For hospital CEOs, earning the trust of their staff is every bit as critical as strengthening trust with the public.
In this episode of HL Shorts, Vernon Health CEO David Hartberg shares how he's building and fostering trust within the four walls of his hospital by highlighting patient gratitude and pursuing inclusive strategy-building with his staff.
Novant Health’s COO offers advice for fellow hospital leaders aiming to contain costs without compromising quality.
As hospitals and health systems continue to operate on the thinnest of margins, cost containment remains a top priority for leaders everywhere.
However, cutting costs without sacrificing quality is easier said than done, which means it’s essential that organizations identify innovative measures in areas like care delivery and the workforce to improve long-term sustainability.
John Gizdic, executive vice president and COO at Novant Health, recently shared with HealthLeaders how his health system is reducing financial waste and provided tips for other hospital decision-makers striving to do the same.
Following a failed 2024 deal, CHS has signed a letter of intent to transfer three financially challenged hospitals to Tenor Health Foundation.
Community Health Systems (CHS) has restarted the process to offload three financially stressed hospitals in Pennsylvania, this time finding a buyer known for reviving struggling hospitals.
After previously failing to divest Commonwealth Health System, CHS has signed a letter of intent with Tenor Health Foundation that will transfer ownership of Regional Hospital of Scranton, Moses Taylor Hospital, and Wilkes-Barre General Hospital to the California-based nonprofit.
Last year, CHS pursued a sale of the Commonwealth Health System through a deal with nonprofit WoodBridge Healthcare. The $120 million agreement, announced in July 2024, unraveled months later and was mutually terminated in November when WoodBridge failed to secure financing via bond sales.
The three hospitals have financially struggled in recent years. According to reports by the Pennsylvania Health Care Cost Containment Council, operating margins for fiscal year 2023 were -24.1% at Moses Taylor, -9.5% at Regional, and -15.7% at Wilkes-Barre General.
For fiscal year 2024, those margins were -20.6% for Mason Taylor and Regional, which now operate under one license, and -6.2% for Wilkes-Barre General.
While CHS attempted to find another buyer for the hospitals, a group of community organizations subsidized the facilities’ finances by investing millions of dollars to compensate healthcare workers and keep operations running.
With a new buyer in place, the hospitals could finally gain long-term stability.
“This is the first step in a process that we all hope will result in a completed transaction and preserve the healthcare services provided by Commonwealth Health,” a CHS spokesperson said in a statement.
Tenor was formed specifically "to identify, own, manage, and turn around financially challenged hospitals,” particularly in rural and suburban areas with moderate to high financial risk and essential community value, according to the organization’s website.
To accomplish that, Tenor’s strategy centers on “efficiency of revenue cycle, enchaining service lines as appropriate and expense management in areas such as salaries and benefits, professional services, purchased services and supply chain.”
Regarding Commonwealth Health, Tenor CEO Radha Savitala said in a statement: “We look forward to working with the communities served by these facilities.”
Tenor entered the Pennsylvania market earlier this year by acquiring Sharon Regional Medical Center, formerly owned by bankrupt Steward Health Care. The hospital had faced months of uncertainty as Steward’s financial collapse forced service cutbacks and raised fears of closure.
After Tenor purchased the facility for roughly $1.9 million, partly through a partnership with Medical Properties Trust, Sharon Regional resumed core services in March before fully reopening in May.
Bankruptcies hit a three-year low in the second quarter, though the lull for providers is expected to be short-lived.
Healthcare providers are enjoying a brief reprieve from bankruptcies, but financial trouble may be just around the corner.
Bankruptcy filings for healthcare companies with more than $10 million in liabilities plunged to just seven in the second quarter of 2025, marking the lowest quarterly total since the same number was recorded in the first quarter of 2022, according to a report by Gibbins Advisors.
The seven bankruptcies are also a significant downturn from the previous two quarters, which saw 17 through the first three months of this year and 19 in the final three months of 2024. After hospitals experienced four bankruptcies in each of those quarters, no hospital bankruptcies were filed during the second quarter.
Clinics and physician practices, meanwhile, had no bankruptcies in the second quarter and just one to start the year, putting the subsector on pace to finish 2025 well below 2024’s total of 10.
At the other end of the spectrum, pharmaceuticals had its highest quarterly total in nearly two years by suffering five bankruptcies in the second quarter. The remaining two bankruptcies in the most recent quarter came from a medical equipment and supply company and a senior care company.
