Safety-net hospitals across the U.S. are navigating a confluence of financial and operational pressures. Looming Medicare sequestration cuts, Medicaid funding reductions and the potential expiration of ACA premium tax credits — along with other federal changes under the One Big Beautiful Bill Act — are all factors that could threaten their stability, as many also face workforce shortages and access barriers in their communities.
Of course, it’s worth noting that safety-net hospital funding hinges on widely varying definitions, as outlined in a recent study from the University of Pennsylvania’s Leonard Davis Institute of Health Economics.
This means hospitals and health systems will not face challenges in the same way. However, some are already preparing for tradeoffs amid deepening uncertainty.
Balancing mission with tradeoffs
For some leaders, the challenge is preserving their organization’s mission as a nonnegotiable, knowing that adjustments may be needed in terms of how care is provided to their communities.
Steven Hanks, MD, president and CEO for Syracuse-based Trinity Health NY, which consists of St. Peter’s Health Partners serving the Albany, N.Y., area and St. Joseph’s Health in Syracuse, told Becker’s his organization is preparing for changes beyond operational adjustments.
“As a nonprofit health system CEO, the tradeoffs we’re preparing for go beyond operational adjustments — they touch the core of our mission,” Dr. Hanks said. “We’re balancing the imperative to maintain access for vulnerable populations with the reality of shrinking reimbursements and rising self-pay volumes.”
He noted that what’s nonnegotiable is Trinity NY’s commitment to equitable, safe, effective and dignified care. But he acknowledged that to preserve that, “we’re having to make difficult choices: consolidating services, delaying capital investments, and rethinking partnerships to stretch every dollar. These decisions aren’t just financial — they’re moral, and they will shape the health trajectory of entire communities.”
Dr. Hanks advocates for a new social compact to assure the continued availability of vital services.
“We need policymakers to understand that funding uncertainty isn’t just a budget issue — it’s a public health risk,” he said.
Karen Duncan, MD, president and CEO of JPS Health Network, a Fort Worth, Texas-based public academic hospital licensed for 582 beds, expressed similar sentiments. JPS is the only psychiatry emergency center and the longest-standing level 1 trauma center in Tarrant County.
“JPS, like many safety-net hospitals, is facing unprecedented funding uncertainties,” she said. “The tradeoffs we face are real. What is at stake is the health of our community, equitable access to care, the stability of our workforce and the long-term sustainability of our health system.”
Like Dr. Hanks, Dr. Duncan also emphasized that the organization’s mission, commitment to quality and investment in people are nonnegotiables.
“JPS will continue to be good stewards of resources, leveraging technology and automation while expanding partnerships that allow us to grow without unnecessary cost,” she told Becker’s. “At the same time, we are investing in the future through programs like [Students in Healthcare for Individual Empowerment, an eight-week, paid summer internship at JPS], to build a workforce pipeline, reimagining care teams and advancing digital access.”
She added that strong advocacy and policy engagement in supplemental funding mechanisms and Medicaid programs will be key to ensuring access to preventative and affordable healthcare services.
Will Condon, president and CEO of Ascension Sacred Heart in Pensacola, Fla., described how his organization and other members of the Safety Net Hospital Alliance of Florida advocate at the state and national levels for funding. Members also collaborate to share best practices and experiences.
“We are a Catholic, faith-based healthcare organization, and we are never going to get away from caring for the poor and vulnerable, with the Medicaid population being a big piece of the poor and vulnerable population we are privileged to serve each day,” Mr. Condon said.
“It’s by internal programs — how do we get those patients to the right level of care …? And then also through community partnerships. There are a lot of people in northwest Florida and Pensacola doing great things for the poor and vulnerable in the healthcare space. So, how do we partner with people already doing that work?”
These questions are part of examining the organization’s portfolio of care, which he views as an important piece of navigating today’s challenges.
State policy and market shape outlook
Not all safety nets operate in the same geographic area or under the same state policies.
Spiros Hatiras, president and CEO of Holyoke (Mass.) Medical Center & Valley Health Systems, notes that where his organization is located has made a difference in financial outlook.
