.

I think the initial executive order did impact programs focused more on the DEI side, but it's gone beyond that now to impacting NIH grants. And the [00:08:00] associated components that go into that, the running of laboratories at academic centers, these private public ventures that are out there and the need to dial back because of reduced funding.

What does it mean? What it means is that if you take a look at leading centers, now we know Harvard's been in the news, but. Guess what? University of California, San Francisco, a powerhouse in clinical innovation. Duke. If you look at NYU, if you look at a lot of the folks that are out there doing groundbreaking research, including, you know, really important topics like maternal mortality, obviously HIV aids, all the prevention across the board, healthcare disparity.

But I would say perhaps one of the most. Important clinical diagnosis and areas that are impacted is gonna be cancer care. Why? Because it depends so much on cutting edge research. It, it has to be part of a synthesis of advanced AI and large language models. And that is exactly where I think some of these cuts are going [00:09:00] to.

If you take it a little further, the NIH has. Capped these indirect cost reimbursements at 15%. That's down from like 28%. This could represent a multi-billion dollar funding reduction for medical schools across the country, so that is a big, big number.

Joe Woolworth: And, and do you have any idea or a sense of what percentage of that funding is towards research?

You know

Rick Gannotta: Large part we would say would go into that. And if you take a look, and this is a proxy for, for I think what's out there, if I was just going to look at the impact on say, patient cares hospitals, which which we bring up all the time. And then innovation, fewer clinical trials, slower access to cutting edge treatments for patients.

On the academic medical center side. To your question, I do think with these tighter budget cuts, they're going to need to cut back on research and training programs. What we're seeing, and I'm not gonna name an institution specifically, is that they're freezing [00:10:00] or cutting line items for new faculty positions.

And redirecting those dollars so that they can keep these academic very innovative labs that are dealing with some of the cutting edge research running and it's coming at the expense of teaching students. So that's what I'm saying with these faculty phrases. Now on the innovation side, I do think that this level of academic leadership and any slowing down of that pipeline is going to impact biotech and pharma.

Innovations because of the downstream effects. This could potentially impact I think, US leadership in those areas. And what do I mean by that? China is out there. If you take a look, this was the study came out recently in the top 10 publications that are out there citing new innovation breakthrough papers.

China had nine of the top 10 the US had one. So there is competition in this space. We have to be really careful what we're doing with [00:11:00] respect to cuts in the academic world because the ripple effects are tremendous.

Joe Woolworth: Yeah. I wanna unpack one of those ripple effects. I'm curious what you think about.

Just the idea of if there's uncertainty, what, what kind of effect does that level of uncertainty of, like, I know in the stock market, if uncertainty is crazy, people just don't put money in. They're like, or they change their investing strategy. And when it comes to research, are hospital, are schools, research facilities, are they similar when there's a lot of volatility, are they gonna put their focus other areas?

Rick Gannotta: Yeah. I think that, I, I don't know that uncertainty applied in that. You know, in, in, in that. Kind of challenge. What you're describing is, you know, absolutely applicable. But what I would say is this, not knowing where your next funding dollar is coming, if we could call that uncertainty, it forces them to make different types of decisions.

One that I just mentioned, freezing faculty positions so that you could fund, you know, an academic lab. There's a lot [00:12:00] of those trade-offs happening. And I think the terminal point to that could be if things aren't remedied at some point, shutting down some really cutting edge research that we have out there.

And again, seeding this to others. I mean, Europe, Europe is now stepping up and saying, Hey, bring your biotech innovation here. We know I just mentioned China. They are doing it. And if you take a look at particular investment, let's just say wearables and a lot of the cutting edge, diagnostics that depend upon artificial intelligence, right.

Ai, a lot of that is now being threatened with competition from China. And, you know, we don't wanna get into a situation like we did with COD with PPE, personal protection for our, our healthcare workers being manufactured someplace else. I mean, that would be, you know. Down a wrong path.

Joe Woolworth: Right. And we talked about, on the show you warned about the threat to medical research, but let's talk specifically about the impact on patients, hospitals, and innovation and markets.

[00:13:00] Yeah, yeah. I

Rick Gannotta: think that, let me, let me just go and jump directly to, to the market side. 'cause I think we, we touched upon the other two, but what I'm seeing is that there is increasing tension, I would say, in the, in the biotech sector. And I don't wanna. Discount pharma that's has its own problems across the board, but MedTech biotech, I think if you take a look, the indices are down from their peaks of a couple years ago, many small to mid cap firms, and now trading below their cash reserves.

I know we had Emily Evans talking about this in a podcast a while back. I think things have changed even from then. And capital flows have slowed, right. So IPO activity is down, fundraising is off. You know, there are these layoffs associated with some of these, cuts to grants and research associated applications that absolutely bleed in, no pun intended to the private sector.

So I think across the board, we're [00:14:00] going to have, I don't wanna say, you know investor confidence being completely shaken, but again, that cautiousness because some of the things they had hoped for. Like, you know, relaxed regulation hasn't necessarily occurred. Right. In fact, I think some of the changes of FDA at the FDA haven't made it that much easier for some of these new MedTech biotech and even pharma, you know, companies to bring new innovations out there.

