From a 51-hospital system spanning seven states to a small critical access hospital in rural Oklahoma, health system executives are pointing to the same threat — a structural mismatch between what the healthcare system is being asked to deliver and the resources available to do it.
“The most dangerous trend in healthcare today is the widening disconnect between the demands placed on the healthcare system and the resources available to meet them,” Erik Wexler, president and CEO of Providence in Renton, Wash., told Becker’s. “Across the country, patients and communities are counting on providers to deliver timely access, advanced treatments and high-quality care. At the same time, health systems are facing growing financial pressures, workforce shortages, administrative burdens and policy changes that make it increasingly difficult to meet those expectations sustainably.”
The mechanism behind that disconnect is a structural shift of financial risk away from payers and policymakers and onto hospitals and the patients they serve.
“The continued transfer of financial risk away from insurers and policymakers and onto patients and care delivery organizations is creating an existential crisis,” said Trevor Sawallish, CEO of North Memorial Health in Robbinsdale, Minn. “Through higher deductibles, co-pays, and coinsurance, patients are paying more for care. At the same time, hospitals and clinics are being asked to assume greater financial accountability for factors they often cannot directly influence.”
Robert Wiehe, senior vice president and COO of UC Health in Aurora, Colo., said the transfer plays out daily in operational decisions that ought to be driven by patient need. Prior authorization delays, narrow networks and shifting coverage rules are increasingly forcing health systems to make clinical and financial choices based on what payers will reimburse rather than what patients require.
“At UC Health, we stay grounded by asking whether a given operational decision genuinely serves our patients and community, not just whether it satisfies a payer or some other requirement, but that’s an increasingly uphill battle as the rules multiply and often work against each other,” he said. “The systems that stay grounded and do right by their communities are the ones willing to push back on policy and payer design that conflicts with good medicine, rather than simply optimizing around it. Left unchecked, this dynamic is quietly reshaping healthcare into a system optimized for compliance and reimbursement instead of health.”
For Shawn McCoy, CEO of Deaconess Health in Evansville, Ind., the pressure is arriving simultaneously from federal and state policy and from national payer behavior.
“It seems our sector is under constant attack from both federal and state government policies and national payer actions. Combined they are eroding the revenues needed to deliver high quality and timely care,” Mr. McCoy said.
States aggressively reducing Medicaid rolls, the prospect of work requirements driving more patients to self-pay status, scrutiny of the 340B pharmaceutical pricing program and payer deployment of AI to complicate collections are all hitting the top line at the same moment wages and supply costs are rising.
“Together, these issues are impacting top line revenue while we face an unprecedented rise in wages and supply costs. It is becoming a difficult problem to solve for many, especially rural hospitals,” Mr. McCoy said.
Zafar Jamkhana, MD, vice president of medical affairs and chief medical officer of SSM Health St. Mary’s Hospital and SSM Health Saint Louis University Hospital, both in St. Louis, identified a cost-side asymmetry that compounds the pressure: Clinical innovation is consistently producing higher-priced treatments at a moment when comparable innovation in access and affordability is not keeping pace.
“Nearly every disease state today is being addressed with a higher-priced drug or a more advanced device, yet we are not seeing the same pace of innovation directed at making care more accessible, affordable, and timely for our communities,” Dr. Jamkhana said.
Timothy Layman, DNP, RN, president and chief administrative officer of St. Mary’s Hospital within Hospital Sisters Health System in Decatur, Ill., warned that sustained financial pressure is producing another organizational risk: the gradual acceptance of running at insufficient capacity as a permanent operating condition.
“Hospitals are being asked to manage increasingly complex patients while simultaneously facing reimbursement pressure, workforce shortages, rising labor and supply costs, and significant regulatory demands,” he said. “The danger is that organizations can begin to normalize operating with insufficient capacity, putting pressure on clinicians, delaying investments, and ultimately compromising access, quality, and patient experience.”
Among the specific federal program threats compounding these broader pressures, proposed changes to the 340B pharmaceutical pricing program rank near the top. Asa Oxner, MD, vice president and associate chief medical and quality officer of ambulatory at Tampa General Hospital in Tampa, Fla., said the stakes are direct for safety-net providers.
“As a charity safety-net hospital, our capacity to care for the uninsured, a population that has grown sharply over the past nine months at our hospital, depends directly on 340B dollars being reinvested into that mission,” Dr. Oxner said.
He flagged a separate regulatory threat: a proposed rule that would bar third-party contractors from supporting remote patient monitoring programs.
“The proposed rule barring third-party contractors from supporting patient management would make RPM administratively unaffordable for small and rural health systems,” Dr. Oxner said.
The financial headwinds fall most heavily on rural providers, where contract rates have lagged actual cost and where quality metrics were built without rural geography in mind. Martha Henley, CEO of Unity Medical Center in Manchester, Tenn., said standard 30-day readmission measures penalize rural hospitals for patterns driven entirely by access barriers.
“In a rural community, a patient may come back because the nearest specialist is a long drive away, or because there was no ride to the follow up appointment, not because we failed them the first time,” Ms. Henley said. “Follow through can be challenging for some patients. None of that is visible to the person reviewing the case. The same pattern shows up in denials, where care that was necessary, documented, and delivered gets turned down against a definition rather than an actual patient need. At the same time, the rates in our contracts have not kept up with what it actually costs to keep a service open in a small community. Rural hospitals are not smaller versions of large ones. Until the people setting the terms spend time where the care happens, the terms will keep missing.”
Tom Vasko, CEO of Newman Memorial Hospital in Shattuck, Okla., said the cumulative weight of financial pressure on rural providers is restrictive.
“Strategic discussions too often center on sustaining essential services instead of investing in workforce development, advanced technologies, precision medicine, digital transformation and the next generation of clinical innovation,” Mr. Vasko said.
The shift has left too many rural facilities attempting to deliver 21st-century medicine within aging infrastructure never designed for modern clinical standards.
“A healthcare system focused on survival cannot simultaneously lead the world in advancing medicine,” Mr. Vasko said.
The consequences are already visible in the disappearing availability of obstetrical care across rural America, Mr. Vasko noted. Fewer than half of rural hospitals in the United States still offer obstetrical services, and since 2020, approximately 139 rural hospitals have closed or announced closure of their labor and delivery units. More than a third of U.S. counties are now classified as maternity care deserts.
For Melvin Price, DPM, president and CEO of MCR Health in Bradenton, Fla., the financial environment carries a strategic risk that extends well beyond any single budget cycle: Organizations under immediate pressure may be systematically underinvesting in exactly what long-term viability requires.
“Financial sustainability is essential, but organizations that focus solely on the next quarter risk underinvesting in the very things that drive long-term success — people, physician development, innovation, preventive care, and community partnerships,” Dr. Price said.
The solution requires keen executives who can thread the needle for both.
“Sustainable healthcare isn’t built by choosing between financial performance and patient care. It’s built by recognizing that the two are inseparable,” Dr. Price said. “The organizations that will lead the future of healthcare will be those that can successfully balance both.”
Mr. Wexler said most of the challenges healthcare is navigating — from administrative burden to payer accountability — have practical solutions available, but that reaching them will require the field to collaborate across sectors in ways it has rarely managed. He is working with lawmakers and other healthcare organizations to advance payment reforms through the bipartisan Medicare Advantage Prompt Pay Act, focused on payer accountability for delays.
“Progress will require collaboration, innovation and a shared commitment to ensuring people can get the care they need, when and where they need it,” he said.
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