‘Expensive and complicated': Most rural hospitals no longer deliver babies
Both hospitals are located in an agricultural swath of the state that's home to most of its poorest counties. Many residents of the region don't even have a nearby emergency department.
Stacey Gilchrist is a nurse and administrator who's spent her 40-year career in Thomasville, a small town about 20 minutes north of Grove Hill. Thomasville's hospital shut down entirely last September over financial difficulties. Thomasville Regional hadn't had a labor and delivery unit for years, but women in labor still showed up at its ER when they knew they wouldn't make it to the nearest delivering hospital.
"We had several close calls where people could not make it even to Grove Hill when they were delivering there," Gilchrist told Stateline shortly after the Thomasville hospital closed. She recalled how Thomasville nurses worked to save the lives of a mother and baby who'd delivered early in their ER, as staff waited for neonatal specialists to arrive by ambulance from a distant delivering hospital.
"It would give you chills to see what all they had to do. They had to get inventive," she said, but the mother and baby survived.
Now many families must drive more than an hour to reach the nearest birthing hospital.
Nationwide, most rural hospitals no longer offer obstetric services. Since the end of 2020, more than 100 rural hospitals have stopped delivering babies, according to a new report from the Center for Healthcare Quality & Payment Reform, a national policy center focused on solving health care issues through overhauling insurance payments. Fewer than 1,000 rural hospitals nationwide still have labor and delivery services.
Across the nation, two rural labor and delivery departments shut their doors every month on average, said Harold Miller, the center's president and CEO.
"It's the perfect storm," Miller told Stateline. "The number of births are going down, everything is more expensive in rural areas, health insurance plans don't cover the cost of births, and hospitals don't have the resources to offset those losses because they're losing money on other services, too."
Staffing shortages, low Medicaid reimbursement payments and declining birth rates have contributed to the closures. Some states have responded by changing how Medicaid funds are spent, by allowing the opening of freestanding birth centers, or by encouraging urban-based obstetricians to open satellite clinics in rural areas.
Yet the losses continue. Thirty-six states have lost at least one rural labor and delivery unit since the end of 2020, according to the report. Sixteen have lost three or more. Indiana has lost 12, accounting for a third of its rural hospital labor and delivery units.
In rural counties the loss of hospital-based obstetric care is associated with increases in births in hospital emergency rooms, studies have found. The share of women without adequate prenatal care also increases in rural counties that lose hospital obstetric services.
And researchers have seen an increase in preterm births - when a baby is born three or more weeks early - following rural labor and delivery closures. Babies born too early have higher rates of death and disability.
Births are expensive
The decline in hospital-based maternity care has been decades in the making.
Traditionally, hospitals lose money on obstetrics. It costs more to maintain a labor and delivery department than a hospital gets paid by insurance to deliver a baby. This is especially true for rural hospitals, which see fewer births and therefore less revenue than urban areas.
"It is expensive and complicated for any hospital to have labor and delivery because it's a 24/7 service," said Miller.
A labor and delivery unit must always have certain staff available or on call, including a physician who can perform cesarean sections, nurses with obstetric training, and an anesthetist for C-sections and labor pain management.
"There's a minimum fixed cost you incur (as a hospital) to have all of that, regardless of how many births there are," Miller said.
In most cases, insurers don't pay hospitals to maintain that standby capacity; they're paid per birth. Hospitals cover their losses on obstetrics with revenue they get from more lucrative services.
For a larger urban hospital with thousands of births a year, the fixed costs might be manageable. For smaller rural hospitals, they're much harder to justify. Some have had to jettison their obstetric services just to keep the doors open.
"You can't subsidize a losing service when you don't have profit coming in from other services," Miller said.
And staffing is a persistent problem.
Harrison County Hospital in Corydon, Indiana, a small town on the border with Kentucky, ended its obstetric services in March after hospital leaders said they were unable to recruit an obstetric provider. It was the only delivering hospital in the county, averaging about 400 births a year.
And most providers don't want to remain on call 24/7, a particular problem in rural regions that might have just one or two physicians trained in obstetrics. In many rural areas, family physicians with obstetrical training fill the role of both obstetricians and general practitioners.
