Abby Burns (00:02):
From Advisory Board, we're bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. I'm Abby Burns.

Rae Woods (00:10):
And I'm Rae Woods.

Abby Burns (00:12):
This is the last episode of the year, which means we have our sights set on 2026. So today we're going to pull back the curtain on the questions that our research teams are asking next year. In other words, what's on Advisory Board's research agenda?

Rae Woods (00:26):
And it's probably helpful here to clarify that the Advisory Board research agenda is meant to do two things. First and foremost, it's meant to interrogate the problems and questions that are keeping you up at night. These are the questions that you email our team about, the things that headline your board retreats or your executive leadership meetings. Advisory Board sits at the intersection of all of the different stakeholders in the industry, and we're constantly tracking how news, policy, and your strategies are shifting, which means there's a second job of our research agenda, which is to push your thinking and to shine a light on the questions that you aren't asking and that we think you should be.

Abby Burns (01:06):
So here to preview the top questions and topics on our research agenda, the areas that our teams are focusing on in the new year are six Advisory Board researchers. They'll each spend a few minutes sharing what they're studying, why it matters, and why we think you should care about it. To start us off, I'm going to turn that over to Advisory Board's AI expert, Ty Adderholt.

Ty Aderhold (01:30):
Hey all, this is Ty Aderhold, Advisory Board's resident AI expert back yet again to talk AI. I'm sure none of you will be surprised to hear that we're going to keep covering AI and healthcare across the next year, and that's going to happen in two ways. First, we're going to pull back up on AI and healthcare and do a gut check of where we are as an industry, what has been happening in terms of adoption, where are organizations finding success? And we're going to use that research to build out a point of view on what executives need to know in 2026 when it comes to AI. We'll highlight the latest trends and provide our take on where things may head in the next few years. One example of that is we're going to be touching on AI's impact on revenue cycle and payment integrity processes. We're hearing a ton of chatter and frankly, fear in this space, fear of what others are doing, what that could mean for your own organization and whether you're falling behind.

(02:28):
And that's what excites me about this research, but it's also what makes me nervous. These are thorny conversations. I'm hoping we can understand what is changing with AI usage in these processes and what those changes could mean for how healthcare gets paid in the future and what payer provider relationships look like going forward. But that study is not the only way we are going to be researching AI this year. We are also going to be looking for AI specific tactics across a wide variety of the research studies that Advisory Board is doing. My team is going to be collaborating with other research teams, including some folks you'll hear from in this episode, to identify ways AI is being implemented across the healthcare ecosystem. Our research studies into things like hospital margin improvement, health plan operational efficiency, even primary care, we're going to be actively looking for where AI may or may not be making an impact.

(03:26):
And I want to emphasize, these are not AI first research streams. We believe that leaders should take a problem first approach to AI adoption. That is, they should only be adopting an AI solution if it is the right answer to a specific problem. And these studies will be taking the same approach, starting with a problem and then considering where AI fits into the solutions, if at all. Across all of this AI research, I'm hoping that Advisory Board can continue to be a place where you can get real talk on AI, not hype, not ignoring the risks and challenges, but a balanced, informed view of what is going on with AI in 2026 and what that means for your organization.

Monica Westhead (04:16):
I'm Monica Westhead, and I lead health system operations and workforce research. Most hospitals and health systems are focused on tightening their belts heading into 2026. We've been focused on doing more with less for a long time, but both worsening and new pressures are making margin management a critical priority now. The severity of that concern varies by hospital type and location. In general, it's the biggest and the smallest systems that are most at risk. Small systems, those that are below about $300 million in revenue have made improvement in labor and supply costs, but they struggle significantly more than their larger peers with bad debt. The largest health systems, those with over $1 billion in revenue, are instead struggling with top line revenue and volume. Rural health systems are struggling more than their peers with labor costs. There are many questions still about the future impact of the One Big Beautiful Bill Act on health systems, but we can expect that coverage changes and Medicaid cuts will meaningfully impact health system margins.

(05:24):
Some of the longer term impacts are harder to predict, but when people avoid care because they can't afford it, or when providers who primarily take Medicaid close due to lack of funding, ripple effects will be felt far beyond those cases. It is a challenging time. We're here to help. So what are health systems to do? Based on Advisory Board survey data, the top lever that hospitals and health systems are looking to pull is operational efficiency. That is a very broad topic. As a researcher, I am most excited to break that down and find the solutions within that. We know that you've already gotten most of the low hanging fruit, but we also know there's room for improvement. Areas like maximizing revenue capture through rev cycle management, making sure that you are actually getting paid for the care that you deliver, leveraging technology to make work more efficient for the full care team, reducing unwarranted care variation, figuring out where you need to spend money to save money and how to make the right bets, and engaging the care team and all of the organization's leaders in operational efficiency improvements.

