Healthcare CEOs facing new financial realities are rethinking core assumptions about hospital economics to support their respective organizations’ path forward.
Among the challenges leaders are navigating: the passage of the One Big Beautiful Bill Act and its effect on Medicaid, as well as rapid growth and workforce shortages. Becker’s asked leaders to share an assumption about hospital economics that they’ve personally rethought — and how that has changed their approach. Below are their responses.
Rachelle Schultz, EdD. President and CEO of Winona (Minn.) Health: Hospital economics, based on the inpatient model, is a shrinking piece of the healthcare pie, yet so much of what we do, and how we are paid, is tied to the hospital model. Rules, regulations, designations, payment structures and more continue to be a barrier to true transformation. For example, the shift to outpatient services, enabled by technology and other medical-surgical advancements, has been transforming healthcare delivery, but it doesn’t fit all needs or sizes. Add to that new drugs, medical devices, genetic breakthroughs and payer pressures, and the whole industry is grappling with how to make sense of all of these changes in a workable model. The old “sick model” does not align with prevention, early intervention or chronic condition management.
I believe we need robust development of pathways to the future state of healthcare and define what that entails. I still believe healthcare is local and should be accessible to all. But that in itself is a statement that needs definition. Rural is not suburban [or] urban (let alone the types of hospital designations) — and there are too many assumptions that bigger is better. I disagree.
For me, the bottom line is that we start with what is needed by our respective community members and we build up from there. Financial performance is an outcome of what we are doing, and [the] current state would suggest that it is failing. Healthcare does not work like any other industry and to continue to operate it as though it is just like a for-profit business, or even a nonprofit business for that matter, is misaligned.
We should be focused on designing an aligned system that is win-win-win (patient, provider, payer). The win-lose situation we have right now is a failure. I have been focused on transforming my organization with limited success because the current infrastructure does not allow coloring outside the lines. I continue to work for changes that allow us to innovate, experiment and demonstrate that we can operate differently.
Chris Schuster, RN. President and CEO of Emerson Health (Concord, Mass.): One core assumption the healthcare industry is rethinking is that growth — more beds, more services, more volume — automatically equates to financial health. For years, the prevailing mindset was that scale would lead to profitability and sustainability. But that model doesn’t hold up in today’s environment, where volume doesn’t guarantee a margin, value or resilience.
Increasingly, hospitals and health systems are being pushed back to basics: How do we best serve our communities? Where are we duplicating efforts? And how can we build partnerships to create capacity and expand service offerings without unnecessary expansion?
This shift is reshaping how we define success: not by how much we grow, but by how effectively we meet the needs of the people who rely on us.
Kathleen Silard, BSN, RN. President and CEO of Stamford (Conn.) Health: Given all of the uncertainty in the external environment, every budget/financial plan should be developed with contingency plans.
Contingency plans that allow organizations to pivot to new revenue growth or reduce expenses or program losses must always be at the ready while we work in an ever-evolving and dynamic environment.
If these contingency plans are always at the forefront, health systems are better able to weather any storms that occur and threaten our financial viability.
Sarah Teaff, PhD. CEO of Patterson Health Center (Anthony, Kan.): One core assumption I’ve rethought is that rural hospitals have to offer everything big-city hospitals do to stay relevant. I used to believe we needed to cover every possible service line just to keep up — but that mindset stretches resources too thin and doesn’t actually serve our patients well.
What I’ve come to understand is that it’s not about doing everything, it’s about doing the right things really well. At Patterson Health Center, we’ve made a conscious shift toward focusing on the services we can deliver with excellence. We don’t need to offer a little bit of everything at 70%. We need to offer a few key services at 110% — with quality, consistency, and a great patient experience.
Kevin Unger. President and CEO of UCHealth Northern Colorado Region (Fort Collins): For much of my career, I have relied upon a core — and frankly, comforting — assumption that Medicaid, while imperfect, would remain a stable safety net for low-income people and families as well as the health providers who care for them. It has always been a foundational pillar in how we plan services, staffing and budgets. But that assumption was upended with the passage of the federal budget bill that will dramatically reduce Medicaid funding and enrollment. All of a sudden, the ground shifted beneath us.
In Colorado, more than 150,000 people could lose health insurance coverage, and hospitals and healthcare providers could see an estimated $10 billion in cuts in the next five years.
For our communities, that could potentially mean longer ER wait times, delayed care, closures of services and facilities, job cuts and ultimately, the worsening of health outcomes.
At UCHealth, we are actively engaging with lawmakers and community leaders to advocate for our patients and the communities we serve. We are committed to working collaboratively with them to preserve access to care. In the meantime, we are doubling down on operational efficiency and continuing our focus on providing exceptional care and patient experience.
Rob Vissers, MD. President and CEO of Boulder (Colo.) Community Health: Health systems have demonstrated tremendous resiliency and the ability to adapt to what feels like continuous financial challenges. However, there are no more rabbits to pull from the hat. The confluence of unresolved current issues such as workforce and a broken payment model, with a trillion dollars in federal support leaving healthcare, will force the need for real and rapid change in how we do things.
