CFOs are confronting a triple threat—reimbursement cuts, service line rationalization, and workforce instability. How are they using strategic approaches to safeguard both their bottom line and their community impact?
At the recent HealthLeaders CFO Exchange, CFOs from systems large and small shared pressing challenges and emerging strategies.
Three clear themes rose to the top: Preparing for shifting reimbursement landscapes, making the right-sized service lines while maintaining community impact, and navigating workforce instability.
Each of these unique challenges requires finance leaders to think strategically, act collaboratively, and advocate loudly.
The Reimbursement Reckoning
CFOs are bracing for a wave of changes to Medicare and Medicaid reimbursements from the Centers for Medicare & Medicaid Services (CMS), which could significantly tighten their margins.
Health systems are actively modeling different reimbursement scenarios (including worst-case ones) via internal “doomsday files” to forecast operational impacts and examine readiness.
CFOs should prepare strategic structural overhead reductions now. Use scenario planning to align executive teams on what could be cut, downgraded, or restructured if needed. Also, examine where partnerships might bridge future care gaps.
Service Line Rationalization
In order to stay in the black, CFOs are looking at cutting high-cost, low-use service lines or consolidating programs.
One tactic gaining momentum: Re-evaluating trauma levels and strategically downgrading or eliminating certain designations to reduce staffing and capital requirements. Health systems are increasingly embracing hub-and-spoke models, by using ambulatory architects to design the right level of care per setting, and shifting toward telemedicine for remote coverage.
Rather than building everything in-house, CFOs emphasize clinical and financial quality indicators to determine when to retain patients and when to send them to other healthcare sites, like a children’s hospital or larger health system with more specialty services.
Strong collaborative partnerships, including joint GPOs for purchasing and clinical alliances for shared service lines, are also emerging as critical tools.
CFOs need to use data-driven decision-making to determine which services are mission-critical. Think in terms of “systemness”—ensure referrals stay in-network, but be realistic about what your hospital can’t do well and seek partnerships to fill those gaps.
Even small partnerships can make a big difference, CFOs said at the Exchange.
The Workforce Crisis
Workforce costs are surging, especially in anesthesia, imaging, and technical fields, where workers chase the highest offer. The looming retirement cliff among physicians further strains service healthcare continuity, particularly in rural and high-cost areas where affordability limits recruitment.
Some CFOs are funding housing subsidies and investing in high school and college internship programs to grow their future workforce locally. Retooling existing staff, rather than replacing them, is another cost-saving move. Prioritizing local hires, retraining, and flexibility across roles can increase long-term retention.
Community Responsibility: CFOs Must Speak Louder, But Strategically
CFOs at the Exchange agreed that hospitals have “lost the narrative” and must rebuild community and legislative support. Emphasize that healthcare is the #1 job provider, and the economic anchor of many towns. Be transparent. Engage employees, patients, and local leaders in the message: losing the hospital means losing more than care, it means losing economic stability.
Create incentives for long-term commitment, like housing, scholarships, and clear career paths. Focus on employees as storytellers: An engaged workforce helps shape the community narrative about the hospital’s value.
The financial future of healthcare may be uncertain, but with smart modeling, aligned partnerships, and a focused community message, CFOs can remain the steady hand guiding their institutions forward.
Marie DeFreitas is the CFO editor for HealthLeaders.
KEY TAKEAWAYS
CFOs are preparing for Medicare and Medicaid cuts by modeling financial impact, renegotiating contracts, and building internal “doomsday” playbooks to stay ahead.
Leaders are shifting away from trying to do everything in-house, opting instead for strategic partnerships, telemedicine, and trauma level reevaluations to manage costs without abandoning community care.
From subsidized housing to high school internships, CFOs are investing in sustainable workforce strategies to retain talent and support care continuity in their markets.