The healthcare restructuring advisory firm now projects the total number of bankruptcy filings for 2025 to land around 48, representing a 16% drop from the 57 cases recorded in 2024.
However, there are clear signs of storm clouds ahead for providers due to policy shifts in Washington and heightened economic pressures.
The newly enacted One Big Beautiful Bill Act (OBBBA) includes steep funding cuts and its ramifications could particularly harm providers with weak balance sheets or heavy reliance on Medicaid reimbursement.
“The unprecedented funding cuts in the One Big Beautiful Bill Act are deeply troubling for the future of healthcare,” Clare Moylan, principal at Gibbins Advisors, said in a statement. “Hospitals serving vulnerable communities—especially those with high Medicaid populations and dependent on supplemental payments—face the greatest risk. Leadership teams must act now to assess the future impact and craft strategies to stay solvent.”
Additionally, hospital mergers and acquisitions have slowed amid ongoing market volatility, even as interest rates have loosened, Gibbins highlighted.
Hospitals and health systems also continued to content with rising labor expenses, leading to workforce shortages.
Elevated bankruptcy activity in 2026 is likely to be felt in rural settings, where many hospitals are already stretched thin on resources and susceptible to a major loss in revenue from the Medicaid cuts.
The health system has climbed back to profitability through disciplined transformation and systemwide culture change, its leader says.
When James Hereford took over as president and CEO of Fairview Health Services in 2016, he understood the importance of transitioning the organization from more of a holding company to an operating company for its long-term viability.
The Minnesota-based nonprofit, which operates 10 hospitals, was already stretched financially in the early days of Hereford’s tenure. Yet nothing could prepare the health system for the seismic impact the pandemic would have on its bottom line.
“Coming out of COVID in the kind of hyperinflation was a little bit of our near-death experience,” Hereford told HealthLeaders.
That trauma created urgency, forcing Fairview to assess and fix the critical factors to its success, and do it in a way that was sustainable and could lead to broader transformation.
As a result, Fairview went from multi-year losses to financial stability, recording its first operating profit since 2018 in fiscal year 2024. The health system generated over $8 billion in total operating revenue and $51 million in operating income last year, marking a significant turnaround from the operating losses of $189 million and $315.4 million in 2023 and 2022, respectively.
It wasn’t achieved through simple cost-cutting, but by undertaking a disciplined, mission-aligned overhaul that improved margins while raising quality, safety, and patient experience scores to their highest levels, according to Hereford.
“If you get the process right, if you get the work right and do the right things in the right way, a lot of good outcomes happen—financially, quality, safety, customer service, and people are more engaged,” he said.
Building and sustaining the workforce
One of Fairview’s most pressing challenges was labor. Minnesota’s stagnant population growth meant Hereford couldn’t rely on an expanding workforce pool.
“We don’t have a constantly growing population to choose from to create the labor force that we need,” he said. “We have to really create it.”
That meant going upstream into high schools, even junior high, to spark interest in healthcare careers. Hereford leaned into healthcare’s career mobility as a selling point.
The strategy paired long-term pipeline building with immediate cost and staffing improvements. Fairview sharply reduced its reliance on costly traveling nurses, cut overtime, and addressed inefficiencies in staffing systems.
Importantly, these measures weren’t about squeezing staff. Hereford credits Fairview’s lean management approach with keeping the workforce engaged while pushing for operational efficiency.
“I’ve always had a great belief in this idea of taking fairly simple, straightforward tools and putting them in the hands of the people who are actually doing the work and having them improve their own quality,” Hereford said. “The challenge is always does the management system support that. That’s what our focus has been on.”
Hereford’s management system is built on three components: enterprise-wide goal alignment, value stream thinking, and daily tiered huddles.
“We spent a lot of time thinking about value streams,” he said. “How are we creating value for the customer from the very front end… all the way through that experience. Healthcare is very good at the point of care. Where we usually fail is in the space in-between.”
Fairview’s daily engagement system, meanwhile, includes tiered huddles starting on the frontlines and cascading up to a 9:45 a.m. executive huddle to ensures readiness, surface problems quickly, and celebrate wins.
Visual management and leader standard work reinforce accountability and transparency. “It’s easy for leaders to get caught up in their office and in front of a computer,” Hereford noted. “That standard work really helps to know what are the things that leaders can do at every level of the organization to reinforce support.”
Pictured: James Hereford, president and CEO, Fairview Health Services.
Rebuilding accountability and unifying operations
When a planned merger with Sanford Health collapsed, Hereford reassessed his leadership bench. Several long-tenured executives were ready to retire, so he recruited a new COO and CMO to bring fresh energy and operational focus.
