A Gisty Halloween: October 30, 2026

In the News

What happened in healthcare recently—and what we think about it.

Medicare clinical laboratory payment cuts in 2027. Hospitals and health systems could see Medicare payment cuts for tests on the Clinical Laboratory Fee Schedule (CLFS) beginning in 2027. The Protecting Access to Medicare Act of 2014 (PAMA) transitioned CLFS rate-setting to a market-based approach tied to what private payers pay for the same tests. Preliminary data released by the Centers for Medicare & Medicaid Services (CMS) show that weighted median private payer rates indicate an average difference of approximately 16% compared with current 2026 CLFS rates. Reductions are capped at 15% per test per year and will be phased in from 2027 through 2029. CMS expects to publish final 2027 rates in November.

• The Gist: Reduced payment rates could expose hospitals and health systems with clinical laboratories to increasing financial pressure—including both Medicare reimbursement and downstream impacts on other commercial and managed care revenue. The question health system leaders need to ask is: what role should lab play in our future and how might PAMA affect the financial performance of our outreach lab? Commercial and managed care contracts tied to the CLFS could apply reductions included in the PAMA across a broader share of laboratory revenue, adding to existing commercial payer pressure on hospital laboratories serving outpatients. Payers have already implemented preferred laboratory networks, referral requirements, and benefit designs potentially putting health system laboratory volumes at further risk, explains Chris Peltola, senior vice president at Kaufman Hall. Health systems should develop an informed perspective on their clinical laboratory services under a range of reimbursement scenarios to gain a better line of sight and prepare with eyes wide open. Payment pressure will likely accelerate partnerships, but “this does not imply that partnership will be appropriate for everyone,” he adds. Decisions should be based on the system’s strategy, its financial position, and the role the laboratory plays in its future. Getting ahead now is important, so that health systems understand the financial implications before reimbursement changes take effect and can act quickly with a fully informed perspective rooted in quantitative rigor and in the context of their strategic, operational, and clinical objectives.

And—what we’re following.

• Rural hospitals continue to struggle with over 300 at risk of closure, conversion, or service reduction, according to a new report from the American Hospital Association.
• Employer-based health insurance premiums jumped 9% in 2026, or about $7,471 on average according to KFF’s 2026 Employer Health Benefits Survey.
• Missouri's attorney general tells Eli Lilly to stop requiring hospitals to share information on discounts they receive under 340B.
• New guidelines for organ and tissue donation approved by the Organ Procurement and Transplantation Network take effect November 18, changing how early organ donation discussions and pauses take place.

Plus—what we’ve been reading.

Tuning out the noise. A recent article in The Wall Street Journal explores the latest strategies to address hospital noise. Constant noise disrupts patient recovery and adds to alarm fatigue for clinical staff, making it harder to respond to critical warnings over time. To combat these problems, Stanford Medicine’s Lucile Packard Children’s Hospital redesigned its system triggers and reduced daily alarms by 75% and 82% across two pediatric units a month. The hospital reduced alarms from 60,000 to 26,000 in that timeframe, without increasing emergencies. Vanderbilt researchers added directional musical alarms that clue staff into their clinical urgency and found that staff were able to recognize urgent blood pressure readings 10% faster and that individuals were able to accurately recognize the redesigned alarms 90% of the time. Emory Healthcare saw an opportunity to reduce alarms upstream with AI tools that tune into patterns in the electronic health record before alarms go off, reducing mortality risk and length of stay.

• The Gist: Hospitals are far from the quiet, healing sanctuaries patients might expect. Noise has been a longstanding challenge for hospital facilities spanning technology, clinical operations, and facility design, with consequences extending well beyond patient rest and clinician frustration. Alarms, routine activity, and urgent signals often compete for the same clinical attention. Technology has simply not kept pace with the model of care. Alarms were not designed to distinguish what requires immediate intervention from what can be observed, delayed, or incorporated into routine care. Approaches like those described above point to a broader opportunity to redesign how information moves through the care team and the physical environment. Taking a system-wide approach to the issue could yield meaningful improvements in patient safety, satisfaction, and outcomes, as well as workforce well-being.

Graphic of the Week

A key insight illustrated in infographic form.

Healthcare data breaches declined in first half of 2026

Reported healthcare breaches declined year-over-year in the first half of 2026, according to a recent report in the HIPAA Journal. In the first half of 2026, nearly 33.8 million individuals' personal health information (PHI) was disclosed, with 5.8 million being affected by the largest breach. While the number of reported breaches affecting 500 or more individuals involving unauthorized access and disclosure declined compared to 2025, the number of hacking and IT incidents increased for the third year in a row. Approximately 2.2 breaches are reported daily, and some, especially those affecting business associates, may be underreported due to notification and reporting requirements for business associates and the affected covered entities. For healthcare providers, which continue to be the most affected, the data indicates a continued need to build operational resiliency and prioritize cybersecurity.

This Week at Kaufman Hall

Medical advances are enabling children with medical complexity to live longer with ongoing care needs, while prevention, treatment, and the shift toward ambulatory care have reduced some historically common hospitalizations. Those shifts are changing where and how pediatric demand must be met.

This article by Elizabeth Mack, M.D., MS, traces how pediatric medicine is changing and the pressures that stimulate the need for care redesign and operational innovation.

On Our Podcast

The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in 10 minutes or less every other weekday morning.

Earlier this week, we heard the first part of The Gist Healthcare Podcast host J. Carlisle Larsen's conversation with Joel Klein, M.D., executive vice president and chief digital and information officer at Hackensack Meridian Health, about the system's approach to responsible AI governance, clinician trust, and technology adoption.

This Monday, JC and Klein continue their conversation, discussing the measurable benefits of AI, how the health system approaches patient safety and acceptable risk, and the technology's potential to expand access to care.

Thank you for reading! Please check out our Gist Weekly archive for past editions. We also have all our recent Graphics of the Week available here.

Happy Gist-o-ween! 🎃
The Gist Weekly team at Kaufman Hall