So some of it remains to be seen, but, you know, I hope that kind of clarifies a little bit more on the, you know, the uncertainty aspect, particularly as it relates to the markets. And again, look. We're doing this show on June 2nd. Things could change, you know, in a couple days.

Joe Woolworth: Yeah. They certainly have in other area.

Mm-hmm. We've been, we've been all over the place. So let's kind of jump into the biotech markets. Innovation. It's slow down. What are the trends affecting healthcare innovation and investment that are happening right now?

Rick Gannotta: great question, but why don't we just take one great example from it, [00:15:00] Stargate.

Joe Woolworth: So in the midst of this and what could be profound innovation, we've got Project Stargate, a $500 billion AI healthcare initiative.

How do you see it?

Rick Gannotta: I, I have to tell you, this is you know, this, I'm very bullish on artificial intelligence. Its applications in, in clinical care and, and in the health sector across the board. I think this is a combination of a lot of promise, but some peril, and we talked about the peril side. I.

Before, and I'm gonna get into that in a second. But look, if anybody doesn't know what Project Stargate is, yeah, you just give a quick overview. Yeah. Listen, I, I mean, project Stargate is an initiative that brings together Oracle Open ai, SoftBank, Nvidia, Microsoft to build advanced AI infrastructure.

These major potential applications in healthcare and in the health sector kind of writ large across the board. I think the potential for breakthroughs in, look, we, we talked about earlier, cancer detection by leveraging ai, obviously personalized [00:16:00] medicine the efficient clinical decision making, whether it's step therapy or just the velocity of care.

And of course the, the potential, I think to create new, believe it or not, significant jobs in the field of AI and healthcare. So there's a positive economic play there as well. But I think the peril piece, and I don't want to go too, you know, crazy on this, if I could use that word. Look, we need to have a very strong national framework that looks at artificial intelligence in healthcare and in the sector.

We've talked so much about the promise of it, that there's been a lot in the news lately about what's happening with ai, and I think scrutiny is important if we're gonna ensure both safety and access and equity. The other piece is who owns it, right? The, the privacy concerns. This is ubiquitous. We've seen this, whether it's 23 and me, or whether it's the HIPAA forms you have to put out.

If you're gonna see your physicians, privacy issues have to be addressed when they're starting to look at. [00:17:00] This level of AI data and I think the promise of it to go into your personal life and pull some other, you know, in a passive way, information about you that we wouldn't even consider clinical.

That could be what you eat, you know, what you spend your money on, et cetera. Yeah. So those are all components of this. So I would caution that. Look, I mean, it's absolutely gonna accelerate innovation. You know who the players are. If the ecosystem is healthy and we ask the right questions, I think we're going to come out of the other end with something, given the players in this that it's gonna be groundbreaking.

Joe Woolworth: Yeah.

Rick Gannotta: But there's some area that we really have to, you know, be, be cautious about.

Joe Woolworth: Yeah, that makes sense. I mean, I. I remember the 23 and me thing. I found that so fascinating. When they started, they were like, we're protecting your data. It's all safe and safe. But then they sold it and now it's not their data.

Yeah. So a different company got to say that. And I think when you get corporations involved in healthcare, you gotta have concerns like that. So what happens if it starts down this path and it's [00:18:00] great, but then it's bought by somebody else that. Doesn't value the same level of privacy,

Rick Gannotta: all that. That's, that's Joe, that's a good point.

And that happened overnight when you think of it. Yeah. I, I think the attorney general of, of New York said, Hey, delete your data. Or California, I mean, that kind of, you know yeah, an pronouncement to the public, it scares people too. And we should all be, you know, again,

Joe Woolworth: and that is how most sales are announced, right?

Because it's. If they don't want to create volatility, if they don't need it. Right. And so it's usually last minute, middle of the night, Hey, we sold this company. Yeah. You know, not good, not good. So, all right, so we're talking ai, we're talking about potential breakthroughs, we're talking about potential perils.

What's the impact of it on hospitals and innovation in the markets?

Rick Gannotta: Yeah. Listen, I, we always have to go back and, and I think you know, ask ourselves these questions. I think with respect to this initiative specifically. If you could have potentially faster diagnostics. Diagnostics, better personalized medicine, really getting into the level of detail where if [00:19:00] we maintain trust, right, and access and the equity piece, the impact on patients would be tremendous, really positive for hospitals again.

They have to carefully invest in AI platforms. I think most hospitals outside of big academic centers or integrated networks are trying to figure that out right now because it's, it's such a game changer, whether it's clinical care or financially efficient ways to do your operations. Everything from low hanging fruit, meaning pre-authorizations.

All the way out to call centers, right? The, the, the promise is fantastic. The, at least for me, the Stargate initiative. When it goes back to the investment question you asked earlier, I think this could really drive significant levels of new investment, particularly when the compute power starts even getting dialed up even more.

And we see how foundational research. Like some incredible cures that we know are out there on the horizon with this type of collaboration. I think [00:20:00] it's going to really open up some incredible opportunities for folks.

