If you haven’t heard of “sludge” in the context of healthcare, let me introduce you. As defined in a recent episode of Freakonomics Radio, sludge refers to unnecessary friction—the redundant paperwork, excessive administrative steps, and arbitrary hurdles that make it harder for people to access essential services.

In healthcare, sludge doesn’t just inconvenience patients. It slows down reimbursements, strangles independent providers, and compromises access to care. And lately, it’s not just medical systems being bogged down. Sludge has seeped into the legal world too, with recent legislation in Georgia introducing even more red tape for plaintiffs and the attorneys and medical providers who support them.

As someone operating at the intersection of healthcare, legal finance, and technology, I see this for what it is: an urgent call to cut through the sludge and refocus our systems on what really matters—patients and providers.

Medical Sludge in Real Terms

Let’s start with healthcare.

Independent practices across the country are drowning in receivables and administrative overhead. They’re not just dealing with complex billing codes and endless prior authorizations—they’re contending with a system where insurance companies effectively dictate care. What should be the doctor’s job has been buried under layers of bureaucratic interference. This isn’t inefficiency. It’s sludge—and it’s costing everyone: providers, patients, and the system as a whole.

That’s why revenue cycle management (RCM) matters. And not just the automation of it.

While AI tools play a critical role in streamlining claim submission and cutting down on manual errors, it’s the managed services component that truly moves the needle. Real RCM means actively working denied or stalled claims, pushing back against unjust reimbursement delays, and keeping providers financially viable despite mounting pressures. It’s a hands-on, high-touch model that brings clarity and control back into the process.

RCM, when done right, doesn’t just reduce friction—it gives independent practices a fighting chance. It enables them to stay solvent, focused on care delivery, and protected from the slow grind of administrative decay. With smarter systems and active support, providers gain more than efficiency—they gain leverage.

Legal Sludge: Georgia’s SB 69 vs. SB 68

Sludge doesn’t stop at healthcare—it’s seeping into the legal system, too.

Georgia Senate Bill 69 proposes sweeping regulations on litigation funding, presenting itself as a transparency initiative. In reality, it adds more friction to a legal process already burdened by complexity. Worse still, it reflects a fundamental misunderstanding of two very different funding models: commercial and consumer.

Commercial litigation funders are focused on multimillion-dollar corporate lawsuits and are often backed by large financial institutions. Consumer legal funding, by contrast, provides modest, non-recourse advances—typically in the $1,000 to $2,000 range—to personal injury plaintiffs who need help covering basic expenses while they await a settlement.

SB 69 makes no distinction between the two. It paints all litigation funding with the same broad brush, potentially choking off critical resources for people who are simply trying to afford groceries or rent while their case winds through the courts. These aren’t hedge funds manipulating the legal system. These are injured individuals in real need of support. Slowing down or restricting their access to funds doesn’t promote justice—it injects more sludge into an already slow-moving system.

Separately, Senate Bill 68 targets the healthcare side of the equation, introducing provisions that could lower reimbursement rates for providers seeing personal injury patients on medical liens. The bill allows payer source information—such as Medicare, Medicaid and or commercial insurance reimbursement rates—to be introduced into evidence, even when it has nothing to do with the value of care actually rendered. This opens the door to reimbursement rates being slashed to unsustainable levels, potentially making it financially impossible for providers to treat these patients at all.

Together, these two bills threaten to entrench the worst kind of system sludge: unnecessary red tape, delayed justice, and dwindling access to care. And while they aim to increase transparency, the real-world result is more confusion, less support, and greater risk for those who can least afford it.

Private Equity: Villain or Corrective Force?

The recent FTC case against Welsh, Carson, Anderson & Stowe (WCAS) and U.S. Anesthesia Partners (USAP) reignited concerns over private equity consolidation in healthcare. But what’s often overlooked is why this consolidation happened in the first place.

For decades, small and mid-sized practices have been squeezed by insurance companies—stripped of negotiating power, underpaid, and buried in bureaucracy. Without scale, they have little leverage. Consolidation—whether driven by private equity or physician-led groups—has, in many cases, been the only viable path to survival. It’s given doctors the ability to push back against unsustainable reimbursement rates and say, “If you want access to our care, here’s what it costs.”

Critics may frame this as profiteering, but the alternative is a fragmented, fragile healthcare system where independent providers disappear—not because they want to, but because insurance companies dictate terms and smaller providers can’t stay solvent.

Senate Bill 68 threatens to accelerate that erosion. Though framed as a transparency measure, the bill introduces new forms of administrative sludge into the lien-based care model. It allows payer source information—such as funding arrangements unrelated to a provider’s charges—to be introduced into evidence, even when those details have no bearing on the value of care actually delivered. The risk? That providers are reimbursed based not on what they charged or what care was necessary, but on what some third party might have paid.

This opens the door to drastically reduced reimbursement rates—so low that it may become financially unfeasible for providers to continue treating patients on lien. If doctors stop seeing these patients, the burden doesn’t disappear. It shifts. And it grows. Delayed care becomes uncompensated care. Private inefficiency becomes public expense.

It’s no coincidence that this bill was backed by insurance interests. The same entities that have long resisted fair reimbursement now aim to legislate further restrictions—under the guise of transparency and a commitment to lower premiums. However, in states that have implemented similar tort reform measures—including Texas, Florida, Georgia, Missouri, Louisiana, and California—insurance premiums have not decreased. In fact, they have continued to rise year after year.

• Florida: Despite enacting tort reform in 2023, Florida’s homeowner’s insurance premiums have increased by 102% over the past three years, making them three times higher than the national average.

• Texas: Following tort reform, Texas households are burdened with nearly $38 billion in tort costs as of 2022, translating to an average of $4,594 per household.

• Georgia: Georgia has seen high tort costs per household, with premiums continuing to rise despite legislative efforts to curb litigation costs.

• Missouri: After implementing tort reform, Missouri has in fact not experienced a reduction in insurance premiums and they continue to escalate annually.

• Louisiana: Lawmakers are reconsidering tort reform measures as residents face some of the highest auto insurance premiums in the nation, with little evidence of premium reductions following previous reforms.

• California: Even with longstanding tort reform laws like the Medical Injury Compensation Reform Act (MICRA), California has seen significant increases in insurance premiums, including a recent 17% hike approved for State Farm policyholders.

The motive is clear: restrict provider leverage, suppress plaintiff recovery, and protect insurer profits by eliminating competition from more sophisticated, better-resourced provider groups.

SB 68 doesn’t just create more sludge—it protects entrenched power at the expense of patients and providers alike.

A Call to De-Sludge Our Systems

Whether it’s a doctor waiting six months for reimbursement, a plaintiff caught between medical treatment and poverty, or a lawyer navigating complex and ever changing regulations—sludge slows us all down. It’s not just inefficient. It’s unjust.

We need smarter policies, streamlined systems, and a renewed commitment to the people these processes are supposed to serve. That means:

• Expanding managed services and automating the revenue cycle so providers can stay independent, focused on care, and financially solvent

• Protecting legal funding as a tool for access to critical funds for plaintiffs awaiting settlement

• Challenging the narrative that all consolidation is bad, when for many providers, it’s the only path to survival

The U.S. healthcare system is already complicated enough. Let’s not make it any harder.