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The Erosion of the Healthcare Moat
Because the Status Quo is No Match for AI
Dana Prommel Strauss
May 11, 2026
In partnership with
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“Your Margin Is My Opportunity”—Jeff Bezos
Jeff Bezos originally used this line in 2012 to describe Amazon’s strategy of attacking industries where incumbents protected their own high margins instead of improving efficiency. At that time, these were the retail, publishing, logistics, and cloud computing sectors.
He also believes all companies need to be “young forever,” and that companies should “work to charge less, not more.”
Fast forward to 2026, and AI turns Bezos’ philosophy into a universal law of disruption.
And no sector of the economy is more vulnerable to disruption by AI than healthcare.
But healthcare organization incumbents of all kinds have been generally okay with the status quo, or at least haven’t felt significant risk of disruption. On top of that, they feel “protected” by rules and regulations, complexity, historical stability, and licenses. Remember the failure of Haven Healthcare? Ironically, that was Amazon’s early attempt to disrupt healthcare with Berkshire Hathaway and JP Morgan Chase!
The past attempts failed for explainable reasons when we look back in hindsight. But I think this time is actually different.
The old moats matter less every day, and policy (particularly via CMS and CMMI) is accelerating that.
Artificial intelligence’s ability to disrupt healthcare is being further enabled and accelerated by policy. Organizations moved and innovated before there were payment pathways in place because they anticipated that was a temporary problem.
CMS is pushing on interoperability, digital-first care, digital front doors, risk-bearing and outcomes-based payment, and quality being measured by outcomes data, not manual reporting.
AI-enabled disruptors are aligning with policy initiatives. Disruptors see margin sitting on the table, and they will take it.
Incumbents didn’t ask for AI.
They were stable. They were compliant. But stability is not a strategy.
Denial is the fastest path to irrelevance.
In healthcare, the organizations that will be left standing are the ones that adapt faster than their margin disappears.
Because AI is increasingly
exposing inefficiencies.
automating administrative tasks.
slowly shifting value away from traditional clinical labor.
enabling new entrants to build business models around incumbent friction.
Care Management Is Particularly Vulnerable
There is margin in care coordination and management, and that “manual care management” margin is being absorbed by tech-enabled care navigation companies. AI-enabled outreach platforms can:
stratify risk
automate outreach
escalate only the highest-need cases
run 24/7
Humans alone can’t compete.
Working in Population Health in the 2010s, clinician case managers and navigators could spend 1-2 hours reviewing various EMRs to get a grasp of a patient’s clinical care journey and social and functional factors to understand where they were now and what they needed. It was actually fun! I felt a bit like a sleuth 🕵️♀️ But efficient? 🤣
This is becoming a thing of the past. Care management platforms integrate information and surface it in just the right way for care teams to use it to engage meaningfully and build trust with patients and care partners. Here’s an example.
It’s Time to Evolve
The question is “What do you do now if you believe that organizations that survive will be those that get out of “denial mode?”
Denial is not just a river in Egypt.—idiom
1. Build an AI Integration Strategy
Groups need to look at their workflows and find where the costs are high and the value is low.
Audit repetitive tasks like documentation and patient outreach.
Start small pilots for administrative automation.
Teach clinicians how to supervise these systems rather than viewing them as rivals.
2. Double Down on Human-Only Skills
The value of a clinician is shifting.
AI can process data, but it cannot build trust or navigate all the emotional nuances of a patient's journey and the complexity of managing the continuum of care. Focus your talent development on the skills that value-based care actually requires. (See the Career Pulse section for more! 👇️ )
3. Create "AI + Human" Hybrid Models
The goal is probably protecting margins while retaining clinical talent and expertise. One example is implementing AI outreach for low to moderate complexity patient engagement and care management, with humans managing clinical escalation at the right time.
4. Anticipate Policy Acceleration
CMS is making it clear that they see the future as digital and outcomes-based. The policy levers are moving toward more risk, more accountability, and enabled by better interoperability.
Invest in data infrastructure that actually talks to other systems.