Ripple effects
Even before Harrison County Hospital suspended its obstetrical services, some patients were already driving more than 30 minutes for care, the Indiana Capital Chronicle reported. The closure means the drive could be 50 minutes to reach a hospital with a labor and delivery department, or to see providers for prenatal visits.
Longer drive times can be risky, resulting in more scheduled inductions and C-sections because families are scared to risk going into labor naturally and then facing a harrowing hourlong drive to the hospital.
Having fewer labor and delivery units could further burden ambulance services already stretched thin in rural areas.
And hospitals often serve as a hub for other maternity-related services that help keep mothers and babies healthy.
"Other things we've seen in rural counties that have hospital-based OB care is that you're more likely to have other supportive things, like maternal mental health support, postpartum groups, lactation support, access to doula care and midwifery services," said Katy Kozhimannil, a professor at the University of Minnesota School of Public Health, whose research focuses in part on maternal health policy with a focus on rural communities.
State action
Medicaid, the state-federal public insurance for people with low incomes, pays for nearly half of all births in rural areas nationwide. And women who live in rural communities and small towns are more likely to be covered by Medicaid than women in metro areas.
Experts say one way to save rural labor and delivery in many places would be to bump up Medicaid payments.
As congressional Republicans debate President Donald Trump's tax and spending plan, they're considering which portions of Medicaid to slash to help pay for the bill's tax cuts. Maternity services aren't on the chopping block.
But if Congress reduces federal funding for some portions of Medicaid, states - and hospitals - will have to figure out how to offset that loss. The ripple effects could translate into less money for rural hospitals overall, meaning some may no longer be able to afford labor and delivery services.
"Cuts to Medicaid are going to be felt disproportionately in rural areas where Medicaid makes up a higher proportion of labor and delivery and for services in general," Kozhimannil said. "It is a hugely important payer at rural hospitals, and for birth in particular."
And though private insurers often pay more than Medicaid for birth services, Miller believes states shouldn't let companies off the hook.
"The data shows that in many cases, commercial insurance plans operating in a state are not paying adequately for labor and delivery," Miller said. "Hospitals will tell you it's not just Medicaid; it's also commercial insurance."
He'd like to see state insurance regulators pressure private insurance to pay more. More than 40% of births in rural communities are covered by private insurance.
Yet there's no one magic bullet that will fix every rural hospital's bottom line, Miller said: "For every hospital I've talked to, it's been a different set of circumstances."
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DORAL, Fla.--(BUSINESS WIRE)--NeueHealth, Inc. ('NeueHealth' or the 'Company') (NYSE: NEUE), the value-driven healthcare company, today reported financial results for its second quarter ended June 30, 2025. 'We are pleased to report another strong quarter of financial results as we continue to build on the momentum we have established across our business this year,' said Mike Mikan, President and CEO of NeueHealth. 'We delivered our sixth consecutive quarter of Adjusted EBITDA profitability, and we are continuing to see strong performance across product categories, including the ACA Marketplace, Medicare, and Medicaid. In the second quarter and beyond, we are focused on advancing our end-to-end, value-based care enablement platform that will power the future of our company, supporting clinical, financial, and administrative functions to create a more aligned and coordinated care experience for all.' Key Metrics Three Months Ended Six Months Ended ($ in thousands) June 30, June 30, 2025 2024 2025 2024 Financial Metrics Revenue $ 209,082 $ 225,991 $ 424,869 $ 471,086 Net Loss $ (1,548 ) $ (57,698 ) $ (12,396 ) $ (61,875 ) Net Income (Loss) from Continuing Operations $ 6,838 $ (39,259 ) $ 5,400 $ (33,571 ) Adjusted EBITDA (non-GAAP) $ 19,020 $ 3,962 $ 32,499 $ 7,618 Expand See the table at the end of this release for additional information and a reconciliation of the non-GAAP measures used in the table above. See table at the end of this release for more detail. Earnings Conference Call As previously announced, NeueHealth will discuss the Company's results, strategy, and outlook on a conference call with investors at 8:00 a.m. Eastern Time today. NeueHealth will host a live webcast of this conference call which can be accessed from the Investor Relations page of the Company's website ( Following the call, a webcast replay will be available on the same site. This earnings release and the Form 8-K filed August 7, 2025 can be accessed on the Investor Relations page of the Company's website. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website. Accordingly, investors should monitor this portion of our website, in addition to following our press releases, U.S. Securities and Exchange Commission ('SEC') filings and public conference calls and webcasts. About NeueHealth NeueHealth is a value-driven healthcare company grounded in the belief that all health consumers are entitled to high-quality, coordinated care. By uniquely aligning the interests of health consumers, providers, and payors, NeueHealth helps to make healthcare accessible and affordable to all populations across the ACA Marketplace, Medicare, and Medicaid. NeueHealth delivers high-quality clinical care to over 600,000 health consumers through owned clinics and unique partnerships with over 3,000 affiliated providers. We also enable independent providers and medical groups to thrive in performance-based arrangements through a suite of technology and services scaled centrally and deployed locally. We believe our value-driven, consumer-centric care model can transform the healthcare experience and maximize value across the healthcare system. For more information, visit: Forward-Looking Statements This release contains certain 'forward-looking statements' within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements made in this release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies, as well as statements regarding timing, completion, and effects of the transaction contemplated by the Agreement and Plan of Merger (the 'Merger Agreement') entered into by the Company with NH Holdings 2025, Inc. ('Parent') on December 23, 2024 pursuant to which, if all applicable conditions are satisfied or waived, the Company will become a wholly owned subsidiary of Parent (the 'Transaction'). Parent is indirectly controlled by private investment funds affiliated with New Enterprise Associates, Inc. ('NEA'). These statements often include words such as 'anticipate,' 'expect,' 'plan,' 'believe,' 'intend,' 'project,' 'forecast,' 'estimates,' 'projections,' 'outlook,' 'ensure,' and other similar expressions. These forward-looking statements include any statements regarding our plans and expectations. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: the failure to complete the Transaction on the anticipated terms and within the anticipated timeframe, including as a result of failure to obtain required stockholder or regulatory approvals or to satisfy other closing conditions; potential litigation relating to the Transaction that could be instituted against NEA, the Company or their respective affiliates, directors, managers, officers or employees, and the effects of any outcomes related thereto; potential adverse reactions or changes to our business relationships or operating results resulting from the announcement, pendency or completion of the Transaction; the risk that our stock price may decline significantly if the Transaction is not consummated; certain restrictions during the pendency of the Transaction that may impact our ability to pursue certain business opportunities or strategic transactions; costs associated with the Transaction, which may be significant; the occurrence of events, changes or other circumstances that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee; our ability to continue as a going concern; expectations and outcomes related to the Merger Agreement; our ability to comply with the terms of our credit facilities or any credit facility into which we enter in the future; our ability to obtain any short or long term debt or equity financing needed to operate our business; our ability to quickly and efficiently complete the wind down of our remaining Individual and Family Plan ('IFP') businesses and MA businesses outside of California, including by satisfying liabilities of those businesses when due and payable; potential disruptions to our business due to the Transaction or corporate restructuring and any resulting headcount reduction; our ability to accurately estimate and effectively manage the costs relating to changes in our business offerings and models; a delay or inability to withdraw regulated capital from our subsidiaries; a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and expand consumer enrollment; our and our care partner's abilities to obtain and accurately assess, code, and report risk adjustment factor scores; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate medical expenses; our ability to obtain claims information timely and accurately; the impact of any pandemic or epidemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; the impact of changes to federal funding for government healthcare programs; our