(06:38):
That includes optimizing financial literacy and getting your full organization behind you. Those are the types of questions that we are asking, but I would love to hear from you. How have you improved your organization's efficiency? Where are your most stubborn challenges? Where can we help? Please reach out. We are going to work through this period of uncertainty together.

Sally Kim (07:08):
Hi, my name is Sally Kim, and I lead our health plan research team here at Advisory Board. In 2026, our team's going to be researching health plan operational efficiency because next year is going to be the year for plans to just break even. And while sometimes it feels like clinical spend is out of our hands, improving operational processes and savings on costs is very much [inaudible 00:07:33]. And then maybe we can get back to growth in 2027. So why are we doing this study? Plans are facing a lot of headwinds at once. I mean, just to list a few, drug spend is growing even faster than medical spend. Costs are going up nearly double digits in employer sponsored insurance. ACA marketplace premiums are up by record amounts. Medicaid MCOs, they're going to have to grapple with more eligibility and enrollment challenges, plus the budget cuts. And Medicare Advantage plans, they're not seeing the margins they used to and trying to shift members to HMOs.

(08:12):
Plus, admin costs are significant, over $130 billion across the health plan industry and about 15% of the premium. So in a world where profits are in the single digits, actually most Blues didn't even profit last year. That is a significant chunk. And we're already seeing this need for operational excellence play out. Small plans are being acquired because they can't operate their back office services efficiently enough, and Blues and Regionals are partnering on these services to try and get to the scale of nationals. So what do I mean by a study on health plan operational efficiency? I will admit this is a big problem. Right now I'm thinking about this in three ways. One, where are we seeing the highest operational costs? Two, where is there a big gap to goal? So big room for improvement. And three, where could AI actually make a difference in the short term?

(09:09):
There are quite a few things that make me excited for this research. First, I'm curious about how plans should prioritize the nearly endless list of operational processes they could improve. And I'm also excited to talk to chief operating officers because we've largely spoken to plan CEOs, CMOs, and CSOs. And lastly, I love data. So if we could quantify the potential admin cost savings from doing these initiatives, that would be my dream.

Sebastian Beckmann (09:45):
My name's Sebastian Beckmann and I do research with data here at Advisory Board. Advisory Board helps you in three ways. First, we make sure that you prioritize the most important changes and trends in the healthcare environment through things like our state of the industry presentation. Then through our data analytics tools, we give you the data you need to make the right decision in that evolving landscape for your organization and your market. And third, we give you the best practices and case studies to execute on those decisions. In the last couple months, we've launched a few different things that cut across all three of those categories. One of those is our care variation reduction assessment tool. That helps you prioritize your CBR efforts by facility, service line, even the physician level, so that you're making the right decisions in what is actually a change management problem, as well as a prioritization problem.

(10:36):
In 2026, we're focused on new tool launches and improvements that will help health system strategists prioritize and support sustainable growth. I'm going to talk about three examples of that. First, we're revamping how we model hospital volumes in our forecasting tool, the market scenario planner. Today, we use national use rates by demographic group, and then we size those down to the population of your service area. We're flipping that on its head. So instead of going top down, we're going bottom up, and we'll be using actual historical use rates for your market as a starting point for volume modeling. Where we don't have enough claims data to cover market, our data innovation team has come up with a clever way to top up the data from similar markets. The result is going to be a truly localized volume model that you can use as a baseline for forecasting volumes for your market.

(11:29):
Next, we'll be introducing a diagnostic lens on top of our procedure-based forecasts. Unlike other diagnosis-based groupings, which don't let you look at more exclusively procedure-based services like orthopedic surgery, we're introducing this as an option that you can toggle on and off. When you want to look at just a surgical or procedural service line, you tighten it off. When you want to look at clinic volumes and understand which of those are coming from cardiology or other types of specialties, you can turn it back on. That's also going to enable more sophisticated physician demand forecasting. Finally, we're launching a claims analysis platform, which will start with state claims data. You'll be able to send us data from your state hospital association, which we can structure into an online platform, apply our methodology for forecasting onto that real baseline data, and then create a simple to use tool where you can conduct all of your core market analyses in one place. That'll include forecasting, market share, competition, out migration, and more.

