Gist Weekly: November 6, 2026

In the News

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

CVS Health to split off retail pharmacy business. CVS Health on Tuesday announced plans to separate into two independent, publicly traded companies by the first half of 2028. CVS Health will comprise of Aetna, CVS Caremark, CVS Specialty, Oak Street Health, and Signify Health. The other company, CVS Pharmacy, will include approximately 9,000 retail pharmacies along with a mail pharmacy, MinuteClinic, and Health100, the company’s consumer AI tool. The announcement comes nearly a decade after CVS Health’s $69 billion acquisition of Aetna, reflecting a partial unwinding of the vertically integrated model the company built through a series of acquisitions. The two resulting companies will be tied together with a commercial agreement. This news comes as CVS Health announced a 154% net income jump in its Q3 earnings, largely propelled by Aetna’s Medicare business.

• The Gist: For years, healthcare’s largest retail health and pharmacy organizations pursued vertical integration, bringing insurance, pharmacy benefit management (PBM), retail pharmacy, and care delivery under one corporate roof. This appears to be changing. “CVS Health’s planned separation is consistent with what we have seen from Walmart Health, Walgreens/VillageMD, and Dollar General,” said Scott Christensen, managing director at Kaufman Hall. “A retail footprint does not create value alongside health plans, pharmacy, and care delivery without a broader strategy behind it. Notably, CVS Health kept Oak Street Health alongside Aetna, which suggests a deliberate sharpening of strategy rather than a retreat.” There has been sustained political pressure on PBMs, which may prompt companies to reconsider owning a PBM and retail pharmacy together, but health systems should not read this as retailers pulling back for good. Rather, it reflects a narrowing of focus on where companies believe value can be created. “The lesson for health systems is the same as with retail clinics: the long-term economics are steadily, albeit slowly, moving toward whoever manages total cost of care, and away from point solutions and transactions,” Christensen said.

And—what we’re following.

• A federal judge last week vacated a key part of the Centers for Medicare & Medicaid Services’ (CMS’) definition of “medically frail” for Medicaid community engagement requirement exemptions, ruling that the agency exceeded its authority by adding a requirement not included in the law and barring it from applying it in the plaintiff states.
• Affordable Care Act plan premiums will rise by 13% in 2027—the second biggest rise since 2018, following a 26% surge this year, according to a KFF report published last week.
• Bon Secours Mercy Health affiliate HealthSpan Partners announced a definitive agreement Monday to acquire Surgery Partners in a deal valued at $5.7 billion, that is expected to close in the first quarter of 2027.
• CMS more than doubled its proposed payment increase for dialysis, finalizing a 2.7% increase in payments to dialysis facilities for 2027, bringing the Medicare base rate to $297.52 per treatment.

Plus—what we’ve been reading.

AI-designed viruses fight antibiotic-resistant infections. A recent article in The New York Times describes an experimental treatment developed by a biotechnology startup for a patient with a stubborn E. coli infection. Using an AI model, the company, Radical Numerics, created bacteriophages, viruses that kill bacteria, after antibiotics and existing virus-based treatments had failed. The approach builds on phage therapy, which uses viruses to target harmful bacteria. The FDA authorized the experimental treatment, but results are not yet available. The company’s research has not been peer-reviewed, and outside experts say more evidence is needed to evaluate the results.

• The Gist: Finding viruses that work against a patient’s specific infection is difficult and time-consuming. AI shows promise in the development of a practical option for treating antibiotic-resistant infections, shortening the engineering process from weeks to days. Cutting that development time can be especially important when existing treatments fail due to antibiotic resistance. But this approach presents some concerns. Researchers still need to show that AI-designed viruses are safe and effective in patients, not just in lab tests. Hospitals will also need reliable ways to develop, test, and deliver these treatments if the technology overcomes regulatory hurdles and becomes more widely available.

Graphic of the Week

A key insight illustrated in infographic form.

U.S. hospital openings and closures, 2015 to 2025

Hospital closures have been increasing since 2015, according to a new study published in JAMA. Hospital closures increased by 4.0% year-over-year while openings decreased by 3.0% year-over-year between 2015 and 2025. Among 4,962 hospitals studied, 432 closed and 216 opened, leading to a net loss of 216 hospitals and 24,399 beds from 2015 to 2025. Of the closures, 315 hospitals closed fully and 117 retained outpatient services, including 45 rural emergency hospitals.

This Week at Kaufman Hall

Higher interest rates are creating new pressure for hospitals, raising borrowing costs, and complicating capital planning at a time when financial flexibility is already limited.

In a new article, Kaufman Hall’s Jeffrey Sahrbeck and Michael Warden compare today’s environment with the last major rate cycle and examine what the differences mean for health systems. The article offers a framework for thinking about debt, investment, and financial strategy in a higher-rate era.

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.

The Gist Healthcare Podcast will not have a new episode this coming Monday. Catch up on JC’s two-part conversation with Joel Klein, M.D., of Hackensack Meridian Health. In Part 1, they discuss the health system’s approach to AI governance, clinician adoption, and evaluating new technologies, following the hospital’s first-in-the-nation certification from The Joint Commission. Part 2 explores the measurable benefits of AI, patient safety considerations 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.

The Gist Weekly team at Kaufman Hall