“The big part of the accountability on the team was just getting the right people who were ready for the work we faced over that next five-year period,” Hereford said.
Execution of discipline came through the Enterprise Project Management Office, which was later transformed into a Transformation Office to drive both improvement and fundamental change.
Part of becoming more efficient for Fairview was thinking and acting as one system.
Historically, the organization operated as a loose holding company. That siloed approach wasted resources, like when two hospitals 15 minutes apart each sought to build competing vascular programs. Hereford pushed for a single operating structure, unified service lines, and a system operations center to match capacity and demand in real time.
Before, a hospital might send staff home for lack of cases while another Fairview site struggled with overcapacity.
“That’s a great example of not thinking as a system and not being able to see the whole picture,” Hereford said. The operations center now ensures “the right cases [go to the] right place with the right physicians and other clinical staff to really be able to manage that.”
One inflection point came when Fairview tackled length of stay challenges. Multiple teams were initially working on the problem in isolation before eventually taking a systematic approach.
“Our length of stays plummeted while our quality and safety and experience went up,” Hereford said. “The team started to see the benefit… and that reinforcing cycle kind of kicks in.”
Even after getting Fairview on solid footing, Hereford cautioned that the journey is ongoing. The $160 million annual gap between Fairview’s 2% revenue growth and 4% cost growth means the system must relentlessly pursue efficiency and innovation.
“The job is never done,” Hereford said. “We have to continue to drive down that cost structure, innovate, transform, and really challenge the status quo.”
As rural hospitals struggle with mounting financial pressures, some of the biggest urban hospitals are tapping into rural Medicare benefits.
Large, urban hospitals are increasingly taking advantage of a regulatory loophole that allows them to be reclassified as rural under Medicare, according to a new study published in Health Affairs.
The number of dually classified hospitals jumped from three in 2017 to 425 in 2023, qualifying them for higher Medicare reimbursements and access to federal programs designed to strengthen rural health access, the analysis found.
Nationwide, the share of administratively rural hospitals among all acute care non-critical access hospitals increased from 27% in 2013 to 43% to 2023, while the share of administratively rural hospital beds skyrocketed from 13% to 45% during the same period.
In 2023, dually classified hospitals accounted for 61% of all beds in hospitals classified as rural for Medicare payments.
The trend is driven by a 2016 rule change from CMS following two federal appellate court decisions. The revised regulation allows urban hospitals to be classified as both rural and urban simultaneously, regardless of geographic location.
The financial implications are significant. Dually classified hospitals can receive enhanced Medicare payments tied to rural hospital designations, including eligibility for sole community hospital status, the 340B drug pricing program, and additional graduate medical education funding. At the same time, they retain urban payment advantages such as higher wage indexes and capital disproportionate share hospital payments.
These benefits have proven especially attractive to large nonprofit health systems and academic medical centers. The study found that 76% of dually classified hospitals in 2023 were nonprofits and all of the top 20 by net patient revenue were teaching hospitals in major metro areas, including NewYork-Presbyterian Hospital, Cleveland Clinic Hospital, and Cedars-Sinai Medical Center.
The practice is especially prevalent in states on the East Coast, such as Connecticut (84%), Massachusetts (81%), Florida (59%), Pennsylvania (58%), and New York (54%), and states in the West, such as Idaho (67%) and California (66%).
Meanwhile, many hospitals actually located in rural areas continue to be in peril. A report by Chartis earlier this year revealed that nearly half of rural hospitals (46%) are in the red, while 432 facilities are in danger of closure.
“To the extent that federal subsidies continue to play a critical role in the financial viability of geographically rural hospitals and other providers, it is essential to ensure that limited federal resources intended for rural health are directed to those hospitals,” the authors of the Health Affairs study conclude.
“To preserve the integrity and effectiveness of rural health policy, Congress should direct federal support to geographically rural hospitals, where it is most needed.”
The volatility hospitals are experiencing is being felt at the highest levels of leadership, new data reveals.
Challenging conditions at hospitals and health systems are prompting long-tenured leaders to retire, step aside, or be replaced by boards leaning on interim leadership to bridge uncertainty.
Through the first half of 2025, hospitals recorded 68 CEO exits, marking a 3% increase from the 66 announced in the same period last year, according to a report by Challenger, Gray & Christmas.
