Becker's Hospital Review

16 CEO / STRATEGY 10 headwinds for health systems in 2025 By Laura Dyrda Healthcare executives are preparing for 2025, a year likely filled with profound challenges and big opportunities. From workforce shortages to financial pressures, technological advances, and policy uncertainties, 74 health system executives and leaders shared their biggest headwinds heading into next year. e big themes include: 1. Continued staff shortages. Hospitals across the U.S. have seen an uptick in demand for patient care despite continued nurse, physician and staffing shortages. e Association of American Medical Colleges predicts there will be a 61,700 to 94,700 physician shortage next year as demand spikes in several specialties; the American Association of Colleagues of Nursing predicts a shortage of 78,610 full-time RNs next year; and a recent Mercer study predicts a shortage of around 100,000 critical healthcare workers by 2028. e shortfalls mean less access to care, slower patient throughput and increased wages to stay competitive next year. "One of the difficult issues we are anticipating for 2025 is a continuing shortage of staff for the level of patient demand we are experiencing," said Michael Dolan, MD, chief clinical officer of Gundersen Region at Bellin and Gunderson Health System in La Crosse, Wis. "While we made some improvements in 2024, this is especially critical in certain physician areas. As a result, we continue to need assistance for physician staffing services to help us meet the demand." Hospitals are preparing to overcome clinician and staff shortages by creating pipeline programs for current team members to achieve advanced degrees, bring in new team members and strengthen the overall workforce. ey are also automating tasks where possible to alleviate administrative burden and support clinical staff. Finally, many hospitals are developing hospital-at-home programs and forging partnerships with regional systems and specialty groups to provide in-person and virtual coverage for patients. 2. Financial pressures. Nonprofit hospitals reported slow margin growth in 2024 and the same is expected for 2025, according to ratings firm Fitch. Slow reimbursement growth coupled with rapidly raising costs and inflation will make the next year particularly challenging for community and independent hospitals, as well as regional chains. An increase in payer denials could contribute to financial challenges. "As we prepare for the top headwinds in 2025, we anticipate significant challenges related to cost containment and revenue cycle management," said Shelly Schorer, CFO of California Division of Chicago-based CommonSpirit. "We will address rising inflationary costs through a rigorous approach to our expense management. Simultaneously, we will strengthen our revenue capture capabilities by optimizing billing processes, improving collections, and fostering strong relationships with payers." Health system executive teams are adding revenue streams, diving deeper into value-based care and entering into new partnerships to implement technology as a difference-maker next year. 3. Trump administration. President-elect Donald Trump will take office for the second time in January, and plans to appoint a swath of new leaders to oversee aspects of the healthcare system. While he hasn't shared specifics about his healthcare policy, his administration is already rooting out inefficiencies and looking for areas to cut costs. ere are also key waivers up for renewal next year that will affect hospitals and executives are planning for a variety of scenarios. "In 2025, we're focusing on finding ways to fill the gaps so we can get to financial stability while continuing to provide the charity care needed in our communities," said Ngozi Ezike, MD, president and CEO of Sinai Chicago. "It's not going to be easy, especially with city and state budget challenges looming and a good deal of uncertainty about healthcare policy pivots with a new administration. So, we need to look creatively at new philanthropy channels, partnerships with better resourced systems along with ongoing efforts to be as efficient and cost-effective as possible. ese are difficult needles to thread, but our leaders and caregivers are committed to our mission that healthcare is a right for all." 4. Technology integration. e technology in healthcare is rapidly advancing, and so is the chasm between the "have's" and "have-nots." Hospitals with the resources to implement new technology and data analytics will grow at a much faster rate than smaller systems and independent hospitals already struggling financially. But technology isn't a "nice to have" anymore; it's an imperative for operating in the digital world. IT purchases are significant for any organization and require diverting funds from other essential areas. Hospitals without enough funding rely on partners and donors to modernize. "To plan the future, hospitals and systems need to invest capital into technology and programs. However, low financial margins, continue to stress the ability for future investments," said Mayank Shah, MD, president and chief medical officer of Advocate Condell Medical Center. "Many systems continue to have dual short term and long- term strategies for financial sustainability." 5. Medicare Advantage. Health systems have gone toe-to-toe with Medicare Advantage plans in the last 18 months aer experiencing heightened denials and low rate increases. Some have le the program entirely while others spent months in contentious negotiations. Executive teams are planning for more challenges ahead as the plans grow. "Medicare Advantage remains a significant headwind as plan sponsors consistently reimburse at rates lower than traditional fee for service Medicare," said Stephen Rinaldi, senior vice president and chief revenue officer of University of North Carolina Health care System in Chapel Hill. "In the coming year, we will continue to work with our payer partners to ensure we have agreements that properly consider future inflation and performance targets." 6. 340B program. Health system executives are planning around potential changes to the 340B program and preparing for the impact of the Inflation Reduction Act. It's unclear how the Trump administration will approach the 340B program, but pharmaceutical companies are pushing for adjustments. "Increasing and everchanging contract pharmacy restrictions and the emergence of 340B rebate models threaten to alter the 340B program, requiring strategic adjustments to maintain program compliance while minimizing the regulatory burden on covered entities," said Matthew

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