New buildings and facilities in Florida and Delaware will allow Nemours to reach more children in need of care.
In this episode of HL Shorts, Nemours Children's Health president and CEO R. Lawrence Moss shares how the health system's recent capital investments are driving growth and expanding access to care.
Leaders have little choice but to pursue strategies to shore up the short- and long-term financial health of their organizations.
Current headwinds and market volatility are creating a particularly challenging financial environment for hospital and health system CEOs to operate within. Between rising labor costs and uncertain reimbursement rates, it’s crucial for organizations to be efficient with their resources.
Leaders must prioritize their spending and allocate funds to where they are most needed to ensure strong portfolio management.
Here are three areas that hospital CEOs can target to improve their financial stewardship.
Achieve growth
Growing your organization is easier said than done when margins are tight, but it doesn't have to feel impossible.
One area CEOs should assess is what service lines are worth expanding on to reach the most patients possible.
For example, Penn State Health achieved this through its affiliation with Lancaster Orthopedic Group, announced in February, which allowed the health systems to grow its orthopedic services in the region.
The physician owned and operated practice includes a staff of 18 orthopedic physicians and 15 advanced practice providers.
Penn State Health interim CEO Deborah Addo recently told HealthLeaders about the affiliation: "It's that kind of growth on the other side that says how do you continue to do the work that you need to do and how do you become the organization of preference, top of mind? We need to make sure that we also are good stewards in the community, but that we are a top-of-mind choice for those who may be thinking of a landing place."
Create additional revenue streams
Similarly, joint ventures or a vendor partnership can provide organizations with win-win opportunities to turn loss leaders into profitable strategies.
Outpatient care is an especially worthwhile investment right now due to its lower overhead and ability to meet the shifting demand for services.
Inspira Health bolstered its outpatient offerings through its joint venture with Atlantic Medical Imaging and Regional Diagnostic Imaging to enhance its outpatient imaging experience for patients.
On the vendor side, Inspira struck an agreement with Labcorp in January to manage its daily operations of hospital labs and serve as the primary lab for the health system's physician network.
Inspira Health CEO and president Amy Mansue recently told HealthLeaders about the importance of "not being afraid to look at some of those areas within your own shop and say, 'OK, I'm not doing this well, is there something else I can do better?' Or you may have an existing relationship that may just not be meeting your needs anymore."
Reduce expenses
Cutting costs can be a painful process for leaders, but it's often necessary for long-term sustainability and the health of the bottom line.
Expenses related to the workforce are a primary target for hospitals right now, with many organizations resorting to layoffs and restructuring of leadership.
However, reducing staffed positions doesn't have to be the go-to strategy to alleviate costs. Instead, hospital CEOs can choose to continue paring down reliance on contract labor by improving worker retention through initiatives that cut down on burnout and improve wellbeing.
Investment in technology that creates more efficiency and further alleviates the administrative burden on clinicals, such as ambient listening and note-taking generative AI tools, can also strengthen the workforce without sacrificing care.
It's the latest concerning development in a tumultuous stretch for the healthcare giant.
UnitedHealth Group continues to make headlines for all the wrong reasons.
Following a poor financial performance in the first quarter and a leadership change that left the company in disarray, UnitedHealth Group is now under investigation for possible criminal Medicare fraud, according to a new report by The Wall Street Journal.
People familiar with the matter told the news outlet that the probe by the Department of Justice's (DOJ) criminal division centers on UnitedHealth's Medicare Advantage (MA) business and has been ongoing since at least last summer.
In response to the report, UnitedHealth Group released a statement saying it was unaware of any such investigation.
"We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today."
"The WSJ’s reporting is deeply irresponsible, as even it admits that the 'exact nature of the potential criminal allegations is unclear.'"
"We stand by the integrity of our Medicare Advantage program."
The probe adds to the growing number of investigations facing the healthcare giant.
A year ago, WSJ reported that the DOJ was looking into antitrust violations regarding the relationship between UnitedHealthcare and Optum, which is under question for creating an unfair advantage over competitors and potentially harming consumers.
WSJ also reported in February that UnitedHealth is facing a civil fraud investigation that is examining the company's practices for upcoding, resulting in extra payments to its MA plans.