While hospital CEO turnover was down year-over-year in the first quarter, which featured 31 departures compared to 34 in 2024, activity picked up significantly towards the end of the second quarter. Seventeen of the 68 exits through the first six months came in June, a jump from the five announced in May and a slight increase over the 16 that came in June 2024.
Across all industries, June experienced 207 CEO exits, representing a 23% rise from May’s 168. Still, that total was down 12% from the 234 changes reported in June 2024.
Overall, 1,235 CEOs left their position in the first half of the year, marking a 12% increase from the 1,101 exits logged over the same period last year, making it the highest year-to-date total since the executive coaching firm began tracking CEO turnover in 2002.
‘CEO gig economy’
One of the prominent CEO turnover trends that emerged through the first six months of the year was organizations’ increasing reliance on interim leaders.
One-third (33%) of new CEOs in the first half were appointed on an interim basis, compared to just 9% over the same period in 2024 and 2023, Challenger’s data found. Among the interim appointments, 53% were selected from within the organization, while 47% came from outside.
Though interim leadership can be an appealing strategy for organizations preferring flexibility, both financially and operationally, it can also attract CEO candidates.
“At the same time, more executives are embracing the increasingly attractive option of short-term CEO roles, essentially participating in a ‘CEO gig economy,’” Andy Challenger, labor and workplace expert at Challenge, Gray & Christmas, said in a statement.
At hospitals, mounting pressures from rising costs and regulatory shifts are creating an uncertain environment that’s turning up the heat on both new and long-standing CEOs.
The industry accounted for 76% of last month’s job gains, highlighting its importance as other sectors shed workers or remain stagnant.
The U.S. labor market’s reliance on healthcare for job creation hit eye-catching levels last month.
Though the overall market cooled in July, healthcare remained a bright spot by accounting for the majority of job gains, according to new data released by the Bureau of Labor Statistics.
The industry created 55,400 of the 73,000 jobs across all sectors, representing 76% of job growth in the country. Healthcare’s total surpassed the 39,200 jobs it added in June and was above its average monthly gain of 42,000 jobs over the past 12 months.
Ambulatory health care services drove the bulk of the industry’s growth with 33,600 jobs added, while hospitals provided 16,000 and nursing and residential care facilities contributed 5,800.
Under ambulatory health care services, home health care services led the way with 14,400 jobs, supplemented by offices of physicians netting 6,700 jobs.
Within nursing and residential care facilities, skilled nursing facilities maintained a steady rate of growth by adding 2,900 jobs.
The 73,000 jobs added in total for July was less than half of the figures initially reported for the past two months. Those totals were also significantly revised, with May coming down from 144,000 jobs to 19,000, and June dropping from 147,000 to 14,000.
The unemployment rate last month ticked up to 4.2%, compared to 4.1% in June, and has remained between 4% and 4.2% since May 2024.
While healthcare once again proved to be a stabilizing force in the labor market, other major sectors such as manufacturing and government were on the opposite end of the spectrum last month, losing 11,000 and 10,000 jobs, respectively.
For hospitals and health systems grappling with staffing shortages, especially in nursing and frontline support roles, continued job growth is an encouraging sign. Still, even amid high demand, leaders are still balancing workforce investment with ongoing financial pressures.
Many provider organizations announced staff reductions in July, citing factors like policy changes in Washington and rising operational costs.
However, most of the layoffs initiated by hospitals and health systems have focused on non-clinical roles, with decision-makers emphasizing that importance of supporting frontline workers.
Though HCA lifted its 2025 outlook, softer volume and Medicaid growth brought more questions from investors.
HCA Healthcare’s bottom line continues to chug along, but investors remain interested in the health system giant’s ability to weather industry volatility stemming from policy changes.
Tempered demand for services and tepid volume growth showed up in what was otherwise a strong second quarter earnings report, allowing the hospital operator to raise its 2025 guidance.
HCA saw $18.61 billion in revenue for the quarter, a 6.4% year-over-year increase, and net income of $1.65 billion, representing a 13.1% increase.
As a result, revenue for 2025 is now expected to be between $74 billion and $76 billion, increasing from $72.8 billion to $75.8 billion, while net income for the year is set at $5.85 billion to $6.29 billion, a jump from $6.11 billion to $6.48 billion.
About half of the company's increased earnings outlook can be attributed to recently enacted state-directed Medicaid payment programs, CFO Mike Marks told investors on an earnings call. Tennessee’s new program, which had been pending approval for months, is expected to generate meaningful revenue in the back half of the year.