Join pilots and communicate through public comment letters to help shape future regulations.
Stay ahead of the shift instead of reacting to it once it becomes a mandate.
(See this May 11, 2026 JAMA Network article by Abe Sutton and Jacob Schiff on tech-enabled care and ACCESS. Note there is a paywall.)
5. Treat AI as a Strategic Asset
The antidotes to denial?
Experiments. Pilots. Persistence.
Find internal champions and measure ROI early.
Champion a mindset of early adoption, and communicate that value clearly to the clinical team.
Remember the uselessness of denial? 🙃
So if disruptors come in and re-imagine healthcare, and the healthcare industry evolves out of necessity, where does that leave the clinicians whose careers have been built on the way we’ve done things for decades?
After all, it’s all they know.
Hone The Skills AI Can’t Replace
Combine clinical and health tech knowledge with these “soft” skills:
Sales/Persuasion
Ever heard the saying “everything is sales?” It’s true. So lean in, because you need this skill in any role. This is more true now than ever.
“Remember that ”sales” means the ability to communicate value, successfully influence decisions, and help people take action.
Storytelling
Practice making the complex simple for others. Help others understand why something matters.
Rejection Tolerance
Resilience is always important, but never more than now. As roles morph, needs change, and expectations evolve, having this skill will help you roll with the punches and persevere. It may be a rocky few years.
Of coures, emotional durability will help you in all parts of your life.
A case study in resilience (while telling a story!) 😄
I clearly remember (while dating myself) in 2001, when the Home Health Prospective Payment System replaced retrospective payment of reasonable costs per visit in home health under Medicare. It coincided exactly with my start date in a Medicare home health agency as one of their first full-time PTs.
So to be fair, I never experienced the “old way,” unless you count commercial visits in non-Medicare agencies via FFS contracts.
The change to PPS created a fixed cost per home health episode, which fundamentally flipped the financial incentives to manage utilization of clinical care within a budgeted amount over 60 days. It was a volume to value play.
The average percentage drop in home health reimbursement per patient episode?
Around 24%! It’s also an important reminder that reimbursement cuts are not “new.”
While managing that reimbursement cut, agencies were also dealing with clinician attrition. Here’s why:
The nurse or therapist performing the home health initial visit now had to complete a new, extensive documentation tool called the Outcome and Assessment Information Set (OASIS) to determine the Home Health Resource Group (HHRG) episodic payment and capture quality, clinical, and functional measurements. Many Medicare home health agencies moved to simple “laptop-like” devices for clinicians starting with the introduction of the OASIS, like our agency did.
For many of the experienced clinicians, this was all too much change at once. Many clinicians left home health or retired early, or moved to non-Medicare home health agencies or certified home care agencies instead. They predicted a doom-and-gloom future for home health, and of course it’s still standing a quarter of a century later.
Staying and adapting to new expectations in their roles while learning new skills required a level of resilience and of flexible thinking. Those clinicians who were able to accept the disruption and still enjoyed the work of home health stayed and evolved. The home health agencies changed their strategies and retrained their care teams and office staff.
Home health is still adapting. Fee-for-service Medicare volumes are lower as a percentage of total Medicare admissions to home health, and this has largely also shrunk margins since FFS reimbursement is the highest.
For what it’s worth, I predict the next step for home health will be value-based contracting with at-risk entities to create and capture more value and corresponding reimbursement per episode of patient management. Let’s see if I’m right and how long it takes to be standardized.
Pair human skills with emerging tools and tech
All indicators are that this time really IS different.
Healthcare professionals are accustomed to relative stability, and that can make it hard to see the present for what’s actually happening.
Regardless of what changes, adaptability is the superstar trait employers, customers, and clients will look for in employees.
I’m a fan of Justin Welsh. I’ve taken other courses of his and am currently taking his Creator MBA course. So I’m passing along this Linked In post (adapted from a Tweet) for you, because he says it best 👇️
*Disclaimer: All opinions and ideas expressed in this article are solely mine and none represent a recommendation or should be viewed as advisement of any kind to anyone to do anything.*
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