Meanwhile, UnitedHealth is attempting to stabilize after undergoing a sudden leadership change, with CEO Andrew Witty stepping down this week for personal reasons. Stephen Hemsley, who previously served as the company's CEO, returned to the role to guide the UnitedHealth through an unsettling period.
The struggles extend to UnitedHealth's bottom line. The company significantly underperformed in its first quarter earnings, which were weighed down by rising costs in MA and a jump in utilization, causing UnitedHealth to suspend its guidance for the year.
Additionally, the company faced scrutiny after its Change Healthcare subsidiary suffered a cyberattack in February last year, disrupting payments to providers and compromising the personal data of millions of people.
At the end of 2024, the killing of UnitedHealthcare CEO Brian Thompson put the company even more under the microscope.
Now, with its stock plummeting and multiple federal investigations directed its way, UnitedHealth's stranglehold on the industry is in a precarious position.
Hospital CEOs should be implementing strategies that strengthen organizational culture and allow staff to feel valued.
For hospital and health system leaders, boosting retention and lowering turnover are more than achievable by addressing the biggest drivers of dissatisfaction in the workplace.
Lack of trust and low engagement are causing more and more healthcare workers to leave their organizations, according to a report from Press Ganey, putting the onus on hospital CEOs to commit to building social capital to ensure a sustainable workforce for the future.
The analysis, based on feedback from 2.3 million employees across more than 400 health systems and 15,200 locations, revealed that worker engagement is declining. After a slight improvement in 2023, employee engagement dropped 0.02 points on a five-point scale in 2024. Disengaged employees are 1.7 times more likely to leave their roles, especially early-tenure staff and younger-generation workers, Press Ganey highlighted.
While employee turnover dropped from 20% in 2023 to 18% in 2024, a dip in engagement, particularly among frontline staff, could reverse that trend.
The widest declines in engagement were seen in advanced practice providers (-0.08 points) and physicians (-0.06 points), indicating a need for organizations to create alignment with providers by involving them in decision-making and making them feel supported.
"In a time of uncertainty, trust is our most vital asset," Patrick T. Ryan, CEO and chairman of Press Ganey Forsta, said in a statement. "Healthcare workers are telling us what they need—not just as individuals, but as teams. They’re asking to be seen, heard, and supported in delivering safe, high-quality care. The organizations that rise to this moment, by building cultures rooted in respect, shared purpose, and real partnership, won’t just retain their people. They’ll unlock the kind of workforce resilience and innovation that transforms care for generations to come."
Generational differences
As millennials and Gen Z continue to make up a greater proportion of the workforce, healthcare leaders must recognize and act on younger generations' motivations.
Millennials and Gen Z showed the lowest levels of engagement in Press Ganey's report, with scores of 3.85 and 3.81, respectively. For comparison, the national average engagement score is 3.97.
The lack of engagement resulted in a turnover rate of 38% for Gen Z, the highest among all generations, and 22% for millennials. The turnover rates for Generation X and baby boomers were 14% and 19%, respectively.
Unlike older generations, Gen Z and millennials place more value on factors like career development, equity, relationships with managers, and work-life balance. Hospital CEOs should be mindful of shifting expectations and desires among their workers, and provide a wide array of benefits with far-reaching appeal.
How CEOs can respond
Hospital leaders need to look beyond compensation to improve retention and focus on drivers of engagement, like trust, respect, and belonging, Press Ganey stated.
Equipping managers to better lead frontline workers is also essential to both culture and performance. CEOs should invest time and energy into leadership development to build up these managers' competencies and skills.
Segmenting engagement data is another strategy that can benefit organizations, according to the report. Separating insights by role or generation can allow CEOs to identify and implement targeted solutions for better outcomes.
"The most resilient organizations are winning trust team by team," said Thomas H. Lee, MD, CMO at Press Ganey. "They’re evolving how they listen—using real-time feedback from rounding, huddles, and digital tools—and they’re acting with urgency. When leaders engage directly with the front line and respond visibly to their needs, it builds connection, confidence, and commitment. These are proven strategies that enable organizations to work with their frontline to find solutions and drive improvement."
Financial challenges for the health systems and pushback from detractors of the deal contributed to its demise.
One of the largest proposed hospital mergers in Oregon's history is dead.
Oregon Health & Science University (OHSU) and Legacy Health mutually called off their deal to integrate, ending plans to form a 12-hospital health system with over 100 locations and more than 30,000 employees.
