As health systems prepare for the financial ramifications of the One Big Beautiful Bill Act, executives say they are bracing for an increasingly difficult balancing act: managing tighter budgets while addressing rising labor costs and workforce expectations.
The legislation, signed into law in July, is projected to reduce federal Medicaid spending by an estimated $911 billion and leave about 10 million more Americans uninsured by 2034. Changes to Medicaid eligibility and financing are expected to begin in 2026 and 2027, prompting concern among healthcare leaders. They anticipate the shift could shrink reimbursement rates and increase uncompensated care — compounding the labor pressures that have already fueled union demands for higher pay and safer staffing levels.
Becker’s connected with leaders from Renton, Wash.-based Providence, Livonia, Mich.-based Trinity Health and Burlington, Mass.-based Tufts Medicine to understand how they are navigating this balancing act.
Workforce engagement and retention
Greg Till, chief people officer of Providence, said the health system is navigating several financial pressures — including the effects of the One Big Beautiful Bill Act, rising pharmacy costs, delayed insurer payments and workforce shortages — while also working to meet growing labor expectations.
Providence’s second-quarter financials illustrate these pressures: The system had 83 days of cash on hand, down from 182 days at the same point in 2019. And in June, it announced a restructuring plan in June affecting 600 full-time equivalent positions across seven states.
“We do need to dramatically transform; part of that is about decreasing our cost structure at a time when our caregivers are also working harder than ever,” Mr. Till told Becker’s. “Over the past few years, their expectations have increased — partly due to inflation and rising consumer costs, but mostly because it’s just gotten harder to be a caregiver, whether in a clinical or administrative role.”
Mr. Till said Providence is aiming to “thread the needle” between containing costs and revenue generation, while also preparing for the future.
“We want to ensure we offer market-competitive pay and benefits for our caregivers and continue to improve the environment so healthcare remains an industry where people want to work,” he said.
Other health systems are facing similar challenges as organizations navigate workforce shortages. Shortages accelerated during the COVID-19 pandemic and persist, said Andre Boyd, regional president and CEO of Trinity Health Mid-Atlantic and Holy Cross Health, based in Philadelphia and Silver Spring, Md., respectively.
There are approximately 340 million people in the U.S. and 1,010,892 active physicians as of 2023, according to the Association of American Medical Colleges. Researchers at the Georgetown University Center on Education and the Workforce, based in Washington, D.C., predict a shortfall of 328,100 registered nurses, 42,100 licensed practical nurses and 33,800 nurse practitioners through 2032.
“Now, with new reimbursement models like [the OBBBA] on the horizon, the ability to connect with your workforce — to show them your value proposition — is more important than ever,” Mr. Boyd said. “Financially, we’re going to have less to work with in the future. That’s the reality. So we have to be smarter with how we allocate our resources going forward.”
Michael Dandorph, president and CEO of Tufts, said employee engagement is a central focus as systems face rising labor costs and staff shortages.
“We are definitely seeing the costs for labor increase,” Mr. Dandorph said. “So the question is, where are there efficiency opportunities? Not because we’re burdening [workers] more, but because we’re changing processes that make it easier to do the work.”
Labor cost escalation
Those concerns are mirrored industrywide. Health systems across the country are adapting cost-containment strategies to address mounting financial pressures, including job cuts, FTE reductions, service consolidations and regional reorganizations. Examples include Fisherville, Va.-based Augusta Medical Group, part of Augusta Health, which is consolidating three care locations in response to the One Big Beautiful Bill Act, and Lavonia, Ga.-based St. Mary’s Sacred Heart Hospital, which ended labor and delivery services due to physician recruitment challenges and Medicaid cuts.
At the same time, wage expectations are climbing. Labor accounted for 56% of total hospital expenses in 2024, according to the American Hospital Association’s analysis of Strata Decision Technology data. Advertised salaries for registered nurses have grown 26.6% faster than inflation over the past four years, per an AHA analysis of Lightcast data.
Union pressure on wages continues in 2025, as some have secured large-scale, multi-year increases. Providence nurses in Oregon, for example, gained raises of 20% to 42% over the duration of new contracts, with some receiving immediate bumps of up to 22%. Massachusetts Nurses Association members at Beth Israel Lahey’s Beverly and Addison Gilbert hospitals secured raises of up to 30% over three years.