To be clear, he has worked at safety-net facilities his entire career. He’s seen them close, be sold, be downsized and shut down services.
“Financial headwinds and difficult choices are nothing new,” Mr. Hatiras said. “This has always been part of the story for safety-net hospitals, regardless of administration or time period. There are certainly times when it’s worse — like during the 2008 crisis and the years that followed — but it’s always been there. It also varies state by state, as policy plays a role.”
Fast forward to his current tenure at Holyoke, and his facility is on a positive financial course, he said. He attributes this to state policy, noting that Massachusetts revamped its Medicaid waiver with CMS in recent years.
“For years, the state lagged behind others in taking full advantage of federal matching funds,” Mr. Hatiras said. “Finally, in collaboration with our hospital association, a plan was submitted to CMS to increase that funding. That change brought in significantly more funding for safety-net hospitals and the state as a whole. In fact, we’re currently approaching CMS again for a potential modification to the waiver in the remaining years.”
Additionally, he pointed to the state’s near-universal healthcare coverage, which he said results in fewer uninsured patients than in other states.
And, most recently, Massachusetts Gov. Maura Healey signed a $234 million legislative package Sept. 22 to provide relief for hospitals and community health centers, including those strained by shifts in payer mix, rising expenses and increased demand for services.
Small size, culture offer Holyoke flexibility
Beyond state funding mechanisms, hospital size and organizational culture can also play a role in an organization’s sustainability. At Holyoke, Mr. Hatiras said he has seen this play out as the organization has embraced its position as a 219-bed facility.
“We’ve put a lot of effort into growing our business, primarily by building a strong culture,” he said. “I know that can sound like a cliché, but it really does take work. Our efforts have started to pay off. I’ve been here 12 years, and it probably took the first half of that time to gain traction. But since COVID, things have accelerated. People want to work here and be part of our team.”
When he began his tenure as CEO in 2013, system revenue was around $140 million to $160 million. Today, it’s $350 million.
“Much of that growth is in outpatient services, surgeries and primary care — even though it’s notoriously hard to grow in primary care,” Mr. Hatiras said. “That diversity in revenue has helped us significantly.
“Everything else works against us. We’re among the lowest-paid hospitals in the private market. Massachusetts has a relative price index comparing hospitals, and we’re either at the bottom or second from the bottom in what we get paid for similar services by private insurers.
“What works in our favor is our culture and our size. Being small allows us to be nimble and entrepreneurial. We don’t have to go through a long systemwide process to make a decision. I’ve worked for big systems … where everything had to align with the system’s directives. Here, if we see a good opportunity, we can act on it immediately.”
Still, he acknowledged the challenges of a small size, such as limited capital flexibility.
“But the upside is our agility. That has given us an advantage over surrounding hospitals and systems,” he added.
He pointed to decisions such as closing the maternity unit in 2020 and adding mental health beds as examples of the hospital’s adaptability. He said the decision to close the unit was difficult, but doing so lifted a financial burden and allowed the system to honor a silent commitment it has kept for 12 years: no layoffs.
“We’ve never told someone they lost their job due to budget cuts. Even when we closed the maternity unit, everyone [affected] stayed on or was retrained,” he said.
Mr. Hatiras also noted that the closure did not affect access for the community, as several hospitals in the immediate area provide birthing services. Additionally, the hospital has maintained OB-GYN services for prenatal and postnatal care.
While the unit closure eased a financial burden without compromising access, Mr. Hatiras emphasized that Holyoke remains cautious about future risks. He said the hospital is monitoring federal and state discussions around access to care, hospital funding mechanisms and potential changes to the 340B drug pricing program.
“My biggest concern would be the 340B program,” he said. “Pharmaceutical companies have been lobbying to reduce or restrict it. If cuts came there, we’d first likely stop capital investments — hold off on buying new equipment for the year. That would be the first step before impacting services. But we haven’t identified any services we’d cut first, and we hope we won’t have to go there.”