(12:33):
There's way more to talk about, but Abby and Rae tell me that I'm actually not allowed to monopolize this conversation. So if you want to hear more about our roadmap and data and analytics, feel free to reach out to your account manager and we'll be happy to talk you through all our plans.

Kaci Plattenburg (14:08):
Hi, I'm Kaci Plattenberg and I study service line strategy for Advisory Board. Recently, my team and I have been having a lot of discussions with health systems about service line growth, and that will continue in 2026. Next year, we'll be building on that foundation of what we learned this year around focusing growth planning on services that create a comparative advantage. We know that the historical growth playbook isn't working like it used to, and so we'll be specifically researching and highlighting examples of how organizations are approaching growth differently now. This could look like how systems are planning around the fact that volumes no longer guarantee margin, how they're approaching analytics in new ways, or how they're finding avenues for growth in new places. My team will also look at these questions for specific service lines. For example, in cardiovascular and oncology, we're doing dedicated looks at opportunities for growth via some operational adjustments.

(15:07):
In cardiovascular, we're finding that the strategy may not necessarily be to go out and build new cath labs as demand increases. Rather, we're looking at the need to improve cath lab efficiency in order to tighten things up and uncover growth opportunities from there. In oncology, we'll be looking at cancer patient navigation, which is of course a mainstay of cancer programs already, but there's wide variation in what programs look like, what panel sizes navigators handle, and how programs bill for them. We'll be looking at best practices of how to optimize the experience for patients and provide them quality care and find what growth potential exists to build the case for reinvestment in the program.

(15:50):
One thing that I love about all this research is that while every organization has its nuances when it comes to service line strategy and structure, these things don't need to be highly unique. In fact, many organizations feel that their strategies are replicable for other systems, which is exactly what we're aiming to highlight next year. We'll be bringing these teachings on service line growth to several outlets, including written content for folks to access on advisory.com, as well as discussions at our summit and roundtable events. Hope to see you there.

Chloe Bakst (16:28):
Hey, everyone. My name is Chloe Bakst, and you might know me as a producer on Radio Advisory, but I'm also a researcher focused on pharmacy topics at Advisory Board. And 2026 will be a big year for drug policy. It's the year that we move from theoretical transformations to real life operational challenges. I'm talking about what it will look like to have a maximum fair price from that first round of Medicare negotiated drugs. I'm talking about the operational impact of the 340B rebate model pilot program and what that's going to mean for hospitals. And I'm also, of course, talking about the most favored nation approach to drug pricing, both that online direct to consumer Trump RX model and the new CMS generous model for Medicaid, and how that will reshape the pharmacy market.

(17:15):
Our job at Advisory Board isn't to report the news. What I want to do is to help you understand how this shifting policy landscape will impact the many different stakeholders that work to get needed medications to patients, and help you understand what that means for your organization strategy.

(17:33):
To do that, my team will be exploring how drug purchasing will change in the next year and beyond. We're eyeing the policy shifts and the growing consolidation in the wholesaler market and asking how health systems are changing their relationships with their wholesaler and GPO partners. We're building on our 2025 research on tariff strategy and supply chain navigation to understand how hospital P&T committees are making formulary decisions. And a big part of that is the evolving role that technology will continue to play in drug assessment. How will AI tools and data analysis influence how hospitals evaluate drugs?

(18:11):
I'll end with a pitch to the folks listening. If you're a health leader that's interested in any of the questions that we're going to be researching in 2026, like mine or any of the others you've heard in this episode, we want to hear from you. What are your challenges? Where are you seeing opportunities? Our email is in the show notes. Let's chat.

Rae Woods (18:33):
Now you know some of the specific research efforts driving our agenda in 2026, but there's always more. We are always adjusting as the world and as health policy changes. And as you know, we put all of this together to provide a high level perspective on the state of the healthcare industry. As we always say, we're here to help, but we're also here to cut through the noise, to highlight the pivotal shifts happening in healthcare, how stakeholders are responding, and what leaders must consider to stay ahead.

(19:04):
Abby, I'll see you next year.

Abby Burns (19:06):
See you next year, Rae.

Rae Woods (19:09):
If you like Radio Advisory, please share it with your networks. Subscribe wherever you get your podcasts and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Abby Burns, Chloe Bakst, and Atticus Raasch.

(19:24):
The episode was edited by Katy Anderson with technical support provided by Dan Tayag, Chris Phelps, Joe Shrum. Additional support was provided by Leanne Elston and Erin Collins. We'll see you next year.