Health system leaders preparing for 2027 have landed on the same conclusion from different corners of the country: Cost cutting alone will not carry them through.
“We know we can’t just cut our way to financial sustainability,” Staci Dickerson, executive vice president and CFO of Phoenix-based Banner Health, told Becker’s in an Oct. 9 interview
Andre Boyd, regional president and CEO of Philadelphia-based Trinity Health Mid-Atlantic, was more direct. “You can’t cut your way to success, regardless of the payment model or HR 1,” he told Becker’s Oct. 13. “You still have to grow.”
Warner Thomas, president and CEO of Sacramento, Calif.-based Sutter Health, made the same case in April. “You have to grow your way through this,” he said at Becker’s Annual Meeting.
That view holds on the smaller end of the market too. “We cannot cut our way to success. We’ve already cut to the bone,” Jeremiah Hodshire, president and CEO of the 110-bed Hillsdale (Mich.) Hospital, told Becker’s.
Beginning in 2027, HR 1 requires most Medicaid expansion adults ages 19 to 64 to document 80 hours a month of work or other qualifying activities, and states must recheck eligibility every six months instead of once a year. Federal restrictions on Medicaid financing mechanisms tighten at the same time.
Coverage is already eroding. The Commonwealth Fund’s biennial survey, published Oct. 22, found 11.2% of adults ages 19 to 64 were uninsured this summer — up from 8.9% in 2024 — driven largely by the expiration of enhanced ACA premium tax credits at the end of 2025. Unsurprisingly, hospital margins are declining as bad debt and charity care surge, according to Kaufman Hall.
More uninsured and self-pay patients mean more uncompensated care, more bad debt and more strain on revenue cycle teams. None of these leaders has abandoned cost discipline. What has changed is where the cuts land and what they are meant to pay for.
Cut far from the bedside
At Trinity Health Mid-Atlantic, which operates six hospitals across Pennsylvania, Delaware and Maryland, cost reduction now starts with support functions.
“As a whole, we’ll continue to look at support areas first, to minimize impact on direct patient care,” Mr. Boyd said.
Livonia, Mich.-based Trinity Health trimmed its revenue cycle workforce by 10.5% in January, moving certain nonpatient-facing functions to an outside partner. It has since shifted 557 IT positions across 120 job titles to an external vendor, a move set to finish by the end of 2026. Trinity also has a systemwide AI committee, and Mr. Boyd sees revenue cycle and coding as areas where AI could further reduce administrative costs.
That pattern holds nationally.
Becker’s analyzed 31 workforce reductions announced from July through mid-October. Twelve involved only leadership, administrative, IT or other support roles. Eight named clinical roles, but always alongside leadership or nonclinical cuts, and half of those were tied to closing a facility, clinic or program.
Marietta, Ga.-based Wellstar Health System cut 761 positions in July, about 2% of its workforce, across corporate, shared services and administrative roles. A spokesperson said the system was “recalibrating our leadership structure to reduce administrative layers.”
The largest systems are restructuring the management layer itself. Chicago-based CommonSpirit will consolidate its five regions into three service areas in January, CFO Michael Browning said on the system’s Oct. 2 earnings call. CommonSpirit is targeting central overhead of 14.5% of operating revenue in fiscal 2027, down from 15.8% in fiscal 2026. A review of management spans of control alone produced more than $103 million in run-rate savings.
Systems are not reaching the same answer on how to run that back office. While Trinity outsources, CommonSpirit is bringing its revenue cycle in-house after exiting its contract with Conifer, rebadging more than 1,900 employees in a transition scheduled to finish Oct. 30.
Across the system, Livonia, Mich.-based Trinity Health is focused on “repositioning” three core areas: refining clinical service lines, expanding community-based care and aggressively reducing costs.
“It’s a focus on both sharpening our focus on clinical programs that we’re supporting, continuing to grow what we call our community based services, and a heavy focus on cost management — especially administrative expense,” Mike Slubowski, president and CEO of Trinity Health, told Becker’s in April. “Anyone following what’s happening with the federal government right now — even on the Medicare side — knows it’s still ‘death by a thousand cuts.’ So we have to be even more efficient.”