Though the organizations didn't provide details in their announcement as to why the transaction was abandoned, it's likely that the decision was influenced by both health systems' financial troubles, as well as by public opposition.
"After careful consideration of the evolving operating environment, the organizations have determined that the best way to meet the needs of the communities they serve is to move forward as individual organizations," OHSU and Legacy Health said in the news release. "OHSU and Legacy will remain focused on each health system’s individual strategic objectives, with the goal of remaining well-positioned to continue supporting their people, patients and communities."
The two sides announced their pursuit of a merger in August 2023, which would have seen OHSU invest $1 billion over 10 years to boost Legacy's infrastructure. A definitive agreement was signed in May 2024 to put the hospital operators on the verge of combining.
However, the deal faced scrutiny from its critics, who stated concerns over the impact of OHSU's increased market power on consumers.
A community advisory board, convened by the Oregon Health Authority, echoed those worries in April by saying that the merger would lead to increased prices and recommended that state regulators deny the deal.
Meanwhile, OHSU, dealing with its own financial headwinds, would have been tasked with supporting Legacy, which has struggled to reach profitability in recent years.
Legacy reported an operating loss of $171.7 million and a net loss of $245.8 million in fiscal year 2023. Through cost containment efforts, the system improved its bottom line in fiscal year 2024, recording operating incoming of $16.5 million and a net gain of $229.8 million.
In OHSU's case, the system cut 500 positions last year and had an operating loss of $71 million through the first nine months of its current fiscal year. As an academic medical center, OHSU is at risk of losing federal funding that the current administration is working to eliminate, in addition to facing potential Medicaid cuts.
Delivering care was less expensive in March, Kaufman Hall's National Hospital Flash Report shows.
With flu season winding down, hospitals are treating fewer patients with respiratory illnesses.
In March, hospitals and health systems across the U.S. experienced a drop in volume stemming from fewer flu cases, which led to a decline in the cost of delivering care while revenue remained flat, according to the latest National Hospital Flash Report by Kaufman Hall.
Dischargers per calendar day and adjusted daily discharges were down 5% and 4% month-over-month, respectively, with equivalent patient days per calendar day also dropping by 4%. Operating room minutes per calendar day fell by 4% and average length of stay was flat.
As a result, total expense per calendar day dipped by 4% compared to February, driven by non-labor expense per calendar day plunging by 7%. Labor expense per calendar day, meanwhile, saw a modest drop by 1%.
Despite the monthly decline in total daily expenses, costs are still up 7% compared to March 2024, due in large part to supply and drugs expenses per calendar day each being up 11% year-over-year.
On the revenue side, net patient services revenue per adjusted discharged and per adjusted patient day were flat month-over-month. Net operating revenue per calendar day declined by 4%, with daily inpatient revenue falling by 5% and daily outpatient revenue dropping by 3%.
Overall, hospitals' median operating margin, inclusive of all allocations for the cost of shared services that they receive from their health system, was 3.1% in March, compared to 2.7% in February. Without allocations, March hit 6.7%, following February's mark of 6.3%.
The year-to-date median operating margin with allocations ticked up from 3.2% in February to 3.3% in March. Without allocations, that figure also saw a slight bump from 6.8% in February to 6.9% in March.
Going forward for the rest of the year, hospitals should continue to look for ways to capitalize on efficiencies in a challenging financial climate, Kaufman Hall noted.
"Hospitals need to remain vigilant about their expenses, especially as the United States enters a period of economic and policy uncertainty," Erik Swanson, managing director and data and analytics group leader with Kaufman Hall, said in a statement. "With revenue largely flat, finding efficiencies that can reduce expenses is mission critical."
Economic uncertainty is likely causing companies across all sectors to hold off on making seismic leadership changes.
CEO turnover in the U.S. is trending downward and hospitals are feeling the effects.
Only six CEO exits occurred at hospitals in March, a 60% decrease from 15 in February and a 25% decline from eight in March 2024, according to a report by Challenger, Gray & Christmas.
Factoring in the 10 CEO departures from January, hospitals experienced 31 exits in the first quarter of 2025, compared to 34 during the same period last year.
Overall, 646 CEOs left their organizations across all sectors through the first three months, setting a record for first-quarter turnover, the executive coaching firm found. The previous record was the 622 exits during the first three months of last year.
