Major Medicaid Proposals and Strategic Moves in Healthcare M&A with Laura Dyrda

Summary

Becker’s Healthcare Podcast Summary: Major Medicaid Proposals and Strategic Moves in Healthcare M&A with Laura Dearda

Released on June 17, 2025

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Introduction

In the June 17, 2025 episode of the Becker’s Healthcare Podcast, host Scott Becker engages in an insightful conversation with Laura Dearda, the esteemed Editor-in-Chief at Becker’s Healthcare. Dearda delves into two pivotal topics currently shaping the U.S. healthcare landscape: significant Medicaid budget proposals and strategic mergers and acquisitions (M&A) within the healthcare sector. This comprehensive summary captures the essence of their discussion, highlighting key points, critical analyses, and expert opinions.

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1. Major Medicaid Proposals and Their Impact

Laura Dearda begins by addressing the tumultuous developments surrounding the budget bill as it navigates through Congress. She emphasizes the heightened tension due to divergent approaches between Senate Republicans and their House counterparts regarding Medicaid funding.

“Senate Republicans are proposing deeper and broader cuts to Medicaid than their counterparts in the House, which is heightening concern among hospital leaders who are already warning of some significant risks to patient access, insurance coverage, and financial stability.” [01:15]

Key Points Discussed:

• Senate Finance Committee’s Budget Reconciliation Draft: Released on June 16, the draft aims to curtail Medicaid spending through:

  • Tighter Eligibility Rules: Stricter criteria for Medicaid eligibility could reduce the number of beneficiaries.

  • Reduction in Provider Tax Limits: A particularly contentious proposal involves phasing down the maximum allowable provider tax rate from approximately 6% to 3.5% in Medicaid expansion states. This phased reduction starts in 2027 and is fully implemented by 2031, directly impacting hospitals and health systems reliant on these taxes for funding.

    “One of the most contentious elements in the Senate draft is a phased reduction of the maximum allowable provider tax rate from about 6% to 3.5% in Medicaid expansion states.” [02:45]

• Expansion of Work Requirements: The Senate’s version would extend work prerequisites, mandating adults with children over 14 to work or volunteer at least 80 hours per month to maintain Medicaid eligibility. This is a significant increase from the House bill’s initial projection of 5.2 million potential disenrollments.

  “The Senate version would require adults with children over 14 to work or volunteer at least 80 hours per month in order to remain eligible.” [04:00]

Impact on Healthcare Providers:

• Financial Strain on Hospitals: Dearda highlights that reduced Medicaid funding could exacerbate underpayments and increase the uncompensated care burden, particularly affecting safety-net and rural hospitals. These institutions, which serve a substantial Medicaid population, may face heightened financial pressure, leading to possible service cuts.

  “Hospital leaders have really been quick to denounce the Senate proposal, warning that these deeper cuts would exacerbate the underpayment from Medicaid as well as increase uncompensated care burden on hospitals.” [04:50]

• State Funding Challenges: With Medicaid expansion, the federal government covers up to 90% of costs, compared to 50% under traditional Medicaid. Limiting provider taxes could significantly reduce states' abilities to fund Medicaid programs and support hospitals adequately.

  “Under Medicaid expansion, the federal government covers up to 90% of the costs, compared to about 50% for the traditional Medicaid. And reducing the state's ability to use those provider taxes could significantly impact how states fund their programs.” [04:20]

Legislative and Industry Reactions:

Dearda points out the contentious debate surrounding the use of provider taxes. While proponents argue that these taxes are crucial for Medicaid funding, critics, including the Centers for Medicare & Medicaid Services (CMS), accuse states of exploiting the system, likening it to money laundering.

> *“CMS has also previously compared the provider taxes to money laundering, citing instances where states collect taxes from providers, then receive enhanced federal matches as well, and then return those funds to those same providers.”* [04:05]

Conclusion on Medicaid Proposals:

Dearda underscores the uncertainty looming over Medicaid funding, stressing that ongoing negotiations and potential legislative changes remain a top concern for healthcare executives nationwide.

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2. Strategic Moves in Healthcare Mergers and Acquisitions: Ascension’s Acquisition of Amsurg

Transitioning to the M&A landscape, Dearda sheds light on a significant recent development: Ascension’s agreement to acquire Amsurg, a prominent Ambulatory Surgery Center (ASC) operator.

“Ascension, one of the largest Catholic health systems based in St. Louis, entered into an agreement to acquire Amsurg, which operates more than 250 facilities across 34 states.” [05:35]

Key Highlights:

• Details of the Acquisition:

  • Amsurg’s Portfolio: Previously owned by Envision Healthcare, Amsurg manages a vast network of ASCs specializing in areas such as gastroenterology, ophthalmology, and orthopedics.

