As policy uncertainty, workforce shortages, and reimbursement pressure converge, it's imperative rural health systems rethinking sustainability.
For rural health systems, sustainability has moved from a long-term aspiration to an immediate strategic mandate. The potential expiration of enhanced ACA premium tax credits, proposed Medicaid changes under HR1, reimbursement compression, and persistent workforce shortages are converging at once.
The cumulative effect is structural pressure on margins that many rural organizations are not built to absorb.
Sanford Health’s response is instructive for CFOs navigating similar terrain. Rather than centering strategy on short-term policy relief, the organization is doubling down on financial discipline, scenario modeling, and scale as structural advantages.
Working With State Partners, But Not Banking on It
Sanford Health has worked closely with state leaders and CMS as Rural Health Transformation Program funding rolls out across the Dakotas and Iowa. CFO Nick Olson described the process as collaborative and inclusive of provider input.
"We've been working really closely with our state partners throughout this process and are super grateful for their strong collaboration," he said. "We're also really appreciative of CMS's close partnership, particularly for creating space for rural providers like Sanford Health to share our insights and expertise and to help inform and ultimately shape the program."
However, the organization is not incorporating the anticipated transformation dollars into its core financial forecasts. Instead, any awards are treated as additive capital to accelerate proven rural care models.
That conservatism is intentional while the system models significant exposure from policy shifts, including a projected $10 million to $20 million increase in uncompensated care if enhanced premium tax credits expire and a potential $400 million impact over the next decade tied to Medicaid changes under HR1.
To prepare, Sanford launched a Premier Performance Plan, which is its proactive financial improvement strategy focused on efficiency, cost discipline and resiliency over a three- to ten-year timeline.
"That coverage continuity is critical to the continuity of care, particularly in rural communities," Olson said.
Olson underscored that Sanford remains focused on efficiency, technology adoption and helping eligible patients maintain coverage.
Growth as a Strategic Lever
In a previous article North Carolina was highlighted as a rural healthcare microcosm, and with over eighty rural counties the state is one of the highest Medicaid users in the country. When asked about potential expansion into North Carolina, Olson didn’t signal towards any near-term moves but underscored a big-picture truth, that growth is central to rural sustainability.
Sanford’s recent transactions, including a merger with Marshfield Clinic Health System and Prairie Lakes Healthcare System, and the acquisition of Lewis Drug and expansion into the Black Hills in South Dakota, reflect a consistent growth philosophy. Growth must be geographically and culturally aligned, mission-driven and designed to strengthen community access.
CFOs should keep in mind that scale does spread fixed costs, supports specialty coverage, enhances purchasing leverage, and creates capacity to invest in innovation.
Expansion, then, becomes less about footprint and more about building an integrated delivery system across people, processes and technology, and one that is capable of absorbing volatility.
Despite reimbursement and Medicaid headwinds, Olson said, "I remain super optimistic for the future of healthcare in rural America."
Workforce: Measuring ROI Beyond Labor Expense
Nearly every county in Sanford’s footprint is federally designated as a workforce shortage area, and that reality no doubt shapes capital allocation decisions across the organization.
"These realities really shape everything we do," he said.
The system is investing in university pipeline programs, community engagement and what Olson describes as a "listening culture" to improve retention. At the same time, many CFOs are aligning workforce strategy with technology, meaning an expansion of virtual care and AI tools to extend staff capacity and reduce administrative burden.
From an ROI perspective, Olson looks beyond labor costs alone, tracking employee engagement scores—which have improved each of the past four years—and declining turnover as key indicators. He also monitors total labor investment as a percentage of revenue, noting that it has improved for three consecutive years.
Still, challenges remain, particularly in nursing, where the system relies on more than 1,200 contracted nurses. He suggested that if the Rural Health Transformation Program funds helped expand pipeline programs and reduce contract labor, it would "free up dollars to expand access and or improve the affordability of the care that we provide."
Ultimately, he said, workforce development is the area Sanford is "really excited about" under the program because strengthening recruitment pipelines could create long-term sustainability across its rural markets.
Strategic Optimism Amid Structural Headwinds
Tariffs, reimbursement uncertainty, and rising community need continue to create volatility for healthcare. Olson acknowledged that some days feel dominated by these headwinds, yet his long-term view remains optimistic.
His core thesis is that rural healthcare sustainability rests on three pillars: disciplined financial management that plans for downside scenarios, intentional, mission-aligned growth that creates scale and integration, and strong workforce investment tied to technology to extend reach and improve affordability.
Rural sustainability will not hinge on a single funding stream or legislative fix. It will depend on building resilient operating models capable of adapting to policy shifts while still continuing to expand access close to home.
"The complexities of healthcare are too large for any one system to solve alone," he said. "So we feel we need to continue to grow and learn from one another, and we believe that that's a big part of our future."
In that sense, rural healthcare’s future may belong not to the most protected systems, but to the most strategically integrated ones.
Marie DeFreitas is the CFO editor for HealthLeaders.