Despite record-breaking numbers for the quarter, CEO turnover headed in the opposite direction in March, which had 177 total exits, down 28% from 247 in February and a tick under the 180 from March 2024.
Unpredictability around potential policy changes in Washington that could impact organizations' financial health may be creating hesitation for companies in switching up leadership at the top of the C-suite.
"After a record-breaking start to the year, companies have slowed a bit on changing their top leader, though historically, it remains a high number," Andrew Challenger, senior vice president and labor expert for Challenger, Gray & Christmas, said in a statement.
"We certainly continue to face economic uncertainty as tariffs, federal job and funding cuts, new regulation, and falling consumer confidence hit companies nationally," he added.
New data from the Bureau of Labor Statistics shows that the industry's job market is holding strong for now.
Healthcare continues to add jobs at a consistent pace, even in the face of economic uncertainty and market volatility.
The industry created 50,600 jobs in April, a slight step down from the 53,600 jobs added in March but right around the monthly average of 52,000 jobs gained over the past 12 months, according to a report by the Bureau of Labor Statistics.
Much of the growth for the month came from hospitals and ambulatory healthcare services, which contributed 22,100 and 21,400 jobs, respectively.
Growth in ambulatory healthcare services was largely driven by jobs added in physician offices (8,000) and outpatient care centers (5,400).
Meanwhile, 7,100 jobs were created in nursing and residential care facilities, with a large chunk coming in skilled nursing care facilities (2,900).
Overall, healthcare had 18.14 million workers in April, representing a 3.5% increase from the 17.53 million workers recorded in April 2024.
Across all sectors, the U.S. added 177,000 jobs in April, roughly in line with the average monthly gain of 152,000 over the prior 12 months. The unemployment rate was unchanged at 4.2% and has remained between 4% and 4.2% since May 2024.
Though the consistent job growth in healthcare serves as evidence for the idea that the industry is "recession proof," many hospitals and health systems have implemented jobs cuts to offset rising costs and potential slashes to funding.
Mass General Brigham announced in February that it would conduct the largest layoffs in its history to close a projected $250 million budget gap over the next two years.
Providence, on the other hand, froze nonclinical hiring in April to alleviate financial strain from issues like low reimbursement from payers.
Hospitals big and small, rural and urban, are feeling financial pressure that could be worsened by policy decisions in Washington in the coming months, possibly leading to a bit of a slowdown in the industry's job growth.
The for-profit giant posted solid first quarter results, though leadership highlighted uncertainty around policy reform.
HCA Healthcare remained on track with its earnings in the first quarter, but it's unclear how potential policy changes in Washington could impact the health system going forward.
Along with reporting revenue growth and strong profits for the first quarter, HCA reaffirmed its 2025 guidance range of $5.85 billion to $6.29 billion.
Leadership, meanwhile, stayed away from providing details on how policies like tariffs and Medicaid reform could affect finances in an earnings call with investors.
"We are in a very fluid situation," CEO Sam Hazen said on the call. "While we have a general sense for the new administration's stated priorities, we do not have any specifics. It is unclear how these efforts might be carried out and what effects they may have on our business."
For the first quarter, HCA recorded revenue of $18.32 billion and net income of $1.61 billion, improvements over the $17.34 billion and $1.59 billion, respectively, reported during the same period last year.
Revenue growth was driven by an increase in patient volume, with the health system seeing same facility admissions rise 2.6% year over year, same facility equivalent admissions jump 2.8%, and emergency room visits swell by 4%.
One area of volume that continued to decline was outpatient surgeries, which fell by 2.1% year over year. Hazen attributed to dip in part to 2024 being a leap year with an added day for services.
When asked by investors about policy developments, Hazen stated that HCA is engaged in advocacy efforts.
"Our general approach is to support reasonable reforms," Hazen said. "However, we do not support reforms that harm coverage for families or individuals, nor do we support policies that compromise the ability for hospitals across the country to care for people in their times of utmost need."
On the issue of tariffs, CFO Mike Marks called HCA's level of risk for the year "manageable." The health system has 70% of its supply expense contracted with firm pricing for 2025, and 75% of its supply expense coming from either the United States, Canada, or Mexico, or from products that currently have broad exemption from tariffs, according to Marks.
