From layoffs to strategies for improving retention, here's what leaders need to be following regarding the workforce.
Through nearly the first half of 2025, hospitals and health systems continue to wrangle with workforce challenges that are pressuring bottom lines and forcing organizational change.
Hospital CEOs have their hands full balancing the need to create a sustainable workforce with reducing expenses to maintain financial health.
Here are three workforce trends that HealthLeaders has tracked in its recent coverage:
Layoffs
With margins slim and costs mounting, many hospitals have turned to either cutting staff or freezing hiring to save money.
Mass General Brigham made waves in February when it announced it would be undertake the largest layoffs in the health system's history to close a projecting $250 million budget gap over the next two years.
Providence, meanwhile, has paused nonclinical hiring, with president and CEO Eric Wexler citing low reimbursement from payers and elevated labor and supply expenses as factors in the decision.
Across the country, hospitals are feeling a workforce crunch that isn't expected to ease up anytime soon.
Leadership turnover
The turnover isn't just happening among clinical and nonclinical staff—it’s affecting leadership levels as well.
According to a recent survey by B.E. Smith, a division of staffing solutions company AMN Healthcare, 46% of 588 provider executives said they plan to leave their organization in the next year.
In many cases, executives are being forced out. The University of New Mexico Hospital dropped 53 executive roles in April, while Yale New Haven Health announced it was restructuring its management and administration positions.
Targeting leadership cuts can allow hospitals to shed high salaries without sacrificing a large number of staff, but it comes with the downside of disrupting organizational continuity.
The importance of engagement
To hold on to the workers that hospitals don't want to lose, CEOs must prioritize engagement to improve retention.
Disengaged employees are 1.7 times more likely to leave their roles, especially among younger generations, according to a recent report by Press Ganey. The analysis also found that employee engagement fell 0.02 points on a five-point scale in 2024, following a slight improvement in the prior year.
Strengthening culture can go a long way in creating a working environment that staff want to be part of, both in the short- and long-term.
Leaders must change their approach to the employment of physicians and the acquisition of their practices.
Hospitals have long accepted physician losses, but that mindset is becoming untenable as rising employment costs continue to add to the significant financial strain many organizations face.
Though employing physicians—regardless of profitability—can help hospitals achieve strategic goals and better serve their communities, CEOs should evaluate whether these physicians are consistently generating losses and consider alternative arrangements.
Due to a variety of factors, hospitals currently lose an estimated $306,792 per physician annually, which is an increase of 5% from the previous year, according to Kaufman Hall's Physician Flash Report.
The leading reason for those losses is the dwindling reimbursement advantage, Kaufman Hall wrote. Regulatory changes and the growing presence of ambulatory surgery centers (ASCs) are offsetting the higher reimbursement rates for physician services billed under hospital outpatient department.
Meanwhile, the overuse of low- or negative-margin services that are encouraged by hospitals to boost patient volume, and the integration costs stemming from administrative burden are also weighing down organizations financially.
To counteract these challenges, here are other strategies hospital CEOs can utilize instead of directly employing physicians, as posited by Kaufman Hall.
Target ASC joint ventures
By pursuing ASC partnerships, hospitals can adapt to the trend of decentralized care and bring in physicians through shared financial incentives. These collaborations also allow hospitals to maintain their market share.
Transition to FQHC facsimiles
Converting primary care clinicals into federally qualified health center look-alikes can unlock financial benefits for hospitals. In addition to FQHC look-alikes receiving better Medicaid and Medicare reimbursement, reducing the need for direct subsidies, physicians working at these facilities often receive medical school loan forgiveness as well.
Implement value-based care models
A fee-for-service environment can make the cost of employing physicians outweigh the revenue they bring in. Shifting to value-based care models like accountable care organizations or bundled payment arrangements can provide a win-win for both hospitals and physicians without requiring employment. These models also place on emphasis on quality over quantity, potentially leading to improved care for patients.
Tight margins and rising costs are threatening the sustainability of hospital and health systems.
Several factors are placing immense pressure on the bottom lines of hospitals and health systems everywhere, putting the onus on CEOs to financially steer their organizations through a complex and challenging environment.
In response, hospitals leaders must make calculated decisions with resources to ensure short-term operational needs are being met while supporting long-term strategic goals.
Here are three ways CEOs can be effective financial stewards:
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 vendor partnerships 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.