Joe Woolworth: Yeah, I mean, certainly I agree. I think when, when we start seeing success stories or diagnosis that would've been missed without it, you know, or potential treatments or modalities, that could be beneficial.

You know, who knows? It's, but it all happens so fast. Like I just, AI wasn't even a thing not that long ago. That's right. Yeah. And now it's like a part of most people's workday and it went from, oh, this is a, this is a thing to now this is integrated and it feels like we've been talking for a long time about regulation, but it just is going so fast.

I don't know if there's any kind of significant. Regulation, or if this is, I guess the question that I got for you is, is this a cat's out of the bag? We better just deal with this situation. Yeah. Is the idea of like. Trying to slow it down. Even, even a conversation anybody's having anymore,

Rick Gannotta: you know, I, I, I would think in the health sector, the one thing we have to be careful of is regulatory capture, right?

We saw this with the [00:21:00] early EHR, right? The electronic health records. Electronic medical records, when just a few players are calling the shots on how the regulations are going to be spelled out. Yeah. It, it could create, I don't wanna say monopolies, because there's government agencies that keep that from occurring.

They could put such distance between, you know, the lead player and the next, that it's for all intents and purposes, a monopoly. We don't want that to happen in ai and we know there's a few players and in the health world, right, in the healthcare delivery side, I think there's enough space and there's enough area, whether you look at, like I said earlier.

Low hanging fruit, like pre-authorizations, that's very different than us looking at gene therapies or, you know CRISPR applications in rare diseases. They're two totally different things. I don't know if the same company should be doing both. And what I'm getting to there is there's probably a lot of opportunity here for many

Joe Woolworth: Yeah.

Rick Gannotta: The regulatory side, which I think is at the bottom of, of, of kind of [00:22:00] all of our questions. To be careful. We do that. We have to be careful that we do this in a way that maintains safety. Mm-hmm. What do I mean by that? Again, personal information. Gotta also have access and have to understand how equity and equitable access all comes together when you're having these revolutionary technologies out there.

Joe Woolworth: And to further complicate it, it's not. Only down the track of, we don't wanna have a monopoly also in tandem. It's like we're competing against other nations, right? That if we don't develop it the way that we want it to be developed, we might just be using a tool prebuilt from another. And so it is complex.

Yeah. And this level, this level

Rick Gannotta: of data, you could see why it would be attractive to. Anyone who's out there including a potential adversary, not only for, well, you could monetize it, but also even in a world of national defense and we know how dangerous that could be because of COVID.

Joe Woolworth: Yeah. So a lot of big concepts here, bringing it all together.

What's, what's the bottom line for the Healthcare Nation listeners?

Rick Gannotta: Yeah, look, I think and I gave a [00:23:00] lot of thought to this in anticipation of this show you know, when we look at things that are happening in the first a hundred days, 'cause this is what we're looking at, look. Rolling back coverage when a time of economic hardship is gonna be tough for some, particularly if you look at 8 million people potentially losing their Medicaid, that's not a good thing.

The frostiness associated with blunting, what I would say could be potentially life-saving research because of what we're doing. In higher ed with respect to grants and dialing back some of those issues that are associated with, you know, forward thinking. You know, postdoc fellowships and how they're funded is, I think, dangerous territory if this impacts, I.

Accelerating cancer care, mental health, infectious disease. You know, we're not just talking about innovations, it could potentially be cures. So I'm really worried about that. And then behind that, of course, is seeding leadership in that area to, you know, [00:24:00] someone else I. Whether it's China or whether it's Europe, and of course, look, we with Stargate, we're launching a major AI initiative, and the question we all have to have is, is there sufficient frameworks in place so that those protections, right, so that the public trust is intact and that it is out there doing the right thing for people.

Yeah, it's very complex and I mean,

Joe Woolworth: it's. The challenges that, that some of these issues are facing is that they're getting swept up in other political issues that are seemingly taking more of the. Conscious or the attention of the American public and these are kind of getting, these issues are getting buried.

Yeah. 'cause it's, it's about something else for a lot of people.

Rick Gannotta: Yeah. And that's why, you know, I, the word stealth came out, you know, early on when, when you and I were talking because you know, it's there, but we just can't see it. Right. And before you know it, it's like the frog and boiling water, you know, the changes have happened and the executive orders, no, there's no checks on that and [00:25:00] things.

And by the way, I'm not against, I don't want folks to hear me. Yeah. Like, hey, I mean, I think a lot of what RFK Junior's doing, we talked about it before with HHS, particularly on the nutrition side. Those are good things. At the same time, we have to have a balanced look at what we're doing to, right. You know, healthcare infrastructure where we could be going down a road where practically and tactically, a lot of people are showing up at the ED with no insurance.

Sure. So listen, Joe, another great show. I really appreciate being back here in the studio and for all of our listeners out there, thank you. Stay healthy, stay informed, and the best way to do that is by staying tuned into the Healthcare Nation on your favorite podcast platform. So, Joe, until next time.

Until

Joe Woolworth: next time.

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