  • Strategic Expansion: This acquisition will significantly bolster Ascension’s outpatient footprint, complementing its existing 58 surgery centers and expanding its operational capabilities.

    “The health system plans to continue the strategy that Amsurg has in terms of physician-led joint ventures in governance as well as spread the strategy to other health systems in the nonprofit sector.” [06:20]

• Market Implications:

  • Shift to Outpatient Settings: The trend of moving complex procedures from inpatient hospitals to cost-effective outpatient settings is accelerating. This includes minimally invasive surgeries in orthopedics, spine procedures, and cardiology.

    “More complex procedures are moving out of the hospital into the low-cost outpatient setting, including more orthopedics, spine procedures, cardiology procedures.” [06:45]

  • Operational Synergies: By integrating Amsurg’s specialized centers, Ascension enhances its ability to offer a broader range of services while maintaining cost efficiency. This move mirrors strategies employed by other health systems like Tennant Healthcare, which has expanded its ASC platform through United Surgical Partners International.

    “Having this network of surgery centers could be really beneficial for Ascension as a primarily now inpatient hospital facility chain.” [06:55]

• Regulatory and Closing Conditions: The deal is anticipated to close by late 2025 or early 2026, subject to standard closing conditions and necessary regulatory approvals.

  “The transaction is expected to close in late 2025 or early 2026, remaining subject to customary closing conditions as well as regulatory approvals.” [07:15]

Strategic Significance:

Dearda emphasizes that Ascension’s acquisition of Amsurg exemplifies a broader shift towards integrated care models and the optimization of service delivery through strategic partnerships and acquisitions.

> *“This is just really kind of a fascinating move and something that we anticipate we'll see more of for surgery centers in health systems trying to get more into that space.”* [07:30]

Conclusion on M&A Trends:

The acquisition not only reinforces Ascension’s market position but also signals a continued emphasis on expanding outpatient services, which are poised to become increasingly vital in the evolving healthcare ecosystem.

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Final Thoughts

Throughout the episode, Laura Dearda provides a nuanced analysis of the current Medicaid proposals and their potentially far-reaching implications for healthcare providers across the United States. Simultaneously, her insights into Ascension’s strategic acquisition of Amsurg offer a window into the dynamic nature of healthcare M&A and the shifting paradigms towards outpatient care.

Participating healthcare leaders and stakeholders would find this episode particularly valuable for understanding the intersecting forces of legislative changes and strategic business maneuvers shaping the future of healthcare delivery.

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Notable Quotes:

• “Senate Republicans are proposing deeper and broader cuts to Medicaid than their counterparts in the House...” [01:15]
• “One of the most contentious elements in the Senate draft is a phased reduction of the maximum allowable provider tax rate...” [02:45]
• “Under Medicaid expansion, the federal government covers up to 90% of the costs...” [04:20]
• “Ascension, one of the largest Catholic health systems... entered into an agreement to acquire Amsurg...” [05:35]
• “This is just really kind of a fascinating move and something that we anticipate we'll see more of...” [07:30]

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About Becker’s Healthcare Podcast

The Becker’s Healthcare Podcast, hosted by Scott Becker, is dedicated to the individuals who drive the U.S. healthcare industry. Featuring daily 15-minute episodes, it offers industry news, analytical insights, and thought leadership from influential healthcare decision-makers. Stay informed on the latest trends and developments shaping healthcare by tuning in wherever you access podcasts.

Transcript

[Becker's Healthcare]

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[Scott Becker]

This is Scott Becker with the Becker's Healthcare Podcast. We're thrilled today to be joined by brilliant Editor in Chief Laura Dearda. Laura is literally a most valuable player. Laura talks to us regularly about stories she's watching closely in healthcare. Laura, let me turn it to you. Maybe you could tell us what are a few of the stories that you're watching closely currently.

[Laura Dearda]