ability to manage any growth of our business; our ability to operate, update or implement our technology platforms and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses and divest businesses as needed; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; our ability to comply with requirements to maintain effective internal controls; the outcome of threatened or pending litigation and risks of future legal disputes; the impacts resulting from new (or change to existing) laws, regulations and executive actions; our ability to mitigate risks associated with our ACO REACH and related businesses, including any unanticipated market or regulatory developments; and the other factors set forth under the heading 'Risk Factors' in the Company's reports on Form 10-K, Form 10-Q, and Form 8-K (including all amendments to those reports) and our other filings with the SEC. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or changes in our expectations. June 30, 2025 2024 Assets Current assets: Cash and cash equivalents $ 131,618 $ 83,295 Short-term investments 13,946 9,871 Accounts receivable, net of allowance of $55 and $27, respectively 53,074 36,594 ACO REACH performance year receivable 321,596 95,075 Current assets of discontinued operations 89,804 173,006 Prepaids and other current assets 29,844 36,807 Total current assets 639,882 434,648 Other assets: Long-term investments — — Property, equipment and capitalized software, net 11,664 11,240 Intangible assets, net 66,088 71,064 Other non-current assets 26,055 27,431 Total other assets 103,807 109,735 Total assets $ 743,689 $ 544,383 Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders' Equity (Deficit) Current liabilities: Medical costs payable $ 97,837 $ 124,360 Accounts payable 5,317 6,298 Short-term borrowings 1,000 2,000 ACO REACH performance year obligation 248,465 — Current liabilities of discontinued operations 333,799 344,651 Risk share payable to deconsolidated entity 123,981 123,981 Warrant liability 27,651 29,738 Other current liabilities 70,362 79,200 Total current liabilities 908,412 710,228 Long-term borrowings 212,433 202,614 Other liabilities 15,899 17,649 Total liabilities 1,136,744 930,491 Commitments and contingencies Redeemable noncontrolling interests 55,729 48,580 Redeemable Series A preferred stock, 0.0001 par value; 750,000 shares authorized in 2025 and 2024; 750,000 shares issued and outstanding in 2025 and 2024 747,481 747,481 Redeemable Series B preferred stock, 0.0001 par value; 175,000 shares authorized in 2025 and 2024; 175,000 shares issued and outstanding in 2025 and 2024 172,936 172,936 Shareholders' equity (deficit): Common stock, 0.0001 par value; 3,000,000,000 shares authorized in 2025 and 2024; 9,024,240 and 8,320,959 shares issued and outstanding in 2025 and 2024, respectively 1 1 Additional paid-in capital 3,107,121 3,099,423 Accumulated deficit (4,464,323 ) (4,442,529 ) Accumulated other comprehensive loss — — Treasury stock, at cost, 31,526 shares at December 31, 2025 and 2024 (12,000 ) (12,000 ) Total shareholders' equity (deficit) (1,369,201 ) (1,355,105 ) Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders' equity (deficit) $ 743,689 $ 544,383 Expand NeueHealth, Inc. and Subsidiaries Consolidated Statements of Income (Loss) (in thousands, except share and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, Revenue: Capitated revenue $ 82,532 $ 64,005 $ 163,519 $ 125,471 ACO REACH revenue 115,339 149,802 239,379 321,613 Service revenue 10,420 12,076 20,254 23,691 Investment income 791 108 1,717 311 Total revenue 209,082 225,991 424,869 471,086 Operating expenses: Medical costs 146,410 177,681 307,304 374,555 Operating costs 44,860 70,470 93,533 137,231 Intangible assets impairment — 11,411 — 11,411 Depreciation and amortization 3,555 3,978 7,114 8,540 Total operating expenses 194,825 263,540 407,951 531,737 Operating income (loss) 14,257 (37,549 ) 16,918 (60,651 ) Interest expense 6,878 4,110 13,515 7,040 Warrant expense (income) 562 (2,213 ) (2,087 ) (4,285 ) Gain on troubled debt restructuring — — — (30,311 ) Income (Loss) from continuing operations before income taxes 6,817 (39,446 ) 5,490 (33,095 ) Income tax (benefit) expense (21 ) (187 ) 90 476 Net income (loss) from continuing operations 6,838 (39,259 ) 5,400 (33,571 ) Loss from discontinued operations, net of tax (8,386 ) (18,439 ) (17,796 ) (28,304 ) Net Loss (1,548 ) (57,698 ) (12,396 ) (61,875 ) Net income from continuing operations attributable to noncontrolling interests (8,507 ) (932 ) (9,398 ) (12,669 ) Series A preferred stock dividend accrued (10,981 ) (10,422 ) (21,710 ) (20,716 ) Series B preferred stock dividend accrued (2,465 ) (2,338 ) (4,872 ) (4,648 ) Net loss attributable to NeueHealth, Inc. common shareholders $ (23,501 ) $ (71,390 ) $ (48,376 ) $ (99,908 ) Basic and loss income per share attributable to NeueHealth, Inc. common shareholders Continuing operations $ (1.68 ) $ (6.42 ) $ (3.49 ) $ (8.77 ) Discontinued operations (0.94 ) (2.23 ) (2.04 ) (3.46 ) Basic and diluted loss per share (2.62 ) (8.65 ) (5.53 ) (12.23 ) Basic and diluted weighted-average common shares outstanding 8,978 8,253 8,750 8,166 Expand NeueHealth, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (Unaudited) Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ (12,396 ) $ (61,875 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 7,114 8,540 Impairment of intangible assets — 11,411 Share-based compensation 7,497 37,407 Payment-In-Kind ('PIK') Interest 8,952 — Gain on troubled debt restructuring — (30,311 ) Net accretion of investments (202 ) (72 ) Loss on disposal of property, equipment, and capitalized software 87 595 Other, net 1,029 (469 ) Changes in assets and liabilities, net of acquired assets and liabilities: Accounts receivable (16,480 ) (4,872 ) ACO REACH performance year receivable (226,521 ) (309,639 ) Other assets 9,567 (7,889 ) Medical cost payable (31,421 ) (35,998 ) Risk adjustment payable (4,996 ) (4,155 ) Accounts payable and other liabilities (12,483 ) (14,387 ) Unearned revenue — (11 ) Warrant liability (2,087 ) 8,978 ACO REACH performance year obligation 248,465 325,599 Net cash used in operating activities (23,875 ) (77,148 ) Cash flows from investing activities: Purchases of investments (8,224 ) (9,544 ) Proceeds from sales, paydown, and maturities of investments 4,388 2,581 Purchases of property and equipment (2,653 ) (877 ) Proceeds from sale of business, net 61,139 197,121 Net cash provided by investing activities 54,650 189,281 Cash flows from financing activities: Proceeds from long-term borrowings — 52,411 Repayments of short-term borrowings (1,000 ) (273,636 ) Distributions to noncontrolling interest holders (2,249 ) (4,730 ) Net cash used in financing activities (3,249 ) (225,955 ) Net increase (decrease) in cash and cash equivalents 27,526 (113,822 ) Cash and cash equivalents – beginning of year $ 185,405 $ 375,280 Cash and cash equivalents – end of period $ 212,931 $ 261,458 Expand NeueHealth, Inc. and Subsidiaries Segment Information (in thousands) (Unaudited) NeueCare ($ in thousands) Three Months Ended June 30, Six Months Ended June 30, Statement of income (loss) and operating data: 2025 2024 2025 2024 Revenue: Capitated revenue $ 81,407 $ 64,005 $ 162,394 $ 125,471 Service revenue 6,874 9,803 13,138 19,333 Investment income 120 21 477 21 Total unaffiliated revenue 88,401 73,829 176,009 144,825 Affiliated revenue 3,227 3,156 6,136 5,783 Total segment revenue 91,628 76,985 182,145 150,608 Operating expenses Medical Costs 36,723 33,579 74,241 61,015 Operating Costs 28,936 34,676 56,146 67,265 Intangible assets impairment — 11,411 — 11,411 Depreciation and amortization 2,757 3,221 5,539 7,007 Total operating expenses 68,416 82,887 135,926 146,698 Operating income (loss) $ 23,212 $ (5,902 ) $ 46,219 $ 3,910 Expand Non-GAAP Financial Measures We use the non-GAAP financial measures Adjusted EBITDA and Adjusted Operating Cost Ratio. We define Adjusted EBITDA as Net Loss excluding loss from discontinued operations, interest expense, income taxes, depreciation and amortization, transaction costs, share-based and other long-term compensation expense, impact of troubled debt restructuring, restructuring and contract termination costs, impairment of goodwill and long-lived assets, losses related to the bankruptcy of one of our ACO REACH partners, impact of classifying certain of our operations as held-for-sale, and changes in the fair value of derivatives. We define Adjusted Operating Cost Ratio as Operating Cost Ratio excluding share-based compensation expense. These non-GAAP measures have been presented in this quarterly Earnings Release or in the earnings conference call and related materials as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding and including items that we do not believe are indicative of our core operating performance. Management believes these measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA and Adjusted Operating Cost Ratio to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to Net Income (Loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow available for management's discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. Adjusted Operating Cost Ratio is not a recognized term under GAAP and should not be considered as an alternative to Operating Cost Ratio as a measure of financial performance or any other performance measure derived in accordance with GAAP. The presentation of Adjusted Operating Cost Ratio has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented: (a) Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to financing initiatives and acquisitions or dispositions. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business. (b) Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on several factors, including the timing, quantity and grant date fair value of the awards. Also includes $0.1 million and $0.2 million of compensation expense that was recognized for the cancellation of P-Unit Awards in relation to our purchase of the minority interest in Centrum for the three and six months ended June 30, 2025. There was no equivalent compensation expense included for the three and six months ended June 30, 2024. (c) Represents the non-cash change in the fair value of the warrant liability established for warrants included in our financing arrangements, which are remeasured at fair value each reporting period. (d) Restructuring and contract termination costs represent severance costs as part of a workforce reduction, amounts paid for early termination of leases, and impairment of certain long-lived assets primarily relating to our decision to exit the Commercial business for the 2023 plan year. (e) Beginning in the second quarter of 2024, Adjusted EBITDA excludes the impact of our operations classified as held-for-sale that were subsequently sold in November 2024. (f) Represents the costs incurred as a result of one of our ACO REACH care partners filing for bankruptcy; includes the full allowance established for the outstanding receivable and ongoing costs incurred to manage and provide service to members attributed to the care partner that would have otherwise been reimbursed prior to the care partner's bankruptcy. (g) Adjustment has been updated to remove the impact of our held-for-sale operations that are adjusted for in their entirety as described in (e). Expand The following table provides a reconciliation of Adjusted Operating Cost Ratio for the periods presented: (a) Represents non-cash compensation expense related to stock option and restricted stock unit award grants, which can vary from period to period based on several factors, including the timing, quantity and grant date fair value of the awards. Also includes $0.1 million and $0.2 million of compensation expense that was recognized for the cancellation of P-Unit Awards in relation to our purchase of the minority interest in Centrum for the three and six months ended June 30, 2025. There was no equivalent compensation expense included within for the three and six months ended June 30, 2024. (b) Represents the impact of revenue and operating costs related to our operations classified as held-for-sale beginning in the second quarter of 2024. The sale was completed in November 2024. (c) Transaction related costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to financing initiatives and acquisitions or dispositions. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business. Expand
Los Angeles Times
2 hours ago
- Los Angeles Times
Millions of Californians may lose health coverage because of new Medicaid work requirements
The nation's first mandated work requirement for Medicaid recepients, approved by the Republican-led Congress and signed by President Trump, is expected to have a seismic effect in California. One estimate from state health officials suggests that as many as 3.4 million people could lose their insurance through what Gov. Gavin Newsom calls the 'labyrinth of manual verification,' which involves Medi-Cal recipients proving every six months that they are working, going to school or volunteering at least 80 hours per month. 'It's going to be much harder to stay insured,' said Martha Santana-Chin, the head of L.A. Care Health Plan, a publicly operated health plan that serves about 2.3 million Medi-Cal patients in Los Angeles County. She said that as many as 1 million people, or about 20% to 40% of its members, could lose their coverage. The work requirement will be the first imposed nationwide in the six-decade history of Medicaid, the program that provides free and subsidized health insurance to disabled and low-income Americans. It's relatively uncharted territory, and it's not yet clear how the rules will shake out for the 5.1 million people in California who will be required to prove that they are working in order to qualify for Medi-Cal, the state's version of Medicaid. After the 2026 midterm elections, millions of healthy adults will be required to prove every six months that they meet the work requirement in order to qualify for Medicaid. The new mandate spells out some exceptions, including for people who are pregnant, in addiction treatment or caring for children under age 14. Democrats have long argued that work requirements generally lead to eligible people l osing their health insurance due to bureaucratic hurdles. Republicans say that a work requirement will encourage healthy people to get jobs and preserve Medicaid for those who truly need it. 'If you clean that up and shore it up, you save a lot of money,' said House Speaker Mike Johnson of Louisiana. 