However, investors raised concerns over HCA’s revised guidance for patient volumes in the second half of the year. Equivalent admissions growth is now expected to be 2% to 3%, rather than the 3% to 4% HCA originally forecasted.
For the second quarter, same-facility admissions increased 1.8%, same-facility equivalent admissions improved 1.7%, and emergency room visits ticked up 1.3%. Meanwhile, same-facility inpatient surgeries declined 0.3% and outpatient surgeries fell 0.6%.
HCA CEO Sam Hazen downplayed worries over depressed volume growth to investors.
“We’ve had 16 consecutive quarters of volume growth,” Hazen said. “And so that consistency tells us that the network model that we’re investing in very heavily and we’re focused around execution on it allows us to compete effectively. It’s allowed us to sustain market share gains, and we think it adds value for our patients.”
Community Health Systems also suffered lower patient volumes than expected in the second quarter, which current president and CFO and soon-to-be interim CEO Kevin Hammons chalked up to a drop in “consumer confidence.”
When asked if that was the reason for HCA’s volume metrics, Hazen said: “I don’t think we can make any comments yet about consumer confidence. I think, again, the demand for healthcare largely, over time, appears to have been inelastic.”
Providers like HCA are also preparing for the impact of the One Big Beautiful Bill Act (OBBBA) and the potential expiration of current ACA subsidies, which are set to expire at the end of 2025 unless Congress acts. If they lapse, premiums could spike for millions of Americans, potentially reducing enrollment in ACA marketplaces and increasing uncompensated care burden for hospitals. HCA has approximately 60% of its Medicaid volumes and revenue in states that elected not to expand Medicaid under the ACA, leadership noted.
“With respect to the Medicaid component in [OBBBA], we believe the adverse impacts over the next few years are manageable,” Hazen said.
UVM Health, MetroHealth System, and Children's National Hospital are the latest provider organizations to announce staff reductions.
As hospitals and health systems navigate a volatile financial landscape, many are turning to workforce reductions to rein in expenses.
Providers across the country who have initiated layoffs have cited factors like declining reimbursement rates, rising operational costs, and shifting policy realities. Generally, the focus has been on reducing costs outside of direct patient care to protect frontline services.
Here's a look at three prominent hospitals and health systems that have each announced job cuts in recent days:
UVM Health
The University of Vermont Health Network is slashing 146 roles, 77 of which are currently filled, as part of a cost-reduction strategy tied to state-ordered budget cuts.
The layoffs, which are expected to save over $5 million, affect primarily non-clinical, administrative roles across departments such as finance, IT, communications, and human resources.
"Today's actions are an important step toward our affordability goals, but we have more work to do," Sunny Eappen, president and CEO of UVM Health Network, said in a statement. "To get there, we're taking a hard look now and in the future at the costs we can control and focus on being more efficient to reduce the cost burden on patients, while continuing to support our dedicated workforce."
The move follows UVM Health's decision to cut around 200 jobs last November and comes alongside paused performance-based pay for leaders, reduced traveler and temporary workers in favor of permanent staff, and minimized spending on non-essential projects.
MetroHealth System
Cleveland-based MetroHealth System is cutting about 125 non-clinical positions, representing less than 1.5% of its total workforce.
The layoffs are part of an effort to stabilize finances in light of growing charity care costs, which have exceeded $1 million per day, and broader economic pressures. The affected roles include leadership and administrative staff, with no clinical positions or patient care services impacted, according to the health system.
"This has been a difficult day for our MetroHealth family," Christine Alexander-Rager, MetroHealth president and CEO, told employees in an email. "We made these decisions in response to significant financial challenges facing our system. Despite your hard work and steady growth in our volumes, MetroHealth's expenses continue to outpace revenues. And that gap is growing."
MetroHealth has also frozen hiring for most non-clinical roles and suspended executive incentive bonuses as it looks to bring expenses in line with revenues.
Children's National Hospital
Children's National Hospital in Washington, D.C., has cut approximately 70 non-clinical positions as providers grapple with financial challenges driven largely by changes in federal Medicaid funding.
The hospital emphasized that the cuts do not affect bedside staff or patient care services, with the eliminated positions mostly impacting administrative support roles, including some in leadership.
The hospital said the move is part of a broader effort to ensure long-term sustainability while maintaining access to pediatric care.
"In light of federal policy changes, healthcare industry shifts, and new opportunities to deliver care more effectively, we recently implemented a reduction in force of approximately 70 non-clinical staff members out of our 8,000-member workforce," the hospital said in a statement.