On the clinical side, Trinity Health Mid-Atlantic is deciding which hospitals can do certain things best rather than offering the same services everywhere. At Nazareth Hospital in Philadelphia, that meant reducing overnight operating room hours and adjusting staffing because surgical volumes could no longer support the previous model. The organization also changed the cardiac catheterization lab at Saint Francis Hospital in Wilmington, Del.
“There was a need, but we can’t meet it everywhere,” Mr. Boyd said.
In California, Sutter is finding capacity through operations rather than construction. Reducing length of stay is helping the system free up beds without building them, and even small reductions effectively add dozens of beds systemwide.
Follow patients out of the hospital
The savings are being steered toward lower-cost care settings, and ASCs are a key part of that shift. CMS is phasing out the inpatient-only list and added 560 procedures to the ASC covered procedures list for 2026 alone. Next year, CMS plans to remove another 637 services from the inpatient-only list and add 618 codes to the ASC covered procedures list.
Banner entered a joint venture with Phoenix-based Atlas Healthcare Partners in 2018 to build and operate surgery centers in Arizona, Colorado and Wyoming. Atlas CEO Aric Burke told Becker’s in August that the Banner market has grown from eight surgery centers to 31 in about eight years.
Ms. Dickerson said the economics are hard to match. “It’s very costly to invest in acute care facilities, operating room expansion, and the like,” she said. “So it definitely is a more economic model in terms of the ability to grow faster at less cost, and it’s a great option for patients as well.”
Other systems are making similar bets.
For example, Greenville, S.C.-based Prisma Health formed a joint venture with Atlas in February to develop more than 15 ASCs, and Minneapolis-based Fairview Health Services launched its own Atlas venture in April.
St. Louis-based Ascension made headlines in June when it completed its $3.9 billion acquisition of Nashville, Tenn.-based AmSurg, growing to about 300 ASCs.
Now, Bon Secours Mercy Health System plans to do the same. The Cincinnati-based health system plans to acquire Brentwood, Tenn.-based Surgery Partners in an all-cash deal valued at about $5.7 billion. The deal would add more than 200 ASCs across 30 states and about 5,000 affiliated physicians to Bon Secours Mercy Health.
Sutter, which plans to merge with Minneapolis-based Allina Health to form a $26 billion, 39-hospital nonprofit system, has opened dozens of clinics and hired more than 2,500 physicians and clinicians in the past three years as it builds out urgent care, ambulatory clinics and physician networks in California. Mr. Thomas said the strategy is also making Sutter a more attractive partner for insurers focused on cost containment.
“Insurers like what we’re doing … [because we’re] driving the cost of care down, we’re keeping people out of the ER, and continuing to move people from the inpatient to the outpatient environment,” Mr. Thomas said. “We see more and more insurers want to work with us, because they see this as a competitive differentiation.”
Some payers are moving from partner to co-owner. In September, Philadelphia-based Penn Medicine, Independence Blue Cross and Franklin, Tenn.-based Regent Surgical agreed to develop at least 18 ASCs across Pennsylvania, New Jersey and Delaware through a new company all three will own.
“Healthcare needs to work better for the people we serve, and that means creating more convenient ways to access high-quality affordable care,” Kelly Munson, president and CEO of Independence Blue Cross, said. “MedPAC reports that Medicare payment rates for most services performed in ambulatory surgery centers are approximately 46 percent lower than in hospital outpatient departments. This partnership brings together the right organizations to expand access, improve affordability, and deliver a better experience for the people and communities we serve.”
For Penn Medicine, the partnership reflects the broader shift in health systems’ financial strategies: finding ways to grow while lowering the cost of care.
“This partnership will help us meet growing demand for outpatient surgery while driving down the cost of care in our region and keeping Penn Medicine’s standards for clinical excellence at the center of every decision,” Kevin Mahoney, CEO of the University of Pennsylvania Health System, said. “By expanding access to appropriate procedures in convenient, high-quality outpatient settings, we can give more patients affordable options closer to home.”
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