'And you return the dignity of work to young men who need to be out working instead of playing video games all day.' Only three U.S. states have tried to implement work requirements for Medicaid recipients: New Hampshire, Arkansas and Georgia. One study found that in the first three months of the Arkansas program, more than 18,000 people lost health coverage. People can lose coverage a variety of ways, said Joan Alker, a Georgetown University professor who studies Medicaid. Some people hear that the rules have changed and assume they are no longer eligible. Others struggle to prove their eligibility because their income fluctuates, they are paid in cash or their jobs don't keep good payroll records. Some have problems with the technology or forms, she said, and others don't appeal their rejections. Of the 15 million people on Medi-Cal in California, about one-third will be required to prove they are working, the state said. Those people earn very little: less than $21,000 for a single person and less than $43,000 for a household of four. The state's estimate of 3.4 million people losing coverage is a projection based on what happened in Arkansas and New Hampshire. But those programs were brief, overturned by the courts and weren't 'a coordinated effort among the states to figure out what the best practices are,' said Ryan Long, the director of congressional relations at the Paragon Health Institute, a conservative think tank that has become influential among congressional Republicans. Long said advancements in technology and a national emphasis on work requirements should make work verification less of a barrier. The budget bill includes $200 million in grants for states to update their systems to prepare, he said. Arguments from liberal groups that people will lose healthcare are a 'straw man argument,' Long said: 'They know that the public supports work requirements for these benefits, so they can't come out and say, 'We don't support them.'' A poll by the health research group KFF found this year that 62% of American adults support tying Medicaid eligibility to work requirements. The poll also found that support for the policy drops to less than 1 in 3 people when respondents hear 'that most people on Medicaid are already working and many would risk losing coverage because of the burden of proving eligibility through paperwork.' In June, Newsom warned that some Californians could be forced to fill out 36 pages of paperwork to keep their insurance, showing reporters an image of a stack of forms with teal and gold accents that he described as 'an actual PDF example of the paperwork that people will have to submit to for their eligibility checks.' Many Californians already are required to fill out that 36-page form or its online equivalent to enroll in Medi-Cal and Covered California, the state's health insurance marketplace. Experts say it's too soon to say what system will be used for people to prove their work eligibility, because federal guidance won't be finalized for months. Newsom's office directed questions to the Department of Health Care Services, which runs Medi-Cal. A spokesperson there said officials are 'still reviewing the full operational impacts' of the work requirements. 'The idea that you are going to get a paper submission every six months, I'm not sure people have to do that,' Long said. Georgia is the only state that has implemented a lasting work requirement for Medicaid. Two years ago, the state made healthcare available to people who were working at least 80 hours per month and earned less than the federal poverty limit (about $15,000 for one person or $31,200 for a household of four). More than 100,000 people have applied for coverage since the program's launch in July of 2023. As of June of this year, more than 8,000 people were enrolled, according to the state's most recent data. The Medicaid program has cost more than $100 million so far, and of that, $26 million was spent on health benefits and more than $20 million was allocated to marketing contracts, KFF Health News reported. Democrats in Georgia have sought an investigation into the program. The Inland Empire agency that provides Medi-Cal coverage for about 1.5 million people in San Bernardino and Riverside counties estimated that 150,000 members could lose their insurance as a result of work requirements. Jarrod McNaughton, the chief executive of the Inland Empire Health Plan, said that California's 58 counties, which administer Medi-Cal, 'will be the ones at the precipice of piecing this together' but haven't yet received guidance on how the eligibility process will be set up or what information people will have to provide. Will it be done online? Will recipients be required to fill out a piece of paper that needs to be mailed in or dropped off? 'We don't really know the process yet, because all of this is so new,' Naughton said. In the meantime, he said, the health plan's foundation is working to make this 'as least burdensome as possible,' working to improve community outreach and connect people who receive Medi-Cal insurance to volunteer opportunities.
