Becker's Hospital Review

14 CEO / STRATEGY Healthcare's strained margin-mission gap By Laura Dyrda "No margin, no mission" is a familiar refrain in healthcare — and for good reason. Leaders devoted to serving their communities know that strong finances are essential to realizing their mission. Yet today, many health systems are grappling with steep fiscal challenges. Rising expenses, shrinking reimbursements, and shiing policy landscapes are forcing executives to make difficult decisions about closing services, reducing staff, and scaling back community programs. Labor costs remain persistently high, driving organizations to invest heavily in talent pipelines and retention strategies to reduce reliance on contract labor and ensure staffing stability. Amid these pressures, leaders are keeping a close watch on the broader economic climate and preparing for multiple scenarios. "We need to keep an eye on general inflation," John Couris, president and CEO of Tampa (Fla.) General Hospital, told Becker's. "is will contribute to increases in cost, we will need to offset some or all of the increases. Labor costs will continue to slowly rise. ey are being stubborn and not leveling out; they continue to increase." And it's not just hospitals feeling the squeeze. Consumers are projected to see a 15% increase in healthcare costs over the next year, while millions could lose health insurance subsidies — limiting access to care. Patients without insurance oen delay treatment, arriving sicker and in greater need of complex interventions. At the same time, policy shis in programs like 340B, site-neutral payments, and Medicaid eligibility are reshaping health system funding. Care continues to move into outpatient and ambulatory settings, while consolidation drives hospital pricing upward nationwide. Larger systems are facing tougher contract negotiations with private payers, who are also bracing for tighter margins ahead. With so many forces in motion, many leaders are asking: Is the gap between mission and margin widening? And how can they prepare for what's next? "Policy and subsidy changes will impact overall costs," said Mr. Couris. "ere will be improvements and there will also be challenges presented to the industry. We need to keep an eye on this work and balance the good with the challenges. We can't overreact or over- correct. We need to work through the obstacles thoughtfully. With any great challenge comes an abundance of opportunity." One of those opportunities lies in value-based healthcare. For years, many systems have taken a binary approach, diving fully into health plans and ACOs or engaging only when required by CMS programs. Leaders have long lamented the challenge of having "one foot in each canoe" between fee-for-service and value-based models. But Peter Pronovost, MD, PhD, chief quality and clinical transformation officer and the Veale Distinguished Chair in Leadership and Clinical Transformation at University Hospitals in Cleveland, offers a different perspective. "One of the most underappreciated trends in healthcare is that success is not an either / or choice between fee-for-service and value-based care. You can win with both models," he said. "e organizations that thrive are those that resist the false tradeoffs and instead build strategies that allow them to capture the strength of each." University Hospitals is embracing the "both / and" mentality by empowering employees to improve value so all can approach their work with an aligned mindset. "When leaders see all employees as inherently capable and give them genuine opportunities to contribute, innovation accelerates," said Dr. Pronovost. "Problems are solved faster, solutions are more practical and costs decline because the people closest to the work are empowered to shape it." Technology also offers a path to protect the mission while adapting to financial realities. Workforce redesign remains one of the most promising areas for transformation. e question for many leaders is how to make the most of their existing staff without overburdening them. "A major but oen undervalued opportunity lies in rethinking labor costs through disciplined simplification," said Dr. Pronovost. "at means systematically asking: what can we stop doing altogether, what can be automated, what tasks can be outsourced or shied to lower-cost roles, or even robots, and critically, what should remain sacred because it's core to the human value of the role? is kind of thoughtful redesign not only reduces costs but also elevates the meaning and purpose of work." For Charlene Hope, PharmD, chief pharmacy quality and safety officer at the University of Chicago Medicine, the connection between mission and margin is strengthened through a relentless focus on quality. "Too oen, safety and quality are viewed as compliance checkboxes rather than drivers of financial performance," she said. "In reality, preventable harm and poor outcomes carry enormous costs. Organizations that treat quality as a strategic asset, not an expense, unlock better patient outcomes, stronger margins and lasting competitive advantage." Technology also has the power to expand access to care, especially for underserved communities. Yet for hospitals already operating on thin margins, the upfront costs of digital infrastructure can be daunting. Some may require support from larger regional partners to invest in the tools that make proactive, equitable care possible. More systems are beginning to shi from treating disease downstream to investing upstream — in prevention, safety, and social determinants of health — embedding "whole-person care" into their missions. But many leaders warn that this evolution is not happening fast enough. "Too oen, our systems reward high-acuity intervention but undervalue efforts like violence prevention, mental health access and community-based models that can dramatically reduce downstream burden," said Eric Cioe-Peña, MD, vice president of global health, Center for Global Health at Northwell Health in New Hyde Park, N.Y. "Another trend that deserves more attention is the role of technology not just in precision medicine, but in closing equity gaps globally using telehealth, AI and data to reach underserved populations. If we fail to recognize and invest in these areas, we risk widening disparities instead of closing them." n

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