Still, Hazen again touted the wait-and-see approach he offered following the release of the health system's fourth quarter earnings.
"I know you would like us to size the potential impacts of health policy risks and now tariff risks, but we are not comfortable with providing estimates at this time," Hazen said. "We just do not have enough insight into what might happen."
President and CEO R. Lawrence Moss is striving to create health, not just deliver medical care for children.
As healthcare grapples with a wide array of challenges that pose a threat to the industry's future, improving children's health looms as a potential answer to drive sustainability for the system.
At Nemours Children's Health, president and CEO R. Lawrence Moss, MD, FACS, FAAP, is focused on advocating for the value of investing in childhood prevention, while strategizing for where children's health is heading.
The United States has a massive burden of chronic disease, one that could be significantly lessened by addressing health trajectories in children, according to Moss. That burden is creating problems in several areas, from the $4.5 trillion in annual costs, to the strain on providers' resources to care for patients.
"The biggest issue for me continues to be our opportunity to do a better job demonstrating that children's health is not just about treating sick kids," Moss told HealthLeaders. "Children's health is about the health of our entire country, it's about the health of our economy, and it's about our future.
"One of the things that that I always try to do, that I think the whole children's hospital industry can do a better job of, is demonstrating that children's health is the lever we have to power our society and our economy. I just get out of bed every day thinking about that because if we could do a better job of that, the shiny object challenges of the day would tend to fade away."
For Moss and Nemours, the priority is advancing whole child health models that promote health, development, and wellbeing over the course of a child's life. Those models are influencing how children's health is trending and the type of medical care children's hospitals are emphasizing.
With higher acuity in inpatient settings and more care being administered at home and in outpatient settings, Moss believes the children's hospital of the future will be a giant ICU with only acute care beds. Meanwhile, most of the care that is delivered in the medical-surgical unit today will be delivered at home.
"At Nemours, we're investing very heavily in something that we call advanced pediatric care at home, which is essentially hospital-level care at home, which we are actively testing and moving very rapidly towards becoming a part of the way that we deliver care here," Moss said. "I hope that we're able to demonstrate to other children's health systems around the country that that's the way to go."
Pictured: R. Lawrence Moss, MD, FACS, FAAP, president and CEO, Nemours Children's Health.
Moss is also bullish on new technology allowing for more innovation in children's health.
By leveraging AI to improve care management and care coordination at a sophisticated level, children's hospitals can scale a major hurdle that currently places limitations on providers.
"In the children's healthcare world, our biggest challenge is the subset of kids we call children with medical complexity," Moss said. "Those are the kids with multiple congenital anomalies, complicated cancer, other types of birth defects, the kind of things that that require what only a children's hospital can do. Yet coordinating that care requires multiple specialists in a variety of procedures and it's the thing we do poorly in healthcare, is deliver that in a coordinated, efficient fashion."
Nemours is partnering with a startup company that's looking at ways to create a virtual care coordinator and care manager to give the health system "essentially an unlimited workforce of roles that are really, really hard to fill," according to Moss. That partnership has yet to be officially announced, but Moss is excited by the opportunity and expects it to greatly benefit children's families.
Additionally, Nemours has been active with capital investments in its home states of Delaware and Florida to strengthen care delivery efforts. While Nemours is interested in delivering population health and elevating children's health outside the hospital, it also wants to care for the sickest of kids, Moss pointed out.
"An emphasis on health outside of the hospital and keeping kids out of the hospital is not a de-emphasis on high-end tertiary quaternary care for kids who need that," Moss said.
In December, the health system announced it would spend $130 million in 2025 on projects in Delaware, including a new Maternal and Fetal Health Program and expansion of its neonatology, cancer and cardiology programs.
At its Central Florida campus, Nemours is investing $300 million over the next four years on expanding the pediatric hospital, building a new surgery center, and building a new administrative building.
"We're finding with the increased visibility we've had in the market and with how responsive communities and families have been through our whole child health model, we've seen a big increase in demand for our high-end tertiary quaternary services, so more kids who maybe were going somewhere else are now coming to us for those services and we need to be there to deliver," Moss said.
Taking care of the sick will always be a core function of hospitals, but bettering the health of communities in a meaningful way requires a comprehensive approach.
"Whether we're leaders in healthcare or we're at the front lines taking care of patients, our job is to create health," Moss said.
