Brett Friedman Previews Medicaid Cuts and 2026 Healthcare Market Effects in Trending Video | News & Events

Attorneys:

In this Trending video, Ropes & Gray Partner Brett Friedman discusses policy, oversight, and AI trends that will impact the healthcare industry in 2026.

Coverage losses and Medicaid cuts after the OBBBA will accelerate inpatient and outpatient consolidation as care shifts to lower-cost sites
State scrutiny of transactions is intensifying—particularly for for‑profit buyers of not‑for‑profit assets—extending timelines, raising costs, and reshaping deals under expanding “material transaction” laws
AI is driving cost savings and revenue gains across prior authorization, clinical documentation, coding, and RCM, while the lack of federal rules is prompting state-level action

Please watch our Trending videos for our health care partners’ insights on specific industry trends, including:

Please contact our health care team at [email protected] for a complimentary briefing on our 2026 healthcare market outlook and/or specific trends.

Transcript

Brett Friedman: I’m Brett Friedman, a partner in Ropes & Gray’s health care practice in New York. I advise providers, plans, and health care investors on complex regulatory, reimbursement, and transactional matters, drawing on my prior leadership experience at the New York State Department of Health as the State Medicaid Director.

If you’re in the healthcare industry and planning on 2026 growth, here are three shifts that could change your strategy.

First, we’re seeing coverage losses and Medicaid cuts after the One Big Beautiful Bill Act. These cuts will accelerate consolidation—on the inpatient side to stabilize hospitals, and in outpatient care to capture scale as volume shifts from higher‑cost settings.

To take advantage of opportunity, you will need cross-practice deal experience like our team at Ropes & Gray, with knowledge of distressed providers, facility with complex transactions, and an understanding of how to unlock unique federal and state funding opportunities such as grandfathered payment programs, rural transformation grants, and private capital support.

Second, with market consolidation, we’re seeing intensified oversight, especially for for‑profit buyers entering nonprofit spaces. That matters because reviews, disclosures, and remedies extend timelines, add cost, and reshape deal structures under state “material transaction” laws. In addition, state legislatures, attorneys general, and health departments are expanding “health care entity” definitions, materiality thresholds, and review requirements.

Where we come in is helping build a collaborative and proactive regulatory strategy when approaching these transactions. This strategy can inform deal structure design, spin-offs of certain market assets, or additional deal contingencies in case these laws materially delay closing or require certain undertakings to get to completion.

Third, we’re seeing AI drive cost savings and revenue gains aligned with value‑based care. Health care entities are moving at light speed in applying AI to “age-old” problems—prior authorization automation, clinical documentation improvement, coding, and RCM analytics.

Given the absence of federal regulation, states are acting, especially around concepts like validation, transparency, bias, and data use. We are tracking this on the resource website, Health AI Atlas, located on our website. We are also advising health care clients on various issues they face when using or developing AI-based products.

Bottom line: in 2026, with massive federal changes and cuts to health care funding, it will be necessary to pair historical strengths in plan and provider consolidation with a proactive regulatory strategy and a deep knowledge of AI uses that are being deployed at light-speed.