Pay and staffing remain key points of contention at the bargaining table. At least 28 healthcare strikes have occurred in 2025, up from about 20 strikes in all of 2024, according to Becker’s reporting.
In October, tens of thousands of Oakland, Calif.-based Kaiser Permanente workers held a five-day strike. One union leader cited the need for competitive wages to recruit and retain front-line workers, warning that without them, patient wait times would increase and outcomes would worsen.
Kaiser said it “offered a strong contract proposal that includes 21.5% in total base wage increases over four years and enhances their high-value medical plans and retiree benefits.”
Labor negotiations and innovation under pressure
As health systems across the U.S. face labor tensions, many are prioritizing collaboration to find solutions. At Providence, shared goals are emphasized in labor negotiations.
“First and foremost, we focus on common ground,” Mr. Till said. “About 38% of our caregivers are represented by a union. We all want the same basic things: to keep our hospitals open and caring for communities, and to ensure our caregivers have fair wages, good benefits and safe work environments.
“We’re aligned on those goals. Where it gets difficult is in the details — how to achieve all that within today’s cost- and revenue-constrained environment. We’re working through that in our contracts with labor partners and also for non-union caregivers.”
Providence is seeking to increase efficiency through technology, employing it to reduce administrative burdens, especially for front-line staff. It also is exploring new care models to deliver better value at a lower cost.
“Some labor partners are more open to those conversations than others,” Mr. Till said. “But we’re trying to move toward more flexible, future-ready care delivery.”
He also pointed to regulatory challenges — particularly staffing ratios — that add to the difficulty of innovating within constrained resources.
Unions have supported staffing ratios as part of contract negotiations, often citing research that ties lower nurse-to-patient ratios to improved outcomes. For example, a 2024 study of 237 hospitals in New York and Illinois found that for Medicare patients hospitalized with COVID-19, each additional patient per nurse was associated with a 20% higher odds of in-hospital mortality and a 15% higher odds of 30-day mortality.
Hospital leaders, however, often support acuity-based staffing models that allow for real-time resources alignment.
“We need to continue partnering with labor — and beyond — to innovate for both patients and caregivers,” Mr. Till said. “Much of what we’re doing with new care models and technology is about reducing burdens, helping caregivers work at the top of their license and restoring joy in the practice of medicine.”
Executive compensation
While some leaders cite what they view as excessive union demands for higher wages, workers point to growing wage gaps. One counterargument is the “financialization” of nonprofit health systems, particularly the rise in CEO compensation.
A study published in August in Health Affairs found hospital CEOs earned about 10.2 times the average wage of hospital employees in 2009. By 2023, that ratio had risen to 12 times the average wage — a 17.6% increase.
Some systems have reevaluated leadership compensation as part of broader cost-reduction strategies. In July, San Diego-based Sharp HealthCare announced that it would reduce its workforce and enact other cost-cutting measures, including reducing senior executive compensation by approximately 15%. President and CEO Chris Howard elected to reduce his compensation by an additional 10%. It is not an entirely new approach; leaders at University of New Mexico Hospital in Albuquerque and Billings (Mont.) Clinic saw pay cuts in 2023.
Mr. Till said Providence is examining its leadership structure and compensation.
“Our aim is market-competitive pay across the board,” he said. “We use external compensation consultants to help us define what competitive pay means for each workforce segment. That includes nurses, physicians, techs, laundry workers — and yes, our leaders.
“We’re committed to reducing overall administrative costs so we can invest more in the front lines. We’ve significantly reduced our leadership headcount over the past two years and are continuing to evaluate our leadership structure.
“That way, we can reallocate more resources to our clinical caregivers — supporting their compensation, benefits and development. We’re still one of the few systems that fully covers caregiver education expenses up to the federal tax-free limit. We do that because development is core to our promise to caregivers.”
As health systems continue to face compounding financial pressures and industrywide uncertainties, leaders say they remain focused on efficiency and boosting workforce engagement.
“It comes back to, as leaders, can we focus on creating the right environment for our people?” Mr. Dandorph said. “And that’s hard in all the uncertainties. … But that’s where we have to continue to focus: How do we create the right environment for our people?”