Absolutely. Well, thank you so much Stat. And there are so many things that we have a close eye on that we're watching, but one of the biggest is certainly the twists and turns with the budget bill going through Congress. Currently, Senate Republicans are proposing deeper and broader cuts to Medicaid than their counterparts in the House, which is heightened concern among hospital leaders who are already warning of some significant risks to patient access, insurance coverage and financial stability. As a result, the Senate Finance Committee's budget reconciliation draft, which was released June 16, aims to rein in some of that Medicaid spending through tighter eligibility rules and a reduction in the provider tax limits as well as an expansion of work requirements for enrollees. According to Politico, the proposal is part of a broader legislative efforts that align really with President Donald Trump's agenda. And one of the most contentious elements in the Senate draft is a phased reduction of the maximum allowable provider tax rate from about 6% to 3.5% in Medicaid expansion states, which is a significant departure from the previous House bill, which would only freeze that provider tax rate at current levels. The Senate plan would then begin to phase in a cap in 2027, fully implemented by 2031, and nursing leaders in care would be some of the immediate facilities that would be impacted. You know, those would be exempt. So it really, truly would focus a lot on what hospitals and health systems are seeing today. And then we also saw that the provider taxes allowed states to leverage federal Medicaid matching funds, and supporters argue that they're essential to funding care for the low income populations. While critics, including cms, say that the tactic is being exploited, CMS has also previously compared the provider taxes to money laundering incited instances where states collect taxes from providers, then receive enhanced federal matches as well, and then return those funds to those same providers. So. So it's really a contentious situation and something that we're keeping a close eye on the back and forth. I know we're not at a final stage yet with it, but it's truly weighing heavily on a lot of the executive teams for hospitals and health systems across the country. Obviously, small rural healthcare providers are hugely impacted by what could happen on the Medicaid level because so much of their population is covered by Medicaid. But the same is true for large health systems and even national health systems as they're looking at the impact on the hospital level. A lot of these organizations, organizations do accept a good amount of Medicaid patients and would see a lot of changes if these new rules were to come into play. So right now, under Medicaid expansion, the federal government covers up to 90% of the costs, compared to about 50% for the traditional Medicaid. And reducing the state's ability to use those provider taxes could significantly impact how states fund their programs as well as how much support they are able to give to hospitals. The Senate bill also expands a work requirement beyond the House plan. The Senate version would require adults with children over 14 to work or volunteer at least 80 hours per month in order to remain eligible, according to the New York Times. And analysts predict that this push for could mean Medicaid disenrollments well above the initial 5.2 million projected in the House bill. And hospital leaders have really been quick to denounce the Senate proposal, warning that these deeper cuts would exacerbate the underpayment from Medicaid as well as increase uncompensated care burden on hospitals and threaten some of their service delivery, especially in those safety net hospitals and rural hospitals. They could see additional service cuts and other areas where they could just be under too much financial pressure and strain. And so it's something that hospital and health system leaders are certainly watching closely, trying to figure out what's going to make the most sense and how they can advocate for hospitals to continue to receive the right level of Medicaid funding. So they're communities and the lawmakers constituents have access to care.

[Scott Becker]

Laura, fascinating. What's going on seeing the headlines that looking at deeper cuts obviously frightening for hospitals and health systems besides the potential deeper cuts as the Senate tries to get the the budget closer to balance versus these big deficits, what else are you watching? What else is top of mind currently that you're watching out there?

[Laura Dearda]

Yeah, absolutely. So, you know, we're really focused on the health care M and A environment and just hot off the presses. As of June 17, a really big acquisition has come across the line. Ascension, which is one of the largest Catholic health Systems based in St. Louis, entered into agreement to acquire Amsurg, which is an ASC operator with more than 250 facilities across 34 states. AMSURG was previously owned by Envision Healthcare, but then split from the physician services giant when it reorganized admitted bankruptcy in 2023. This move by Ascension will significantly expand its outpatient footprint when the deal closes and adds centers that are specialized in gastroenterology, ophthalmology, orthopedics and other services to Ascension's network. Ascension currently has 58 surgery centers and is deepening its operational footprint with the transaction. The health system plans to continue the strategy that Amsurg has in terms of physician led joint ventures in governance as well as spread the strategy to other health systems in the nonprofit sector. Ascension is targeting late 2025 or early 2026 to close the transaction, which continues to remain subject to customary closing conditions as well as regulatory approvals. The transaction also comes as more complex procedures are moving out of the hospital into the low cost outpatient setting, including more orthopedics, spine procedures, cardiology procedures. You know, really a good number of outpatient surgeries, as they become less invasive are being pushed into that outpatient surgery center space. And so having this network of sur centers could be really beneficial for Ascension as a primarily now inpatient hospital facility chain. And this also takes a page out of the notebook of other health systems including Tennant Healthcare. Tennant has heavily focused on scaling its ASC platform under the brand of United Surgical Partners International. So this is just really kind of a fascinating move and something that we anticipate we'll see more of for surgery centers in health systems trying to get more into that space.

[Scott Becker]

Fantastic Laura. So that's fascinating to watch Amset Ascension go after Amsurg. Amsurg, who has been this great, great company, took it to the chin a little bit the last couple years, but just really fantastic to see them moving in the right direction and Ascension growing like this. Sun's got magnificent leadership. Laura, again I would tell you, thank you so much for joining us. I know also you in person next couple days at the Orthopedic Spine and Pain Management Conference. Totally looking forward to that. Thank you for joining us. On the on the back of private equity and business podcast. Thank you.

[Laura Dearda]

Thanks, Scott. It's always a pleasure.